Motion Picture Daily (Jan-Mar 1934)

'ednesday, March 21. 1934 MOTION PICTURE DAILY Lppeals Court Hears Attack On RKO Deal {Continued from page 1) res. Reade, through his attorney, erbert S. Colton, contended y ester y that the pledging of the negatives performance of the agreement beeen the noteholders, under which ey were to refrain from foreclosing, is damaging to the interests of KO creditors. This was denied by irl E. Newton of Donovan & lichle, attorneys for the RKO reiver, and by William D. Whitney, /A attorney. RCA, as holder of 85 r cent of the RKO debentures, is a incipal party to the noteholders' reement. Decision was reserved by the Grit Court yesterday and an opinion expected within the next month. Under the agreement RCA paid .500.000 to RKO, which subseently applied the payment to maturi gold notes held by the Chemical mk and Commercial Investment •ust. In consideration for this pay:nt, Chemical and CIT agreed to tending the maturities of the reunder of the issue, aggregating .S25,000, so that the first of the -.laining notes does not mature until xt July 1. Maturities thereafter are J.0O0 each on the first of each suc;ding six months. Terms of Agreement RKO gave RCA its note, secured a completed negative, in return for t $2,500,000 advance under the agree:nt. As the pledged negative deviates in value a new note, secured a newlv completed negative, is deered to RCA by RKO. It was e phase of the agreement, affirmed the District Court's order, that was acked by Reade in his appeal to ■ higher court as damaging to the erests of general creditors of RKO. W hat is the matter with Judge oolsey's order?" Presiding Justice an asked when the complicated :eholders' agreement had been nstakingly explained to the court Xewton. '"What does the appellant eade) want?" "I think," Xewton replied, "that he :sn't understand that without Judge Dolsey's order there would be no eivership and no going business in 10. The appellant thinks that putg a chattel mortgage on a new film taking something out of the revership estate. The fact is, it puts nething into the estate, because uIO doesn't own the films, anyway, ley are owned by subsidiaries. |.der this procedure RKO gets an lity in a secured note in place of : in an unsecured note." The court was told that five nega'es have been mortgaged under the ■eement thus far, and that nothing ; been repaid to RCA on the $2,500,) obligation largely because of the iding appeal of Reade's. Sees Precedent Set •Vhitney told the court that this and lilar recent arrangements estabied a precedent for film receiverp cases in that they provided the >t instance in which "anything of ue has been preserved in a film npany's receivership." 'The motion picture business is All for His Art Natika Balieff, producer of "Chauve Souris," states he never works for money but for the propaganda of the art. He told this to members of the Cheese Club yesterday. different from all others," Whitney said, "in that its only asset is its film productions and these have a very brief life. It's true," he added hastily, "they have some flimsy structures in Hollywood in which they make pictures, but nothing much can be realized on these in a forced sale. Up to now, in film company failures, such properties have been shown to be almost valueless and the failures were complete." "Don't they own valuable machinery, such as sound recording devices?" the court wanted to know. "Sound equipment is mostly leased," Whitney replied as Federal Judges Swan, A. N. Hand and L. Hand smiled broadly. "Other equipment is valuable only to the user. When it is about to be sold it is almost without value." Another bit of testimony that amused the court was the statement by Xewton that RCA's holdings in RKO "at one time had a book value of $70,000,000, but their cash value was only a fraction of that." "Yes," Judge Swan interrupted with a smile, "you don't have to assure us of that. We've had some similar cases." The respondents' attorneys emphasized that all of RKO's assets were pledged to secure the notes involved and that these assets were principally its investments in subsidiaries. Without the agreement not to foreclose on these assets, the attorneys declared, RKO could be put out of existence as a going concern. Majestic Planning 12 for Next Season (.Continued from page I) now being discussed by the company's franchise holders. The meetings, which started on Monday, will last for two more days when the new program is expected to be set. It is also probable that a producer to succeed Phil Goldstone will be announced this week. Resumption of work on the balance of this season's product is expected in about two weeks. Charter Film Carriers Dover, Del., March 20.— Xational Film Carriers, Inc., has been chartered here. No capital stock is listed. The incorporators are T. Lea Perot, William C. Wright and Daniel A. Ward of Philadelphia. Hayes to Hurry Back Hollywood, March 20. — H e 1 e n Hayes will return here June 1. .instead of in September, as first agreed, to be starred in "What Every Woman Knows" for M-G-M. Remake Griffith Film Hollywood, March 20. — Warners will remake "Saturday's Children," in which Corinne Griffith starred in 1929. Patman Bill Is Brookhart Plan Revived (.Continued from page 1) booking; requires the furnishing of full synopses of all pictures at the time the pictures are offered for sale ; enlarges the anti-discrimination provisions of the Clayton Act to include 'leases' as well as 'sales' of commodities ; provides for the settlement of disputes between exhibitors and distributors by the Federal Trade Commission." Its passage, some hold, would scrap the whole XRA setup for the industry under the Code Authority. Abram F. Myers says in the bulletin there was little hope for the Patman Federal censorship measure backed by Canon William Sheafe Chase, and this was the reason for the introduction of the regulation bill and the granting of permission by the House Interstate and Foreign Commerce Committee to discuss both bills at the hearing originally intended for the censorship measure. Myers has filed a brief on the bills and is urging Allied to get behind the regulation bill, H. R. 8686. Copies are to be mailed out later, the bulletin states. Myers holds the bill is in "a strategic position and should be passed. The best indication that this bill has a chance is that C. C Petti john of the Hays office, having been given 10 minutes to replv to the advocates of H. R. No. 6079. devoted practically his entire time to anticipating the arguments that he thought I might make in favor of 8686. "I should have preferred to wait until next session to press the measure, but Charlie Pettijohn has turned the dogs loose, and unless the exhibitors and organizations opposed to block booking get busy, the Hays propaganda will greatly handicap future efforts in the direction of abolishing block booking." Business Picks Up In Idaho and Utah (Continued from page 1) surrounding territory, gained 30.5 per cent during February over February, 1932, according to a report of the San Francisco Federal Reserve Bank which includes this area. Salt Lake was second only to Spokane among western cities in percentage of gain. O. J. Hazen, local manager for National Theatre Supply Co., has just returned from a trip through Idaho and he reports a number of spots where improvements are being made. Precedent Set On Para. Rent Disallowances Pocatello Session Set Salt Lake City, March 20.— A meeting of the M. P. Owners' and Operators' Ass'n. is to be held at Pocatello. Idaho, March 27 for a general conference between Utah and Idaho exhibitors. "U" Moves About May 1 Universal is expected to move to Radio City around May 1. The company will occupy three floors in the RCA building. (Continued from page 1) District Court here was the first of its kind in the Paramount bankruptcy administration. An order disallowing the claim was entered by Referee Davis shortly after the U. S. Supreme Court handed down its ruling early last month in the United Cigar Stores case, holding that future rent claims were not provable against bankrupts. The referee's opinion disallowing the Steubenville claim cited the, Supreme Court decision. The landlord appealed the ruling to the U. S. District Court. In upholding Referee Davis's finding, Judge Knox affirmed the order without submitting any opinion. The District Court's ruling is regarded as a precedent for the final disposition of future rent claims against Paramount Publix and Publix Enterprises aggregating more than $100,000,000. Labor Board Seeks Action on An Order (Continued from page 1) missed in January for union activities are not reinstated today, Ben Golden, Regional Labor Board official, said yesterday. Max Levine, an usher at the Jewel, and Leon Horn usher at the Palestine, were the employes said to have been discharged for joining Local 118, Theatre and Amusement Employes' Union. Their reinstatement was recommended by Golden following a hearing Jan. 23. Golden said he was advised recently that the reinstatements had not been made yet and after further conferences with Manhattan Playhouses within the last few days he has ordered reinstatement of the men by today, failing which, he will ask the NRA Compliance Board to take action against the circuit, he said. Golden reported that he is also investigating a complaint filed by a Negro employed as a theatre cleaner by a contracting service, who charges that he is worked 70 to 80 hours a week for $60 a month. The NRA legal department recently ruled that such employes, even though hired by cleaning contractors, are governed by the provisions of the industry code. Naming of 2 Boards Is Expected Today (Continued from page 1) today when the committee on selections meets. A number of replacements on various boards also are expected to be completed today and approved by Code Authority at its meeting tomorrow when George J. Schaefer presides. New Union Hearing Set Individual hearings on circuit objections to recognition of Local 118, Theatre and Amusement Employes' Union, will be held before the NRA Regional Labor Board here, Ben Golden, an official of the board, said yesterday. The individual hearings will begin today with representatives of Loew's, Inc. Other circuits will be heard later.