Broadcasting Telecasting (Oct-Dec 1961)

A footnote on the tangled finances of Alexander Guterma Some historical notes on the financial activities of Alexander L. Guterma, onetime owner of Mutual 13 r^o a d ^^^^^^^^^ tions that they Mr. Guterma must report all significant transactions. Mr. Guterma, who presided over a labyrinthine corporate structure, was found derelict in failing to inform his stockholders of what he was up to. Mr. Guterma is presently in jail on several charges. The film company with which he bartered, Guild Films, is in bankruptcy. On May 1, 1956, a company controlled by Mr. Guterma bought controlling interest in Bon Ami, a cleanser manufacturer founded in 1915. To gain control, he paid double the market price for the stock, or $1,701,000. This amounted to less than 30% of the outstanding stock. The transaction was not reported to the SEC. The same month Bon Ami purchased $1.25 million in debentures from Diversified Oil & Mining Co. Through a Canadian holding company, Bon Ami sold and various Guterma-owned companies bought the debentures, some of the purchase price being loaned to the Guterma companies by Bon Ami through its credit with the Canadian company. One Guterma company "in purported payment" for $750,000 worth of debentures paid the holding company a check which was endorsed over to Bon Ami but which was never paid, the SEC said. These complicated transactions were not reported to Bon Ami stockholders. Who's on First? Another game of catch with Bon Ami as pitcher and Guterma companies on the receiving end took place in 1957 in connection with Bon Ami's desire to purchase tv spot time for advertising purposes. Bon Ami negotiated with Matthew Fox, "who had available or had access to large quantities of spot time for sale at substantial discounts." (Mr. Fox had previously bought distribution rights for all RKO film products to be offered to tv and had bartered film products for tv time). In the negotiations Bon Ami lent Mr. Fox $115,000 in return for a note. As security for the loan, Guild Films, a company to which Mr. Fox agreed to make available tv time, agreed it would supply $350,000 worth of spot time if Mr. Fox defaulted on the note. Mr. Fox did default and Bon Ami sold the note to a Guterma company. Mr. Guterma advised Guild Films he expected that company to make good on the tv spot time. Somehow during May the Guild Films "collateral" was increased from $350,000 worth of spot time to $500,000 worth without any payment by the Guterma company, the SEC said. In June Guild Films sold another Guterma company $750,000 worth of tv time for $200,000. On the same day the Guterma company assigned both of these batches of spot time to Bon Ami for a total of $830,000 or about 66% of the going rate. For the $1.25 million worth of spot time, Guterma companies paid a total of $317,000 and sold it within a month to Bon Ami for $830,000. In the summer of 1957 Mr. Guterma sold his controlling interest in Bon Ami through another complicated series of deals, the details of which were not reported to stockholders. One Satiris G. Fassoulis bought controlling interest from Guterma companies for $2.13 million. Mr. Fassoulis bought the stock under the name of the Baltic Investment Corp. to conceal his identity as purchaser, the SEC charged. Icthyan Means Fishy ■ Much of Baltic's payment to Bon Ami consisted of transfer of a package of foreign films for television known as "The Icthyan Package." Although Bon Ami was not in a position to use the film package itself, the cost to the company was $1,115,000. The cost of the same package to Guterma companies had been approximately $193,000. "An additional consequence of the various transactions involved in the transfer of the Icthyan Package and the change of control of Bon Ami was that the Guterma instrumentality received, for no apparent consideration, the $750,000 principal amount of [DOM] debentures which had been owned by Bon Ami," the SEC reported. After Mr. Fassoulis gained control of Bon Ami, the company entered into a contract with Guild Films, agreeing to purchase $6 million in spot tv time for 60% of the end card rate (maximum discounted rates for tv time allowable under a station's rate card). According to the SEC, Guild Films had been selling such time at only 26% of the end card rate just a few months before. Bon Ami Cleared ■ Of the $3.6 million Bon Ami was to pay Guild, Bon Ami was credited with $1.2 million for giving Guild the Icthyan Package. On Feb. 28, 1958, the contract was canceled after certain payments; Bon Ami paid a $60,000 penalty to Guild for canceling the contract. None of the details of this transaction were made known to Bon Ami stockholders until after the cancellation and even then the penalty provision was not revealed. The SEC said it plans no action on the violations of its rules because Bon Ami is no longer listed on the New York Stock Exchange and because the "persons who constituted the management of the company during that period have not been associated with it since at least July 1958." session of facts concerning the proposals to present such programs might well obtain injunctions to prevent their being shown notwithstanding the previousrestraint prohibitions against censorship and the freedom of speech provisions of the First Amendment. (He added that if some feel such programs to be outside the realm of possibility, they should read the Charlie Walker anecdotes which he liberally included in his findings. A sampler of Walkerisms was printed in Broadcasting, June 12.) "Brief injections of erotica, pornography or smut are enough seriously to prejudice, if not destroy, the general utility of radio and television," Mr. Donahue said, pointing out that children can get "an eye or earful of smut which their parents, quite legitimately, may desire they be shielded from. . . . A high degree of acceptability among literary cognoscenti as a test for obscenity seems woefully inadequate when used in connection with a medium the very nature of which is general public acceptability." Mr. Donahue said that under the Roth test "there is clear evidence that 76 (GOVERNMENT) BROADCASTING, December 18, 1961