Fox Indicted on Charges of Block Booking Films

A federal grand jury in New York on Thursday indicted 20th Century Fox Film Corp. and one of its Midwestern branch distribution managers, charging them with criminal contempt for allegedly “block booking” several of the studio’s motion pictures.

Block booking is a practice whereby a distributor requires a theater owner to show one or more less popular movies to obtain the right to exhibit a highly popular one. Block booking is prohibited by a 1951 consent judgement signed by all the major Hollywood film studios, including Fox.

According to the indictment, which was filed in U.S. District Court in Manhattan, the alleged block booking occurred between 1985 and 1987 out of Fox’s regional office in Chicago.

The indictment alleges that in 1985, Fox required several exhibitors to book the movie “Johnny Dangerously” in exchange for the right to show the more popular “The Flamingo Kid.” That same year, the company conditioned the booking of its enormously successful “Cocoon” on the exhibitors’ also taking “Prizzi’s Honor,” according to the indictment.

In 1986, the company required exhibitors to book the box-office flops “Space Camp” and “Big Trouble in Little China” in exchange for “Aliens,” the indictment charges.

Fox Denies Charges

In 1987, Fox offered “Mannequin” to theater owners only if they also booked “Black Widow,” the indictment said.

In a statement issued Thursday, Fox said it “strongly denies” that it was in contempt of the 1951 decree and called the charge “unwarranted.”

“Fox has consistently cooperated with the Department of Justice in all matters, including this investigation,” the statement said. “The facts will show that Fox has taken very seriously its obligations under the decree and has had in place for many years a comprehensive and multifaceted compliance program designed to ensure adherence to the decree.”

A Fox spokesman said the company would not comment beyond the statement. Leila J. Goldstein, the branch manager indicted along with the company, could not be reached for comment.

The consent decree grew out of a landmark 1938 case, United States vs. Paramount Pictures Inc. et al., in which the government charged seven of the major Hollywood movie studios, including Fox, with violating the Sherman Antitrust Act for attempting to monopolize the production, distribution and exhibition of motion pictures.

The case ultimately resulted in the U.S. Supreme Court ordering the studios, in 1948, to sell off their movie theater operations. Three years later, the seven studios signed a consent judgment that enjoined them from “performing or entering into any license in which the right to exhibit one feature is conditioned upon the licensee’s taking one or more other features.”

Pleaded No Contest

Thursday’s action was not the first time that Fox has been charged with violating the decree. In September, 1978, the company pleaded no contest to a single count of contempt for allegedly requiring theater owners to book a movie called “The Other Side of Midnight” in exchange for the right to show “Star Wars,” which was the most successful movie in history at that time.

That indictment was also returned by a New York federal grand jury after a yearlong investigation by the Justice Department. The company was fined $25,000 and required to pay for the cost of the investigation.

Charles F. Rule, the assistant attorney general in charge of the Justice Department’s antitrust division, said Thursday that the current charges against Fox were the result of a grand jury investigation conducted by the department’s Professions and Intellectual Property Section in Washington.

“The department views willful violations of its consent decree as very serious matters, deserving of criminal penalties,” Rule said in a statement.

“This is true even where, as here, the conduct prohibited by the decree would itself rarely, if ever, be prosecuted as a criminal violation of the Sherman Antitrust Act. Parties subject to any outstanding antitrust consent decree are not free to ignore prohibitions of the decree even when the conduct prohibited is not itself an antitrust violation,” Rule said. The criminal statute under which Fox was charged does not establish a maximum penalty.