The Exhibitor (1966)

MOM Proxy Bottle More Intense; O'Brien States Case Against Levin NEW YORK — In his affidavit in opposition to the application for an injunction presented by Philip J. Levin, Robert H. O’Brien, presi¬ dent of Metro-Goldwyn-Mayer, revealed some of the fundamental policy differences between the management of M-G-M, headed by O'Brien, and the dissidents, headed by Levin. Argument was scheduled in U.S. District Court, Southern District, Judge Sylvester Ryan, with Louis Nizer, attorney for the de¬ fendant. Metro-Goldwyn-Mayer had, on Aug. 31, 1966, total assets of $251,132,000. Gross in¬ come for the fiscal year was approximately $185,000,000. Levin is leading an all-out proxy fight to gain control of the company. “Perhaps the most significant differences be¬ tween management and Mr. Levin,” the affida¬ vit states, “relate to the feature picture produc¬ tion program of the company.” Levin has ad¬ vocated a yearly output of up to 50 pictures. According to O’Brien’s affidavit, “this program is unrealistic, unworkable and wholly unsuited for the markets toward which MGM’s feature programming is directed. Squarely opposed to this is the management position with a bal¬ anced program of approximately 25 pictures per year, with pictures of a top category (from $5,000,000 to $8,000,000) and the balance ranging in cost down to approximately $500, ooo.” c Another important policy difference relates to the method of releasing feature pictures to television. Levin has been advocating what he calls a slow release of pictures to tv. The differ¬ ence between his position and that of manage¬ ment was climaxed in his vote against two CBS network contracts, which were submitted to the board of directors at a special meeting on Sept. 29, 1966. CBS has contracted to pay $52,800,000 to MGM over five years, begin¬ ning in September, 1967. “Mr. Levin has raised a serious issue in op¬ posing the manner in which the cost of feature pictures is amortized,” the affidavit states. Levin opposed the position of management in allocating part of the cost of pictures to later television income. According to him, this has the effect of improperly increasing present earnings. On the other hand, it is the position of management and of its independent certi¬ fied public accountants, Arthur Andersen & Co., that in order to treat with the conditions as they exist today, it is proper and necessary to apply part of the amortization of the cost of the picture against the later television income. Levin has stated that he opposed increasing the cash dividend of the company while the company is utilizing bank loans to provide working capital. Management’s position was diametrically opposed, and the dividend was increased over Levin’s opposition. Levin has voted against many motion pic¬ ture production projects presented to the board for approval during the past year (including all projects involving the producer of “Doctor Zhivago” even after it became evident that this would be an enormously successful picture), and Levin urged a variety of policy reasons as the basis for voting against these projects. As he continued to vote against projects recommended by management to the board for approval, it became evident that there were irreconcilable policy differences as to the way in which MGM should be managed; and this in the light of the fact that Levin’s entire busi N CM Seeks Zoning Okay For Proposed Studio Site HOJ ~,YWQOD — Having completed prelimina y designs for a proposed new motion pictur studio, Metro-Goldwyn-Mayer, Inc., applic d formally to the county of Ventura for rezoning of the property in Janss/ Conejo that it currently has under option. MGM emphasizes that the filing of this application is for the purpose of deter¬ mining that proper zoning will be granted. This must be determined before the MGM board can make its final decisions with respect to excercise of its option and to the building of a studio. ness life has been devoted to areas of activity wholly unrelated and unconnected with the motion picture industry. His only connection with this business has been his activity as direc¬ tor of MGM for less than two years and mem¬ ber of the executive committee for one year, management maintains. Another basic policy difference between the management slate and Levin’s slate in the cur¬ rent contest is whether a company such as MGM requires management by officers and di¬ rectors deeply versed in the many ramifica¬ tions of the entertainment industry. The company’s record, since O’Brien be¬ came president and chief executive officer of MGM in January, 1963, has involved a turn¬ around of MGM’s income from a loss of $17,479,000 in fiscal year ended Aug. 31, 1963, to a profit of $10,221,000 in fiscal year 1966. This record of achievement was possible only because of the depth of experience amassed by MGM’s present board of directors and chief executives, according to O’Brien. The necessity for extensive and deep experi¬ ence in the entertainment industry, which management asserts is almost totally lacking in Levin’s proposed director slate, is described in ( Continued on page 17) WB Net Income Rises In First Quarter Report WILMINGTON, DEL.— The annual meet¬ ing of Warner Bros. Pictures, Inc., was held here, with more than 88 percent of the out¬ standing stock represented in person or by proxy. The stockholders reelected Jack L. Warner, Albert Warner, Benjamin Kalmenson, Charles Allen, Jr., and Serge Semenenko directors for a term of two years. The remainder of the board consists of Waddill Catchings, R. W. Perkins, and T. J. Martin, whose terms expire in 1968. A statement was read at the meeting cover¬ ing the financial report of the company for the first three months of the current fiscal year. Consolidated net income was $1,671,000, representing 34 cents per share on the 4,877,552 shares of common stock outstanding. The consolidated net income for the corresponding period last year amounted to $ 1 ,5 7 8,000, which represented 32 cents per share. Lilm rental income from theatrical exhibi¬ tion amounted to $13,759,000; from television exhibition, $7,388,000; record, music and other income, $6,666,000; dividends from foreign subsidiaries not consolidated, $37,000; and profit from sales of capital assets, $1,000. Net current assets at Nov. 26, 1966, were $51,238,000, and debt due after one year was $7,808,000, compared with $50,788,000 and $7,457,000, respectively, at Aug. 31, 1966. The chairman Judge George T. Coulson, stated: “It is too early to determine the operating results of the second quarter, which ends Leb. 25, 1967, but it is estimated that the net profit will be not less than the first quarter. “This year, 1967, is a particularly significant one for our company. It is an anniversary year, the 40th since Warner Bros, pioneered in ‘talking pictures.’ It was in October, 1927, the ‘The Jazz Singer’ opened in New York, beginning a new era in entertainment. To cele¬ brate this anniversary, our company is filming a great new musical, ‘Camelot,’ which will have its world premiere on Oct. 25 this year at the Warner Theatre in New York.” He also detailed Warners’ current and up¬ coming production program and the activities of other subsidiaries and divisions. Here, at a meeting of the new Greater New Orleans Theatre Association are (seated, l-r) Bob Ragsdale, Jim de Ne e, C. Claire Woods, Don B. Woods, Earl Perry, Bill Alexander, Jules Seven, Doyle Maynard, T. G. Solomon, Levere C. Montgomery (president), Mrs. Betty Woolner, Arthur Barnett, Izzy Lazarus, Ed Mortimore, Page Baker, Ben Bicknell, Frank Henson, and Bob Boovey. Standing (l-r) are Asa Booksh, Buck Prewitt, Mrs. Gene Barnette, E. Clarke Montgomery, John Roberts, Mrs. S. A. Wright, Louis Dugas, George Lokker, John Milane, and E. T. Calongne. 8 MOTION PICTURE EXHIBITOR February 8, 1967