H.—44a

REPORT.

Reasons for the Inquiry. 1. It is considered desirable to set out briefly the matters leading to the setting-up of this inquiry. In 1930 the Department of Industries and Commerce was approached by the Exhibitors' Association submitting that a number of clauses in the film-hiring contract with the Film Exchanges operated unfairly and detrimentally to their interests. Several conferences between the Film Exchanges and Exhibitors' Associations were arranged by the Department, as it was thought that this procedure would be effective to bring about more harmonious relations between the two associations, and was preferable to any State intervention. The parties met in conference, but negotiations proved abortive, and the position remained to a great extent unaltered. Early in 1932 a further difficulty arose in regard to the adoption of methods of competition between chain-theatre interests and the independent exhibitors. Urgent representations were made to the Government by a number of exhibitors, who submitted evidence alleging that unfair methods were being employed to obtain control of or a financial interest in the independent exhibitors' theatres. As a result of these representations the Government brought down regulations under the Board of Trade Act to prevent the operation of unfair and monopolistic practices. These regulations were declared ultra vires of the Cinematograph Films Act by decision of a Court of Appeal on the 7th April, 1933. 2. Petitions to the House of Representatives were made during the last session of Parliament by a number of independent exhibitors, complaining of alleged " inequitable conditions contained in the film contract they were compelled to sign in order to secure the necessary supplies of film to keep their theatres going." The Labour Bills Committee of the House, which heard the petitions, recommended that they be referred to the Government for consideration. Another matter that has arisen is the question of compulsory minimum charge for admission to theatres. This was the subject of a private member's Bill introduced during the 1933 session of Parliament. This Bill was referred to the Industries and Commerce Committee, which, after hearing the evidence, made the following recommendations to the Government: —• " That in the opinion of the Committee an exhaustive inquiry into the film industry in all its bearings should be undertaken at the earliest possible date. " That in view of the amount of evidence offering and the limited time at the disposal of the Committee it is impossible to undertake such inquiry during the present session. " The Committee therefore recommends such inquiry be made by the Government, and pending same that the Hire of Films Bill be not allowed to proceed this session." Proceedings. 3. The Committee held its first meeting on Tuesday, 13th March, 1934, and sat on twenty-one days in all, fifteen of which were employed in hearing evidence. A total of twenty-seven witnesses appeared before the Committee, seventeen representing exhibitors, six representing renters, and four on behalf of other interests. In addition, the Committee considered a considerable volume of written evidence referred to elsewhere in this report. All witnesses were examined on oath. In view of the technical nature of the industry it was deemed advisable to hold the inquiry in camera. The freedom with which evidence was tendered proved the wisdom of this course. 4. Counsel appearing before the Committee were Mr. E. P. Hay, for the Film Exchanges' Association of New Zealand, Inc., and Mr. F. C. Spratt for Fuller-Hay ward Picture Corporation, Ltd., John Fuller and Sons, Ltd., J. C. Williamson Picture Corporation, Ltd., and Kemball Theatres, Ltd. Mr. J. Robertson, Dominion Secretary, appeared for the New Zealand Motion-picture Exhibitors' Association, Inc., and Mr. R. H. Allen, Secretary for Amalgamated Theatres, Ltd., for his company, which operates the only important chain of theatres outside the Exhibitors' Association. Expert departmental officers attached to the Committee were Mr. F. Johnson, of the Industries and Commerce Department, and Mr. R. Girling-Butcher, of the Department of Internal Affairs. Mr. R. E. Kemp, of the staff of the Minister of Industries and Commerce, acted as Secretary to the Committee. Reference. 5. Prior to the commencement of the inquiry a memorandum had been prepared by Mr. R. Girling-Butcher, Chief Inspector under the Cinematograph Films Act, explaining the operation of the industry and the nature and effect of the controlling legislation. Copies were circulated to both sections of the industry and to members of the Committee. The memorandum has been the subject of frequent reference during the inquiry, and, with the exception of a few criticisms of a minor nature, it has been accepted by both sides of the industry as a fair and impartial statement of the conditions existing. It constitutes a convenient reference for matters which would otherwise have to be dealt with in detail in this report, and is therefore published as an Appendix. General Observations. 6. The Committee recognizes the difficulty of making comparisons with other businesses on account of the unusual character of the industry from a technical point of view. It will be seen from the references in paragraphs 18 and 25 to 27 of the Appendix that the payment for film-hire made to both producer and renter consists in many cases of a percentage of the actual gross receipts. Both for this reason, and because of the different comparative box-office results obtained from the exhibition of films in different towns or theatres, it is impossible to assign a definite renting value to any particular film, and the industry largely operates on a system of " average " values.

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