The Battle Nobody Wins

Motion Picture Exhibitor Magazine, March 23, 1960:

One of the more unfortunate signs of a troubled business is the continuing practice of exhibitor under-reporting of grosses on percentage films and the resulting unpleasant and embarrassing legal wrangling.

Sargoy and Stein represent distribution in such legal actions and the 30 years we have followed their activity have brought only one court loss to the best of our recollection (and that one was one a “fluke”).

The guilty exhibitor will point to unconscionable film rentals to explain away his crime (stealing is an ugly word, but what else can it be termed). The industry conditions that force men who have made their mark in business and civic affairs to dishonesty are to be deplored, but this is no excuse.

Even more surprising, perhaps, is the fact that after exposing them, distributors continue to sell to the chiseling exhibitors. In any other line of endeavor, such turnabout would be unthinkable.

Universal Pictures at one time refused to sell film to such an exhibitor for a year.

Knowing his situation, his probable gross, his expenses, the honest theatre man makes the best deal he can for a film and still keep his economic head above water. Having done so, he sometimes watches the picture go to someone else whose high percentage offer is more acceptable to distribution.

A man with a lifetime in the business generally knows an unrealistic bid when he hears one. Still, we have been told by exhibitors whose honesty cannot be doubted that they have time and time again been the middle man in such deals, caught in the squeeze of dishonesty and greed.

You would think the experienced distributor would be just as apt to recognize an unrealistic bid. This doesn’t seem to be the case. The exhibitor who couldn’t possible stay alive living up to the contact he has “won” resorts to under-reporting. Enter Sargoy and Stein: exit another chiseler.

The most unfortunate aspect of the whole untidy situation is that these are not dishonest men. With a lifetime of effort devoted to his business, it is understandable that he can rationalize under-reporting into simple business strategy. We repeat that this is no excuse for dishonesty, but it is true, nevertheless.

It is a common practice now to demand 40, 50 or even 60 percent terms for pictures that can’t possibly perform that well at the box office. Demands for double playing time, double week ends, no review, and other sales gimmicks, unless justified by exceptional quality, are just discouraging for the man seeking to keep his business and integrity at the same time. Add that distributor favoritism to selected circuit customers at 25 percent and holdovers at no cost at all at the expense of smaller accounts, and the picture is clearer still. We have seen evidence of this in no uncertain manner.

Who’s the winner when such practices as forced bidding in situations where biding is suicidal become fact? Is it the distributor, with his other eye on a pot of gold at the end of a TV rainbow? It seems to us that more realistic live and let live policies could only add to his film’s playing time and grosses.

High pressure sales terms equals bitterness equals dishonesty. That seems to be the equation of the times. The men who should be leading this industry to its greatest days, at times seem to be pushing it towards its bleakest days.

So Sargoy and Stein keep busy and run up an imposing list of legal victories. Let’s hope that future historians wouldn’t look back at this troubled time and say, “They won every battle, but lost the war.”

The dishonest exhibitor can’t win. The shortsighted distributor can’t win. Against odds like that, cooperation makes awfully good sense.

But doesn’t it always!

“Edward Abraham Sargoy, a lawyer who specialized in copyright infringement cases and matters involving motion picture distribution, died Wednesday…. In recent years, he was a consultant to the New York law firm of Sargoy, Stein & Hanft, which he founded in 1945 as Sargoy & Stein. During his career, which began in 1925, Mr. Sargoy represented almost all of the major companies in the motion picture industry…”

Edward A. Sargoy, Lawyer Represented Film Companies
(New York Times, Aug 13,1982)