The Exhibitor (1950)

12 EXHIBITOR Underage' Companies Win French Decision New York — The decision in the arbi¬ tration of the apportionment of certain frozen funds received from the French subsidiaries of eight American motion picture companies was rendered last week. The controversy arose among the eight companies in connection with determining these companies’ respective shares of the total dollar value of certain of the re¬ mittances from France. (The terms “Overage” and “Underage” companies are used to denote those companies which on the particular dateline set by the French government had or had not sufficient remittable funds available in France to remit in full their proportion of the total dollar amounts.) The position of the so-called “Under¬ age” companies, Columbia, Loew’s, RKO, and Universal, is that a contract defining the method of apportionment or division of this total amount was entered into on June 17, 1947, and provided that the allocation should be on the basis of each company’s gross billing share of the in¬ dustry’s total remittances. The “Over¬ age” companies (except 20th CenturyFox), Paramount, United Artists, and Warners, while conceding that an agree¬ ment was reached to divide the remit¬ tances on a basis of gross billings con¬ tend that this agreement does not apply to the amount of money which the “Un¬ derage” companies were unable to remit because of shortage of remittable francs on a specific day fixed by a French re¬ striction, and also that if the agreement is applicable to the “surplus,” it is unen¬ forceable. 20th Century-Fox, an “Overage” com¬ pany, maintained from the outset of the proceedings that the position taken by the “Underage” companies was correct. The basic and underlying conclusion of the arbitrator was that on June 17, 1947, an agreement was reached between the eight companies for the apportionment of such funds in accordance with what is referred to as the “gross billings formula,” and that this agreement was not super¬ seded or modified by any other. A clear distinction was made between “appor¬ tionment” or “division” of the dollar total received from France and the mechanics of the “remission” of such funds. The most salient factor regarding the French negotiation is the extent to which it has been conducted as an industry matter. The interest of the individual company was re-emphasized continually for the in¬ terest of the industry. The arbitrator found, subject to stated qualifications, that the contentions of the “Underage” companies are sustained by the evidence and the applicable law. It is directed that the amounts of the sur¬ plus dollars received or to be received shall be reapportioned to the “Underage” companies to the end that each “Under¬ age” company shall receive as nearly as possible its share of the total amount remitted from France by the industry, as determined on the gross billings formula. In return for the dollars so received from the “Overage” companies, the “Un¬ derage” companies shall make payments to the respective “Overage” companies of francs in France at the rate of 119.3 MPAA Ads Misconduct Clause To Ad Code NEW YORK — In a new move to strengthen the film industry’s vol¬ untary and long-established system of self-regulation, the board of direc¬ tors of the Motion Picture Associa¬ tion of America last week banned the use of advertising that exploits the misconduct of screen personali¬ ties. By unanimous vote, the board added a new section to the code of ethics for motion picture advertising and adopted accompanying regulations to administer and carry out its pro¬ visions. The new section (No. 14) follows: “No text or illustration shall be used which capitalizes, directly or by im¬ plication, upon misconduct of a per¬ son connected with a motion picture thus advertised.” At the same time, the board adopted a statement of policy reaffirming its adherence to the Advertising Code, and calling upon all in the industry to join in faithful observance of the Code's spirit and letter. The new provisions on self-regulation were recommended to the board by the Association’s Advertising Advisory Council, comprising the directors of advertising and publicity of MPAA member companies. The board added two new regula¬ tions governing the administration of the Advertising Code. One provides machinery through which the board, on recommendation of the Advertising Code Administrator, could call for withdrawal of advertising previously approved if ensuing circumstances make such advertising objectionable. The other, applicable only to the new Section 14 of the Code, provides an alternate avenue of appeal, to the board of directors, from decisions of the Code Administrator. Appeals in all other instances must still go to the association’s president, or in his absence, to three members of the board's executive committee. francs per dollar received in New York. The arbitrator recognized that the “Overage” companies have performed, and are performing, a substantial service for the industry and for the “Underage” companies in bringing over the surplus dollars, and concluded that as realistic compensation for this service, the “Over¬ age” companies shall receive interest on the amount of surplus remitted by each “Overage” company computed in dollars for the period from the date the purchase of dollars is effected to and including the date on which each company receives francs in France in return. The arbitrator noted that the entire amount of French funds allocated to the so-called independent companies was de¬ ducted from the surplus rather than from the amount authorized for remission by the entire industry, prior to the applica¬ tion of the gross billings percentages to the eight companies here involved. Also the entire cost of this arbitration by agreement is being deducted from the surplus. The arbitrator found that it is fair that these items be borne by the “Underage” companies, thus effecting ad RKO Loss Cut, Stockholders Told New York — RKO Radio Pictures and its Canadian subsidiary sustained a loss of $3,721,415 last year, as compared with a loss of $5,288,750 in 1948, RKO President Ned E. Depinet reported to stockholders last week. The statement was issued in connection with the calling of a special stockholders’ meeting, to be held at Dover, Del., on July 25 in lieu of the annual meeting usually held in June. Stockholders are to elect seven direc¬ tors, vote on a proposal to reduce from four to three the number of directors re¬ quired to constitute a quorum, and con¬ sider the decision of the directors that consummation of the company’s plan to reorganize be postponed until Dec. 31, 1950, as permitted by the U. S. District Court in the revised consent decree. RKO management proposes to put up for reelection the seven incumbent direc¬ tors, Maurice H. Bent, Noah Dietrich, Francis J. O’Hara, Jr., Howard R. Hughes, A. Dee Simpson, J. Miller Walker, and Depinet. The proxy statement cited lower federal income taxes and maintenance of RKO’s unsecured revolving credit of $8,500,000 at two and a half per cent interest, predi¬ cated upon continuance of the ownership of a controlling interest in RKO Radio by RKO, as two special advantages to stock¬ holders in continuing RKO operations as an integrated enterprise as long as it is permitted to do so. A comparative summary of pro forma consolidated balance sheets as of Oct. 2, 1948, and Dec. 31, 1949, contained in the report reveals that the net worth of the new theatre company and subsidiaries increased from $19,620,441, to $22,854,336, while net worth of the new picture com¬ pany and subsidiaries decreased from $37,704,011, to $35,497,349. Net profit of the new theatre company and subsidiaries on a pro forma basis is listed at $6,359,635 in 1947; $3,974,137 in 1948, and $4,173,385 in 1949. On the same basis, the new picture company sustained net losses at $1,787,417, in 1947; $5,596,154 in 1948, and $4,218,681 in 1949. Two Industryites Mourned New York — The trade last week mourned the passing of two members of the industry, Ben Brodie, who operated several houses in the city at one time, the Miami Playhouse, Progress, Atlas, Madison, and Triboro, and Emil Greenstein, who was in the business for 20 years, and who operated the Plaza, . Jamaica, L. I. Schenck Sets Departure Date u Hollywood — Joseph M. Schenck an¬ nounced lqst week that he plans to resign as executive head of production at 20th Century-Fox by July 15 to devote all of his time to his theatre interests. ditional compensation by such companies for the service the “Overage” companies have rendered to them by effecting a re¬ mission of the disputed sum. June 28, 1950