Broadcasting Telecasting (Oct-Dec 1957)

FILM NTA TO BUY CONTROL OF AAP CORP. • Purchase price for stock estimated at $7.5 million • Involved is big library of features, shorts, 'Popeye' National Telefilm Assoc., New York, last week accelerated its already-rapid expansion program with an announcement that the company has contracted to acquire "more than 50%" of the stock outstanding in Associated Artists Productions Corp., New York, a leading tv film distributor, and that NTA plans to purchase the balance of AAP stock. The purchase price for the stock was not specified but is estimated at $7.5 million. When this transaction is concluded, NTA will obtain the majority interest in a company that owns the Warner Bros, library of more than 800 feature films plus 1,500 short subjects, and also owns the popular "Popeye" cartoons. This thrust by NTA is the latest in a series of movements in the past 18 months that has solidified the company's position as a dominant distributor of feature films in the industry and has transformed NTA into a multifaceted operation covering network activity (NTA Film Network), station management (purchases of KMGM-TV Minneapolis, WAAT-AM-FM and WATV [TV] Newark, all subject to FCC approval), theatrical film distribution (NTA Pictures Inc.) and co-production with Desilu and 20th Century-Fox Corp. A joint announcement last week from Ely A. Landau and Oliver A. Unger, board chairman and president, respectively, stated the conditions of its contract with the AAP sellers as follows: for each 100 shares of Associated Artists, NTA will pay $437.50 in cash, $440 in 7%, seven-year subordinated sinking debentures and 10 shares of NTA common stock. According to NTA, 1,639,000 shares of AAP common stock are outstanding. Based on last week's average quotations of stock for both companies on the American Stock Exchange, the total purchase price approaches $7.5 million. The shares of Associated Artists are to be acquired by NTA from a group of stockholders represented by Louis Chesler and Maxwell Goldhar, chairman of the board and executive vice president, respectively, of AAP, according to the statement, which added: "A substantially similar offer to purchase the balance of the outstanding shares is expected to be extended to all Associated Artists stockholders after the initial acquisition has been completed and various required formalities concluded." NTA reported there are about one million shares of NTA common stock now outstanding. In addition, NTA has outstanding $4.9 million of 6% subordinated sinking fund notes. Mr. Landau organized National Telefilm Assoc. in the spring of 1953 and the following year he was joined by Mr. Unger and Harold Goldman, now executive vice president of the company. The organization's initial prominence came shortly thereafter when Mr. Unger persuaded such outstanding independent producers as David O. Selz nick, the J. Arthur Rank Organization and Alexander Korda Productions to release some of their films to tv through NTA. In 1956, the company's upward spiral was speeded when NTA entered into an agreement with 20th Century-Fox Corp., requiring NTA to pay Fox $30 million for about 450 feature films, deliverable over a fiveyear period. As part of the transaction, Fox acquired 50% of the NTA Film Network. The film network began operations in the fall of 1956 but has not yet achieved the ambitious blueprint it set for itself. It programs Wz hours of feature films weekly under the name of Premiere Performance and also is presenting four Shirley Temple features this fall and winter under the title, Holiday Specials. NTA executives insist, however, they will expand the programming There was no evidence last week to indicate Associated Artists Productions Corp. had other than a bright financial future when National Telefilm Assoc. stepped into the picture as a proposed buyer of 50% of AAP and eventually the whole company. Why, then, AAP's apparent decision to sell? AAP's board of directors was closeted Thursday in a day-long meeting, but this much was indicated: AAP had been torn recently by two factions. One, as represented by Board Chairman Louis Chesler and director Maxwell Goldhar, looked forward to continuing profit-taking, while the other, as represented by President Eliot Hyman, purportedly sought a slow corporate build-up. Failure to reconcile these stockholder and operational groups may have led to the decision to sell. AAP Corp., which operates AAP Inc., Associated Artists Enterprises (merchandising) and Dominant Pictures Corp. as wholly-owned subsidiaries, has been in business since July 1956. In its first annual report last summer [Film, July 1], AAP Corp. had reported negotiation of sales contracts totaling a little more than $31.6 million for its first seven months of activity. From this, AAP realized a net profit after taxes of $963,524. For the first quarter of 1957, AAP showed sales contracts at the $8.1 million level. The company had expected it would have more than $3.5 million in net profit this year (1957). AAP had been projecting its thinking into terms of eventual tv commercial production for national and regional advertisers and their agencies. The corporation acquired its assets in July 1956 when it purchased the Warner Bros, library for $21 million, financed by $7 million on hand, a loan of $9 million from the Manufacturers Trust Co and a $5 by next spring and attempt some live telecasting of sports and special events. The NTA already has bought KMGMTV Minneapolis and WAAT-AM-FM and WATV (TV) Newark, the sales awaiting FCC approval. The company has gone on record as intending to purchase the full complement of radio and tv stations allowed by the Commission. NTA's gross sales for the fiscal year ended last July (still unreleased) are expected to reach about $17 million as compared with about $2 million in the year ended July 1955, according to Mr. Unger. NTA officials declined to reveal last week the source of financing, for this latest venture, except to say it comes "from internal and external sources." It is reported that internal friction within Associated Artists weighed heavily in the decision of the majority stockholders to sell their stock interests. The company bought the Warner library in March 1956 for about $21 million and later that year bought the "Popeye" cartoons from Paramount Pictures for about $2.5 million. million deferred payment to Warner Bros. The bank last April assumed the Warners' obligation and consolidated the $14 million debt into one loan that by last summer AAP already had reduced to a little more than $ 1 1 million. Also in April, the AAP directors approved a four-for-one capital stock split. AAP has kept 35-37.5% of "collections" (income), paying the balance to the bank to retire its debt. It is believed AAP had set the end of next year as the time it would have the whole outstanding debt retired. Also acquired in July 1956 were tv rights to "Popeye" cartoons from Paramount Pictures Corp. and King Features for $2,225,000, a deal financed by the sale of $3,945,000 of 6% convertible sinking fund debentures to provide the working capital. Most of the principal amount of the debentures was outstanding as of the first annual report. Among properties owned and distributed: more than 800 Warner Bros, features, an additional feature library produced by various U. S. and British companies, 337 "Looney Tunes" cartoons from Warner, 234 Popeyes and approximately 1,400 Warner Bros, short subjects and documentaries being held back from tv. (At one time, Hal Roach Jr. of Hal Roach Studios, Culver City, Calif., had been negotiating with AAP for rights to these films.) In addition, AAP Corp.'s operations include theatrical reissues, cartoon reissues, rental of films to non-theatrical and nontv sources, motion picture remake rights, stock footage library, radio adaptation rights, live tv rights, distribution of kinescopes overseas, acquisition of new products, conversion of literary properties to legitimate or theatrical production, adaptation of silent features, merchandising rights and industrial films. Formation of the merchandising subsidiary (AAE) was made known earlier this What's Behind AAP's Sale? Policy Split Hinted Broadcasting November 18, 1957 • Page 59