Motion Picture Daily (Oct-Dec 1934)

MOTION PICTURE DAILY Tuesday, December 4, 1934 Feist Favors Quick Move in K.C. Rate War (.Continued from page 1) succeed because exhibitors who have contracted for pictures are obligated to play them. " 1 he idea is especially stupid since product buys were not predicated on tne price at any prior run," he commented. He said the price cuts at the Midland, M-G-M's affiliate first run here, were made necessary partly by conditions existing locally, partly by the fact there had been a slash at a competing first run in contravention of an agreement entered into early in the fall. While he did not mention the theatre by name, it was inferred he meant the RKO Mainstreet, against which similar charges are made by Loew's. "If the Midland could sell balcony seats at 25 cents matinees, it certainly would not reduce the price to 10 cents," he added. However, he did not defend the lower scale as good business practice, pointing out tne effect of sub-normal admissions at any key city first run proves detrimental over a wide area. "Patrons naturally ask the local manager why he charges a higher price for his pictures when the same product is shown in a nearby big city at a lower admission," Feist declared. "Of course, the manager has to explain that conditions differ with each locality, even as in some towns where there is a price war among petroleum companies you can buy gasoline for a few cents a gallon less than the standard price." Sees Advantage to Suburbans Feist asserted the suburban theatres received the advantage from a distribution standpoint, as against first runs, which pay higher rentals. "This is not said in a derogatory sense, and I am not minimizing the importance of neighborhoods and subsequent runs, as they are vital to our business," he said. "But it's the first runs furnishing the rentals of $1,000 and up that keep the industry going." Feist agreed with other distribution executives that the present system in Kansas City of basing clearance on admission prices resulting in identical availabilities to similar priced houses is impractical and that rentals should be the guide in setting protection. He said he did not believe the Midland's balcony price of 15 cents until six o'clock and 25 cents thereafter was hurting the neighborhoods, because the latter had the advantage over the first runs in the matter of location, convenience, accessibility and other factors, including which he mentioned that the suburbans offered the same kind of entertainment as the first runs, and some in as good or better surroundings. Reports Business Up Chicago, Dec. 3. — On the basis of reports he has received, New York and Philadelphia are the only large centers where theatre business generally has not shown improvement, said Felix Feist here today. "I don't know the reason, but I will dig into that when I return to New York," he said, adding Loew theatres in New York were an exception and that circuit's business was on the upgrade. Feist plans to remain here three or four days before proceeding east. The M-G-M sales chief has fully recuperated from a let-down which sent him to Honolulu for a rest. He has been away from New York about three months, part of the time on the coast. He said that while on the train between Los Angeles and Kansas City he caught up with what is going on in the industry by reading about 150 issues of trade papers which had accumulated. New Paramount Plan Is Put Before Court (Continued from page 4) ferred of $10 par, and 1,610,452 shares of new common stock. On this basis, the estimated consolidated balance sheet, giving effect to consummation of the plan, would show total assets of $148,769,919. Of this amount there would be total working assets of $35,245,599, including cash of $15,456,787. The distribution of the new securities under this estimate of capitalization would be as follows : Banks, $4,906,548 of new debentures and the same amount of first preferred stock; Allied Owners, $2,500,000 of new debentures and a like amount of new first preferred stock; bondholders, $14,310,655 of new debentures and the same amount of new first preferred; stockholders, $6,441,806 of new second preferred stock and 1,610,452 shares of new common; general creditors, $5,392,797 of new debentures and a like amount of new first preferred stock, and Paramount Land Corp., $390,000 of new debentures and the same amount of new first preferred stock. The estimated consolidated balance sheet, prior to reorganization, and based on financial statements as of Sept. 29, last, shows cash on hand of $17,071,146. Of this amount, $13,101,290 was held by solvent subsidiaries and $3,969,855 by the trustees of Paramount Publix. The plan estimates that cash requirements of the reorganization will be about $10,469,000 to care for the cash provision of the bank debt settlement, expenses of administration and of reorganization of both the parent company and subsidiaries and for corporate purposes of the new company. This amount will be made up of the approximately $4,000,000 held by the trustees and the balance, approximately $6,500,000, is expected to be derived from the stock subscription warrants. Urging the desirability of an early reorganization, the plan points out earnings of the Paramount picture subsidiaries are showing a continuing decline, with net earnings for the third quarter of this year of approximately $574,000, as compared with $918,000 for the same quarter last year. It adds that preliminary figures for the fourth quarter of this year indicate "a substantial continuing decline as compared with the same period of 1933." It states that consolidated net earnings for 1933 were $5,690,000 and adds that "it is estimated that earnings for 1934 on the same basis will not equal those for 1933." "It is believed," the plan concludes, "that an early reorganization and the consequent removal of the handicap of bankruptcy should increase the ef ficiency of the enterprise and result, under comparable conditions in the industry, in increased net operating earnings. Earnings for 1933 and 1934 appear to be at an annual rate sufficient to provide a substantial return upon, and substantial amortization of, the estimated amount of claims entitled to participate in the reorganization proceeding. Under these circumstances it would seem that a reorganization should be promptly effected." Expunge Theatre Claim By a Mutual Agreement The $1,513,604 claim of the trustees of the Stanley Co. estate against Paramount Publix was expunged yesterday by mutual consent of the claimants and the Paramount trustees. The claim was based on an alleged guarantee by Paramount of a lease on the Kettler, West Palm Beach, Fla., operated by the Stanley Co. The original claim was subsequently reduced to $32,500, but objections filed by the trustees resulted in its expunging. Hearings scheduled for yesterday before Special Master John E. Joyce on motions resulting from the claims against Paramount of Allied Owners Corp., Paramount Broadway Corp. and the bank creditors' group were adjourned by consent to Dec. 18." Settlements of these claims have been included in the Paramount reorganization plan and the actions pending before Joyce will be marked off when the plan is accepted by the court and made effective. Flinn in Tomorrow; Rosenblatt Delayed John C. Flinn is due to arrive from Hollywood tomorrow. Compliance Director Sol A. Rosenblatt, who was due to return to Washington tomorrow, will be delayed a day or two. Rosenblatt lost two days en route to the coast when he was forced to take a train half way instead of making the whole trip by air. As a result, he may be held two days longer in Hollywood. His delay in returning puts back the planned meeting on the local operators' situation for Friday. Rosenblatt also will miss the Campi meeting Thursday when the Kansas City and Buffalo clearance schedules come up. George Schaefer and W. Ray Johnston will report on the Kansas City modifications as a result of a recent trip to the territory with Tyree Dillard, Jr. It is likely that the plan may be passed because of the price protection agreement. The Buffalo schedule will be shipped back, since it is not in conformance with the 12 basic principles. Plainfield Product Appeal Is Set Back Although the New York grievance board awarded Joseph Sicardi of the Liberty, Plainfield, N. J., 70 of Walter Reade's allotment at the Strand, Oxford and Paramount, same city, local exchanges refuse to give up the films, claiming they do not want to do business with the Liberty account. An appeal hearing was slated for yesterday, but because Leo Justin of the Reade office was away over the week-end and did not prepare the case it was put over until tomorrow when several distributors, including William F. Rodgers of M-G-M, will appear. Charge Duals Cut Quality, Kill Shorts (Continued from page 1) Warners; E. C. Grainger, Fox and Ed Kuykendall, M. P. T. O. A. president, were among those film executives and attorneys here in formidable array. Resident exchangemen included Robert Lynch, Earl Sweigert, Sam Gross, Frank McNamee, William Mansell, Harry Bodkin, Herbert Given and S. E. Applegate. The drift of the defense testimony had it that double features caused cheaper pictures and cheaper pictures caused trouble with the public. In rebuttal, Benjamin M. Golder for Perelman, tried to bring forth the fact that major pictures in some cases raised objections as well. In this connection, he cited the Chicago "white lists" of the Legion of Decency and charged that, since short subjects companies in many cases were owned by the majors, the latter were merely endeavoring to protect their investments. Lichtman First Defense Witness Lichtman, as the first defense witness, told the United Artists set-up. Tracing the history of the entrance of Fox, M-G-M, Radio, and First National into production by way of answer to the plaintiff's complaint that the majors were turning to exhibition, he declared the reverse had been the procedure. Depinet said doubles led either to cheaper pictures or increased admissions for the better ones. Hammons recounted the plight of short subject producers at large, told of Educational's efforts to develop the shorts field and said doubles in Detroit had cut short subject receipts there by 66 per cent. The history of the M. P. T. O. A. was mulled over when Kuykendall took the stand. For two hours, he delved into the membership, affiliated and otherwise, with Golder hammering at the source of the dues and the support of each classification to the M. P. T. O. A. treasury. Kuykendall declared, like the others, that doubles induced cheaper production which, in turn, led to lower moral standards. Allied to Praise Para. Paramount will come in for exhibitor praise today when Allied of New Jersey meets at the Lincoln. The committee on sales policies will tell the1 members Paramount should be complimented for deviating from its per-: centage policy. The showmen state that the company has realized that its percentage policy cannot hold for, every type of theatre and that the change was necessary for the smaller! house. Flash Reviews Gambling — . . . average entertainment . . . routine story fails to be lifted by routine direction. . Maryjka — . . . overflows with pictorial beauty . . . acting is commendable. . . . These films will be reviewed in full in a later issue of Motion Picture Daily.