The Film Daily (1938)

M P I3 UC) ID iSr ID I ST 215 W 44 TH ST 10 N Y C IDE iirnw DAILY Tuesday, October 4, 1938fl| $58,000,000 RKO PHYSICAL VALUATION (Continued from Page 1) committee, continued his attack on the evaluated assets of RKO and declared that these had been arrived at via a trio of formulae consisting of reproduction cost and management opinion as the first two, and a combination as the third formula used. He said that the equity of $7,000,000 provided for stockholders was inadequate and should actually be $13,000,000, and further that the physical equipment as of Dec. 31, 1931, ought to be raised from $41,000,000 to $58,000,000 which, he pointed out, represents a true present worth. Cohen cited the fact that 900 films had been evaluated at one dollar each, whereas some 42 of these had subsequently and collectively returned a total of $1,000,000, — a point which Hamilton C. Rickaby, counsel for Atlas Corp., took issue with later in the day. Methods of writing down theater valuations also came under Cohen's criticism. Examples were given in the instances of the Franklin Theater, New York; Proctor's, Mt. Vernon, and the Lexington Ave. Theater. He also argued adjustment of debenture awards, declared that the Gold Notes should have been paid off, and advocated that stockholders should have prior rights in acquiring the new common stock. Responding to the question of Judge William Bondy, Cohen declared that debenture holders should receive three and a half shares for interest money. He called attention also to the Rockefeller claim which had been at 460,000 shares under the old plan and is now raised to 500,000. He told the court also that a fund should be set up for redemption of scrip and a date fixed as a basis. John A. Stover, counsel for the Stirn interests of Milwaukee, bitterly assailed the part of Atlas in the reorganization, characterizing the company as a "professional organizer." He and Associate Counsel Griswold declared that Ernest Stirn is ill of pneumonia in St. Luke's Hospital, New York, and that when the latter recovers will personally present his findings with respect to the proxies dating back to the 1931 vote, which Griswold stated, in Mr. Stirn's belief, to be fraud, ulent in some instances. Judge 43 Pix In Work; 20th-Fox>s IVttte Leads West Coast Bureau of THE FILM DAILY Hollywood— Forty-three pictures are in production with 20th Century-Fox leading with nine; Warner Bros, and RKO are making five each; Paramount and M-G-M, four each; Columbia is making three, and Universal and Monogram, two each. Wanger, Selznick, Coldwyn, Roach, Small, Republic, Sherman, Colonial and Standard are down for one each. Believe It Or Noi Scowling counsel in the RKO reorg. hearing got a climactic laugh to the heated allegations which were hurled yesterday. As the p.m. session wound up, Judge Bondy set Oct. 25 as the next hearing date. A counsel asked in stentorian tones: "In what room?" Bondy could not restrain a smile as he retorted: "This time, down in the Criminal Court Room!" — and there 'twill be. Supreme Court Will Select Cases to be Heard Monday (Continued from Page 1) Berliner are attorneys for General Talking Pictures. The Hiram Steelman-William Fox case is still on the docket but has been passed over by the court until pending negotiations are settled. Texas Consolidated Theaters, Inc., vs. S. H. Pittman has been set for hearing on Oct. 18. This case involves a judgment Pittsman received from Texas Consolidated as a result of an accident. Other film cases on the docket, which the Court may elect to hear are the Douglas Fairbanks, vs. United States tax case; the Perelman case against the majors charging violation of the Clayton Act with respect to duals; the Dallas anti-trust case, which was sent back last term for a lower court finding of fact; and the William S. Hart Co. vs. United Artists case, involving a contract between the parties on division of receipts on certain films produced under the contract. The appeal of Ascap from the law of the State of Washington outlawing the organization from that state be held filed with statements as to judisdiction by both parties. The North Dakota divorcement case has not as yet been filed with the high court. Bondy refused to listen to Griswold's representations on the grounds that he was not qualified nor prepared to state facts. In the afternoon session Stover attacked the relationship between Atlas Corp., Leo Spitz and Merlin H. Aylesworth, but Hamilton C. Rickaby militantly retorted to Stover's assertions by reading from the record. When asked by Judge Bondy whether or not the reported negotiations for the acquisition of certain RCA stock in RKO by Atlas had been consummated, Rickaby said that to the best of his knowledge the arrangement has expired with some of the option not satisfied. Just before adjournment, Rickaby launched a general refutation of opposing counsels' allegations, which was followed by several interests coming to his support by declaring their view that the plan should be confirmed. Rickaby met opposition contentions that the Delaware incorporation of the proposed new company was a matter of proponent convenience, by reading restrictive clauses in the new certificate. Bondy adjourned the hearing until Tuesday, Oct. 25, in Room 110, Federal Court, at 2.30 o'clock. Drive's "Musical Week" Will Start on Oct. 31 (Continued from Page 1) sic publishers and dealers, ork leaders and musical artists will join in, and dance bands will feature music popularized by films, new and old. Co-operating committee includes Irving Berlin, Ben Bernie, Gene Buck, Henry Busse, Ted Lewis, Abe Lyman, George Olsen, Will Osborne, Irving Caesar, George M. Cohan, Duke Ellington, Ferde Grofe, Horace Heidt, Richard Himber, Andre Kostelanetz, Gene Krupa, Leo Reisman, Sigmund Romberg, Gustave Schirmer, Phil Spitalny, Deems Taylor, Rudy Vallee, Fred Waring, Paul Whiteman, Victor Young, Meyer Davis, Henry Spitzer, Louis Bernstein, J. J. Bregman, Bob Crosby, Lou Diamond, Max Dreyfus, Leo Forbstein, Kay Kyser Jack Milt, Eddie Le Baron, Edward B. Marks, Jack Mills, Edwin H. Morris, J. J. O'Connor, Jack Robbins, A. Schwartz and Louis Silvers. Ascap is sending a tie-in pictorial layout, in mat form, to 3,000 newspapers, it is announced. A theme song dedicated to Motion Pictures' Greatest Year will be published. This song will be made up into a trailer, employing the Max Fleischer "bouncing ball" device, for distribution to the .theaters in the movie drive. Oct. 10 has been set as the deadline for submission of sketches and designs from leading Coast stylists for the all-industry fashion show, sponsored by the campaign committee. John H. Harris of the Harris Amusement Co., Pittsburgh, will deliver a talk on "First Facts in the Movies" in connection with Motion Pictures' Greatest Year, over Station WOR and the Mutual Broadcasting System on Oct. 17. $7,415,461 REDUCTION IN RKO INDEBTEDNESS La. Tax Commission Action on Majors' Appeal Waits (Continued from Page 1) the major film companies in this territory over a tremendous increase in merchandise taxes ordered by the parish (county) assessor, The Film Daily learns from a reliable source. The assessor boosted taxes arbitrarily from around $4,500 a year on the larger exchanges to $50,000 and managed to give Film Row a rather wry laugh at his lack of partiality — he soaked the small indies who don't do $50,000 gross business in a year, the same amounts as the majors. Fixed indebtedness of RKO and its subsidiaries has been reduced $7,415,461.56 during the four-year period the corporation has b/"\ Hn trusteeship and undergoing Teorganization, it is revealed in the latest report of the Irving Trust Co., submitted last week to the U. S. District Court. Discussing the earnings of theater operating companies for the first half of the year, report points out that although there was a slight gain in average admission price, aggregate admissions declined. Report then goes on to say: "On the other hand, total operating expenses increased, although reductions occurred in certain classifications. The principal increases were in film rentals and salaries, which latter increase was due mainly to the revisions of union contracts and additional compensation for service employes effected in 1937. Decreases in expense occurred principally in the cost of vaudeville, advertising and maintenance. "The drop in vaudeville cost resulted from several factors, of which discontinuance of vaudeville for the Summer at an earlier date than in prior years was the most important. A careful control of advertising commitments during recent years resulted in a substantial saving in such expense during the period under review. Deferment of the less urgent maintenance programs until improved business conditions warrant higher expenditures accounted for the decreased cost in this connection." With reference to the showing of producing and distributing companies, the report says: "During the first half of 1938, the combined gross receipts of the picture producing and distributing companies of the debtor increased substantially over the receipts for the same period of 1937, with only a small rise in distribution expense. However, a larger proportion of the receipts was accounted for by the distribution of films made by outside producers, and the payments to such outside producers to cover their share of film earnings more than doubled. Amortization of negative costs also showed a substantial rise, due to an increase in the number of high cost RKO pictures being distributed, and to higher production costs generally." Just Show Biz The old bewhiskered gag in theaterdom re there being more actors than folks in the audience came to pass at the RKO hearings yesterday. Counsel clearly outnumbered spectators. Said an attorney to one on the opposing side: "We gotta pretty poor house today." Replied attorney number two, pointing to the mass of briefs and other legal ammunition: "Yeah, and what's worse, the house is heavily papered!"