The film daily year book of motion pictures (1929)

Radio-Keith-Orpheum Corp. PRESAGING a period of concentrated activity in the motion picture field as well as the first definite participation of one of America's largest electrical groups in production, distribution and exhibition, the Radio Corp. of America in the fall of 1928, formed Radio-Keith-Orpheum to serve as a holding company for Keith-Albee-Orpheuni, Film Booking Offices and RCA Photophone. Securing the large block of K-A-O common held by Joseph P. Kennedy, J. J. Murdock and other stockholders in that corporation, Radio made a second deal for the Kennedy-Guy Currier interests in FBO which, added to the block in this latter company held by Radio by virtue of a direct purchase made some time previously, gave the electrical group the majority interest. On October 21, 1928, K-A-O stockholders were advised of the consolidation plan. At that time 40 per cent of the stockholders had agreed to it, while the necessary 11 per cent was gradually bought in. On Nov. 10, 1928, over 51 per cent of the K-A-O common had been deposited with the Empire Trust Co. in New York, thus assuring consummation of the merger as originally outline. (See Kcith-AlbeeOrpheum, page 844 for further details of this company's financial position). Prior to announcement, it was expected holders of K-A-O stock would trade their shares in for RCA stock. However, a new issue known as Radio-Keith-Orpheum was announced and the terms of the transfer as follows: R-K-O will issue Class A stock, share for share for the common stock of K-A-O and will also issue 500,000 shares of Class B in consideration for contracts to be made with RCA, RCA-Photophone and the National Broadcasting Corp. The B stock to be issued to RCA will not be entitled to dividends until cumulative dividends at the rate of $2 per share will have been paid on Class A after which both stocks will share dividends equally. Class B stock, however, has been made convertible into Class A share for share, to the extent of 100,000 shares provided the net earnings of Radio-Keith Orpheum will, for two years, be equal to $2.75 per share on Class A outstanding after conversion. The balance of Class B will be convertible in lots of 100,000 when net earnings equal $2.85, $2.90, $3.50 and $4 a share, respectively. Class A stock in Radio-Keith-Orpheum will also be issued, share for share, for the capital stock of FBO. Application will be made to list Class A stock on the N. Y. Stock Exchange. This coalition of interests gives RCA not only an outlet for Photophone, but a formidable chain of theaters stretching across the country for op erating profits and a producing and distributing organization which will be used as the nucleus of manufacturing and marketing outlets for sound pictures. It also means the retirement of Joseph P. Kennedy from affairs of K-A-O where he has been chairman of the board and from FBO where he has been president. Aside from whatever personal contracts he holds with Gloria Swanson and Tom Mix, Kennedy remains in the industry only in a business advisory capacity to Pathe. Hiram S. Brown, president of the United States Leather Co., was elected president; David Sarnoff, executive vice-president of the Radio Corporation of America became chairman of the board ; Maurice Goodman, long an executive of Keith-AlbeeOrpheum and head of its legal staff, vice-president and B. B. Kahane, another K-A-O official, secretary and treasurer. The board, perhaps the strongest of any organization in the industry, was named as follows : Owen D. Young, chairman of the board of General Electric and of the Radio Corporation of America ; Gerard Swope, president of General Electric ; James G. Harbord, president of RCA ; Edward R. Harden, of Campbell, Starring and Co. ; Edwin M. Herr, president of Westinghouse Electric M'f'g Co.; Paul D. Cravath, of Cravath, De Gersdorf, Swaine and Wood; H. P. Davis, vicepresident of Westinghouse and chairman of the board of National Broadcasting Co.; M. H. Aylesworth. president of National Broadcasting Co.; Monroe Gutman, Paul M. Mazur and Arthur Lehman of Lehman Bros.; Elisha Walker, president of Blair and Co. ; Edward F. Hayes, of Blair and Co.; Edward F. Albee, president of KeithAlbee-Orpheum ; Marcus Heiman, president of Orpheum and an officer in R-K-O subsidiary companies ; Joseph P. Kennedy, business advisor of Pathe; John J. Murdock, president of Pathe; Walter P. Cooke, attorney; Louis E. Kirstein of William Filene Sons and Co.; R. C. Hunt, attorney representing Jeremiah Milbank; Mrs. C. L. Kohl, widow of Charles E. Kohl, one of the founders of the Orpheum circuit and the officers of the corporation. Consolidated balance sheet of R-K-O and subsidiaries as of Aug. 31, 1928, giving effect to the formation of the corporation and to the assumption that the entire common stock of Keith-AlbeeOrpheum Corp. and the entire capital stock of FBO Prod., Inc., will be acquired through issuance of Class A stock, and to the transactions incidental to the reorganization : ASSETS CUrCashand W°rking aSSetS : .' $2,322,965.82 Notes receivable 126,25 6.47 Accounts receivable, less reserve Si'??i'eo Accounts receivable from officers and employees i'coo jo Accrued interest, etc J 2,59 2.39 Advances to outside producers, less reserve 134,702.37 Inventories — (pledged $1,789,314.43) : Completed pictures, unreleased, at cost $1,473,960.55 Released pictures, at cost less amortization 876,834.95 Accessories and supplies 193,698.71 2,544.494.21 Scenarios and continuities 81,042.97 Capital assets : At sound values as appraised by American Appraisal Co. at Dec. 31, 1926, together with subsequent additions at cost, and less reserves for subsequent depreciation and amortization : Land owned $17,104,317.69 Buildings and equipment on land owned or partly owned.... 20,709,048.09 Improvements and equipment on leased property 15,929,371.14 Other land, buildings and equipment, at book values 1,057,310.12 Broadway Theater leasehold, at cost less amortization 826,245.32 Other leaseholds, goodwill and contracts 3.00 Investments in and advances to affiliated and other companies: Equities in capital stocks of affiliated and other companies, based on the appraisal by American Appraisal Co. at Dec. 31, 1926, but excluding leasehold and goodwill included therein $3,272,116.95 854 $5,874,271.83 55,626.295.36