20th Century Fox Fined $500,000 in Booking Dispute

A federal judge in New York levied a $500,000 fine Wednesday against 20th Century Fox Film Corp. for so-called block booking of several films in criminal contempt of a 1951 antitrust agreement.

Block booking is an illegal practice in which a studio forces theaters to show less desirable movies to obtain bigger box-office attractions.

The fine, which was the maximum permitted, followed U.S. District Judge Edmund L. Palmieri’s ruling last Friday finding the Los Angeles firm guilty of contempt after a four-day non-jury trial. The Justice Department brought the case through grand jury indictment.

Fined in ’78

Fox said Wednesday that it will appeal the conviction based on “erroneous” rulings by the judge. The company complained that a pretrial ruling deprived it of its defense by not allowing the studio to present evidence on its policy forbidding block booking. The company also complained that it was denied a jury trial.

Palmieri also assessed a $5,000 fine against Leila J. Goldstein, who was manager of a Midwestern branch office of Fox at the time of the alleged practices. The judge could have imposed a six-month prison sentence upon her, and the Justice Department had recommended jail time.

The case accused the company and Goldstein of several instances of block booking between 1985 and 1987. For instance, the indictment alleged that exhibitors had to show the box-office flop “Space Camp” to obtain the hit “Aliens” and to book “Prizzi’s Honor” to get the highly successful “Cocoon.”

In 1978, under different ownership, Fox pleaded no contest to a contempt charge for allegedly requiring theater owners to book “The Other Side of Midnight” in exchange for the right to show the blockbuster “Star Wars.” That case resulted in a $25,000 fine against Fox.

The company, in a prepared statement, said Wednesday that the government itself conceded in the trial that the questioned practices were confined to one of its 20 branches.

Palmieri said in passing sentence that he had considered the plight of the small exhibitor facing the large distributor. He noted that the $500,000 fine was less than 1% of Fox’s net earnings for its last fiscal year.

Block booking is prohibited by a 1951 consent judgment signed by the major Hollywood studios, including Fox. The agreement itself grew out of a landmark 1938 case, United States vs. Paramount Pictures Inc. et al. In that case, the government charged seven movie studios, including Fox, with violating the Sherman Antitrust Act by attempting to monopolize film production, distribution and exhibition.

Suit Filed

Coincidentally, block booking was one of several allegations made against Fox in a multimillion-dollar lawsuit filed Monday in Los Angeles Superior Court.

The plaintiffs, principals in four SLM Ltd. partnership joint ventures with Fox, accused the company of fraud and breach of fiduciary duty in the course of distributing 27 films owned by the joint ventures, including “Alien” and “Cocoon.”

A Fox attorney declined to comment on the allegations Wednesday.

The suit alleges that Fox engaged in “a variety of unfair practices and covert dealings” to divert to itself revenue that belonged to the joint ventures. Among these practices, it alleged, were excessive advertising of the films on the Fox television network and giving price breaks to Fox-owned television stations for showing the films.

The suit also accused Fox of violating the joint venture agreements for a financial accounting on the movies.