Readers of the Gastonia, N.C., Gazette must have doubted their eyes this spring when they saw an advertisement for the movie "Quintet," playing at the local Webb Theater.

"I cannot tell a lie," the advertisement read. "'Quintet' is one of the worst movies I have ever seen--if not the worst. My advice for our paying patrons is instead of buying a ticket to see this dog, save your money and buy a cow." Signed: R. L. (Sonny) Baker, owner of Webb Theater.

Baker explained that the reason "Quintet" was playing at all in his 688-seat theater was that he had to "blind-bid" the movie from Twentieth Century-Fox Film Corp. In other words, he and other theater owners had to agree to play the movie for a specified number of weeks and, in some instances, offer cash guarantees without ever seeing the movie. All they had to go on was a one-page summary from Fox describing the plot in general terms and listing the stars and director.

"It was Paul Newman's first movie in 18 months," Baker recalls. "Bibi Anderson was in it -- I like her looks. And Director Robert Altman had a good track record." He adds, "But I was buying a pig in a poke. I lost $2,500 on 'Quintet.'"

Baker ran the ad to dramatize theater owners ' plight, and soon thereafter North Carolina became the 13th state to enact legislation banning blind bidding on films. Two more states have since passed similar laws.

The issue of blind bidding is fomenting bitter battles in other state legislatures, and the new laws against the practice are being challenged in the federal courts. The combatants are theater owners, including some large chains, and the big companies that produce and distribute movies.

The outcome could change the way the adversaries divide the growing amount of money that Americans spend for movie tickets -- $2.7 billion last year. It also could alter the way movie companies and theater owners share the risk of producing big-budget films.

Beyond the effect on the movie industry, the blind-bidding dispute poses a classic question of whether state governments have the right to interfere in private-business negotiations to help local businesses escape what they consider to be unfair contracts. The battle also has antirust and free-speech implications.

Both sides see serious consequences for the moviegoing public. Theater owners say that if the practice isn't stopped, many more small and independent theaters will be forced into bankruptcy from losses on blind-bid films. They say they will be forced into bankruptcy from losses on blind-bid films. They say they will have to raise ticket prices to make up for their losses on blind-bid flops like "Quintet." One Boston theater owner has offered to cut ticket prices by 10 percent if a law banning blind bidding is enacted in his state.

Theater owners also contend that if they could view films before they bid for them, many would never have agreed to show MCA Inc.'s "Slapshot," a foul-language hockey film that offended many customers, or Paramount Pictures Corp.'s violent gang film "The Warriors," both of which were blind-bid. At showings of "The Warriors" in some cities, violence broke out, and some deaths occurred as a result of gang fights in theaters

Movie companies, on the other hand, believe blind bidding is necessary because of huge production and advertising costs and the need to book expensive pictures early in one of the prime viewing times -- summer, Christmas or Easter.

Without blind bidding, movie companies say, release dates of major films would be delayed by months and production and distribution costs would rise. Having to show exhibitors a finished print before theaters are booked would foul up planning for national adveristing campaigns because television network advertising time must be purchased a year or so in advance be purchased a year or so in advance, they say. Interest expense on money borrowed to make the film would contiue for months longer than now, amounting to hundreds of thousands of dollars for each movie.

The end of blind bidding "would mean fewer big-budget blockbuster' movies and fewer artistic or experimental films," says Jack Valenti, president of the Motion Picture Association America. "Movie companies just won't be able to put so much money into a film if they don't know for sure they have play-dates in theaters at one of the prime times." And they won't be as willing to take risks on artistic or experimental films for fear exhibitors won't play them, he adds.

Ticket prices on "Blockbuster" movies will skyrocket, he says. "With the intense competition between the big theater chains, when a movie is shown at a screening and it's an obvious smash, the bidding will go right through the ceiling. Exhibitors will bid more and will charge more at the box office." (Exhibitor bidding after regional screenings of the movies is the Tradional method of marketing them.)

Valenti calls exhibitor comments about "Slapshot" and "The Warriors" "blatant hypocrisy." He adds: "They'll play any picture that makes money. You'll notice they didn't complain about the raw language in 'Saturday Night Fever,' which made a lot of money." As for "The Warriors," Paramount offered theater owners the opportunity to cancel their booking after violence broke out. Only a couple of owners stepped forward because "The Warriors" was big hit, Paramount says.

Whichever arguments you buy, the blind-bidding issue remains a hot topic. Besides the 15 states that have already adopted legislation prohibiting blind-bidding, bills to ban the practice have been introduced in 19 other states. So far, the most populous state to ban the practice is Ohio, which accounts for about 5 percent of the nation's movie box-office receipts. Legislation is currently being debated in the heavily populated states of New York, Pennsylvania, New Jersey, Maesachusetts and Michigan. Bills have died in Texas and Illinois. In 1980 the legislation will be introduced in the rest of the states, says the National Association of Theater Owners, the organization leading the drive.

A federal judge in Ohio has been hearing arguments from attorneys representing the theater association and the moviemakers in a suit filed by the Motion Picture Asssociation challenging the constitutionality of blind-bidding laws. The suit charges that the blind-bidding law delays release of motion pictures in Ohio and therefore interferces with free speech. It also contends that blind-bidding laws interfere with interstate commerce and unlawfully preempt the federal Sherman and Clayton Antitrust acts and the copyright act.

U.S. antitrust chief John H. Shenefield said last year he believes that blind-bidding has contributed to some movie-theater bankruptcies and that passage of a law against it would encourage more competition in the industry. Pressed by angry moviemakers about the remarks, he has said that these were only "tentative conclusions" and that the department will continue to "monitor" the situation.

The U.S. Justice Department has closely regulated the movie industry ever since a U.S. Supreme Court decision in 1948 made the movie companies sell their theater chains because of antitrust violations. Blind-bidding of films also had been prohibited until 1968, when the Justice Department entered into a stipulation with movie companies allowing them each to blind-bid three films a year. In 1975 the Justice Department didn't continue its blind-bidding rules, and the practice began in earnest.

Today, the vast majority of movies from the nine major film companies are distributed through blind-bidding. The ones that aren't are usually those of lesser interest. Actual precentage estimates range from 59 percent blind-bidding, according to the movie companies to 90 percent, according to theater owners. The nine major companies account for about 92 percent of the U.S. box office.

Theater owners have participated in blind-bidding because they were desperate for good movies to show on their rising number of movie screens. While movie companies have reduced the number of movies they produced because of sharply increasing production and advertising costs, theater owners built theaters containing 4,600 new screens in the last 10 years, a 38 percent increase. This occurred as theater chains moved with the population from big downtown theaters with one screen to theaters with as many as six screens in suburban shopping centers.

Blind-bidding works this way: Six months to a year or longer before a movie is to be released, the movie company sends a bid letter to theater owners across the country briefly describing the movie and listing its actors and director. The letter also outlines minimum terms for a probable successful bid, how long the movie should play (often 16 weeks for a blockbuster); the amount of an advance cash guarantee from the theater owner (up to $300.000 for an exclusive first run in a large city), and a formula for dividing the box office dollar (typically, the movie company's share declines week by week from 70 to 90 percent for the first two weeks of playing time down to a minimum of about 35 percent.

Cash guarantees for some eagerly awaited films have reduced the movie company's risk to zero. Twentieth Century-Fox Film Corp. already has well in excess of $26 million in guarantees from theater owners for "The Empire Strikes Back," a sequel to "Star Wars," scheduled for May 1980 release. Paramount Pictures Corp. is reported to have about $30 million in cash guarantees for "Star Trek -- the Movie," booked for this Christmas.

Still, large and small theater owners alike say they can no longer tolerate the big losses they suffer under such tough contracts. When a hoped-for blockbuster fails at the box office, they're stuck with playing it for many weeks even if few patrons show up. (It's possible, however, for a theater owner to negotiate his way out of such a contract.)

A. Alan Friedberg, president of the Sack Theater Chain in Boston, cites the 1978 United Artists Corp. war film "A Bridge Too Far" as a prime example of a blind-bid disaster. He says he received a bid letter for the movie describing it as a "26 million action war film starring Robert Redford."

That sounded good. Friedberg recalls. So he put down a $300.000 cash guarantee as United Artists suggested, and agreed to play the movie for eight weeks. When he received the film later, he was aghast.

"Robert Redford was on the screen for about seven minutes," he says. "not that many people came. My loss on the film was about $300,000 -- a tremendous blow for a company our size". (40 screens).

Other theater owners feel laws against blind bidding are important because local theater owners have a keen sense of their market and need to view a picture first before they can make an intellingent bid. "What goes over big in New York, Los Angeles or San Francisco doesn't necessarily go over in the Willamette Valley," says Lawrence Levin, an executive with Moyer Theater Inc. in Portland, Ore.

Moyer Theaters says it put up a $100,000 guarantee with six weeks playing time to obtain rights to show Woody Allen's film "Interiors," described by United Artists as "Woody's first straight drama," with a top-secret" plot. "We lost $60,000 on "Interiors,'" says Levin. "Had we viewed it, we would have never put up that large a guarantee. We know what people in Oregon like."

Only a few states have had enough experience to report how the laws against blind bidding are working so far, and the results are mixed. Many Virginia theater owners said their grosses on the Warner Bros. hit "Superman" weren't affected, even though they got the movie a month or so later than competitors in neighboring states without blind-bidding arbitrations. The delay was caused by the time-consuming movie screening and bidding procedures required by law.

However, Earl Perry, president of Ogden-Perry Theaters Inc., a big Louisiana chain, says he lost 40 percent of the gross revenue on "Superman" because Louisiana's blind-bidding prohibition delayed his getting the film until Jan. 28, while competitors in border towns opened it Dec. 15. Many of Perry's Louisiana theaters are within short drives of Mississippi and Texas neither of which has outlawed blind bidding. Perry is so angry that he is spearheading a drive in Louisiana to repeal the blind-bidding law.