Harrison's Reports (1935)

184 HARRISON'S REPORTS November 16, 1935 Inc., in exchange for their Twentieth Century Pictures stockholdings. (7) Joseph M. Schenck and Darryl F. Zanuck were to be employed by Twentieth Century-Fox. On August 15, a meeting of stockholders of Fox Film Corporation was held in this city and this plan was ratified. But it was not put into effect immediately, by reason of the legal steps William Fox took to restrain its execution. William Fox failed, however, and within a short time after its ratification by the Fox stockholders the agreement of July 22, 1935, was carried out. It was the apparent intention of the principals of the two companies to do away entirely with Twentieth Century Pictures, Inc., and to have Fox Film Corporation take over its high executives, widening its production operations by such an acquisition of additional man-power, and to have (a) Sidney Kent continue as president of Twentieth CenturyFox, in charge of distribution, (b) Joseph Schenck elected chairman of the board of directors, and (c) Darryl Zanuck elected vice-president, Schenck and Zanuck to be in charge of production jointly. Joseph Schenck was to receive $2,500 a week salary, Zanuck $5,000 a week, and Kent $180,000 a year ($3,460 a week,). In addition, Kent was to receive certain expenses as well as an option to purchase 60,000 shares of the new common stock, at a certain figure, over a given number of years. Kent was to receive also an additional $25,000 a year in the event of his non-employment by National Theatres Corporation. On August 22, there was filed in the office of the Secretary of State, of New York, one certificate increasing the number of shares of Fox Film Corporation stock and providing for the issuance of both preferred and common stock to take the place of the old Class A and Class B common stock, and another certificate changing the name of Fox Film Corporation to Twentieth Century-Fox Film Corporation. On the same day there was filed by Joseph Schenck, William Goetz, and Darryl Zanuck, as the holders of record of all the outstanding shares of Twentieth Century Pictures, Inc., entitled to vote, a certificate providing for the change of the name of Twentieth Century Pictures, Inc., to "SGZ Corporation" (the letters undoubtedly being the initials of Schenck, Goetz and Zanuck). At the same time they filed another certificate dissolving the SGZ Corporation, as a result of which act the SGZ Corporation, which was the new name of Twentieth Century Pictures, Inc., was legally dissolved. What was the net result of these maneuvers? Fox Film Corporation simply purchased the assets of Twentieth Century Pictures, Inc., and under the new name, Twentieth Century-Fox Film Corporation, it employed Messrs. Joseph M. Schenck and Darryl Zanuck to supervise its production activities. Could these moves have any effect upon the validity of the contracts made with exhibitors before the amalgamation ? The purchase by Fox Film Corporation of the Twentieth Century Pictures properties and the hiring of two of its executives could have no more effect upon these contracts than would my buying of additional desks, typewriters and pencils, and my hiring of more assistants, have upon an agreement between me and an exhibitor by which 1 was to deliver a copy of each of the fifty-two weekly issues of Harrison's Reports, for one year, each copy to be paid for as delivered. Prior to the merger, Fox Film Corporation made contracts with exhibitors to deliver to them all its feature pictures not to exceed fifty, and promising to deliver not fewer than forty. Consequently it must deliver at least forty pictures, no matter whether these pictures are produced under the supervision of Zanuck, or Schenck, or of any other employee of the Fox Film Corporation. Nor can the adoption of a new name by Fox Film Corporation void its obligations under such contracts any more than can the adoption of a new location for its studios or for its offices. The pictures licensed under these contracts include all feature pictures (not more than fifty and not fewer than forty) generally released by Fox during the 1935-36 season, without regard to any changes of name of Fox Film Corporation and without regard to who may supervise the production of the company's pictures. Since the amalgamation, Twentieth CenturyFox Film Corporation has been licensing its pictures under two separate contracts. The one contract relates to a group of feature pictures comprising not more than fifty and not fewer than forty pictures, excluding "Dante's Inferno" and certain other pictures designated as "Twentieth Century Productions" ; the other contract relates to a group of feature pictures comprising not more than twelve and not fewer than nine pictures designated as "Twentieth Century Productions." An exhibitor holding a contract of the former form is not entitled to the Twentieth Century Productions ; and an exhibitor holding a contract of the latter form is not entitled to the regular Twentieth Century-Fox pictures. As said in an editorial in last week's issue, the Twentieth Century Productions are distinguished from the Twentieth Century-Fox Productions by the fact that the former (Twentieth Century Productions) carry on the introductory title of each film the wording, "Presented by Joseph M. Schenck," and, "Produced under the supervision of Darryl Zanuck," whereas the latter (Twentieth Century-Fox) carry the name of some other person as supervisor of production. If you hold a Fox contract, made before the merger, calling for a maximum of fifty, with a minimum of forty, pictures, you are entitled to all the feature pictures Twentieth Century-Fox Film Corporation will generally release during the 1935-36 season, not to exceed fifty, and to be not fewer than forty, no matter whether they have been or will be produced under the supervision of Darryl Zanuck or of any other Twentieth Century-Fox employee, and no matter whether they are distinguished by the name "Twentieth Century Productions" or by any other name, so long as they are not excluded by a provision in the Schedule of your contract. If some of these pictures, not excluded, as said, by some provision in the Schedule, have been sold to your competitor, that is just too bad for Twentieth Century-Fox Film Corporation ; you are entitled to these picture just the same.