Motion Picture Herald (Jul-Aug 1936)

24 MOTION PICTURE HERALD July 2 5, 19 3 6 COMPANIES7 HOLDINGS EQUALIZED (Continued from preceding page) Ostrer. The gentlemen of the press took one glance at the formal "hand-out" and proceeded to fire from the hip, a score and a half of men with a hundred questions at once. Mr. Ostrer, surveying the melee, suggested that the spokesmen sit down together and organize the answers. An hour later Nicholas M. Schenck left for another appointment, summarizing for Metro in his opinion that the arrangement was for that concern "good business." For another hour his brother and Mr. Ostrer met the questioners. They explained that details of the plan are by no means complete; that television or pressure from the British Government or the desire by the American companies to control the British unit, did not enter into the negotiations ; and that the present_ proposal is only an "agreement in principle," the result of a "meeting of minds." Mr. Ostrer gave illuminating explanation of the corporate convolutions involved in the procedure but seemed annoyed at times when reporters, who have difficulty in budgeting cigaret money, were slow in following the transactions and in determining the interests to be benefited. Primary facts of the agreement are two. Metro-Goldwyn-Mayer, of which Nicholas M. Schenck is president, will buy half of the 49 per cent interest held by Twentieth Century-Fox in the Metropolis & Bradford Trust, British company which holds 57 per cent of the voting stock of the GaumontBritish companies. All stock not held by Fox in the trust company is owned by the Ostrer brothers. Secondly, a new company will be formed to take over the Metropolis and Bradford holdings and a substantial block, "more than half," of the new company's stock will be sold to the British public so that definite control will remain British. At the same time the holdings of the Ostrer brothers, Fox and Metro in the new company will be equalized so that none will have a controlling voice in the affairs of the company and hence in GaumontBritish. Effects of the agreement when put in operation would be, they said, a working alliance between the three companies. Gaumont production was to be increased, perhaps doubled, according to Mr. Ostrer, the distribution and sales forces of the three companies would be "absorbed" in the United States and in England, the American companies would abandon present or planned production units in England, and the technical departments of Fox and Metro would be placed at the disposal of the GB production department. In the light of recent discussions of the quota situation in England and the reported efforts of the English Government to limit exhibition in that country to English-made pictures, the "agreement in principle," is especially significant. During the questioning which followed MIAMI FILM RULING HELD DISCRIMINATORY Ernest Morrison, general manager of Paramount Enterprises, Inc., and Mitchell Wolfson of Wometco Theaters, both of Miami, Fla., told the city commission this week that Miami's charter section prohibiting the showing of pictures of contests between negroes and white persons "is discriminatory now where it was not at the time it was adopted." They pointed out that the pictures of the Max Schmeling-Joe Louis fight were shown in cities surrounding Miami and accounts of the battle were broadcast to Miami. The appearance of Mr. Morrison and Mr. Wolfson before the commission was brought about by the banning of the fight pictures in Miami recently. the handing out of the statements Joseph Schenck explained, with a happy smile, that under the new arrangement the two American companies will not have to make any quota pictures and that distribution in England will be handled as one unit. Mr. Ostrer joined him in pointing out that quota pictures up to now have been of obviously poor quality. The new set-up will change this, they declared. The British executive proudly emphasized that ■ "all Gaumont British pictures are of fine quality." The quota problem was mentioned by Joseph P. Kennedy in his recent report to the Paramount board in which he said, after pointing that foreign quotas constitute a serious threat to the industry: "If the current move to limit the exhibition of films in England largely to English-made films is carried out, not only will it be imitated in other countries, but, in some instances, it might make all the difference between profitable and unprofitable operations for American units. "Some American companies, notably Twentieth Century-Fox, have been keenly aware of this danger and have made recent affiliations abroad to offset the consequences of an embargo. . . . Recent events seem to foreshadow a determination on the part of British authorities to take important action. Obviously the British Government is planning real regulation of the industry, but the thought is also suggested that this information may be sought as a basis for decision as to the measure of aid the government may give the British film producers. English insurance companies, banks and investment trusts are now large holders of securities in British film concerns and the known tendency of Great Britain to subsidize its industries gives color to the fear that when the new quota is announced it will reveal further difficulties for American made films." Capitalization To Be Decided In discussing the financial structure which will be erected under the proposed arrangement Mr. Ostrer and the Schenck brothers emphasized the point that with half of the stock in the new holding company owned by the public, the three contracting parties, even together, will not have control. Although Mr. Ostrer remarked that, naturally, he and his brothers are part of the British public, he and Joseph Schenck stressed the fact that the three parties have agreed, again "in principle," that none of the stock to be sold to the public will be bought by any of them. The purpose of turning control of the company over to the public, according to Mr. Ostrer and Joseph Schenck, is that none of the three parties wanted control and thought it not "healthy" for them to hold it even jointly. The holding company's capitalization, number of shares, par value and other corporate details have not been worked out and will not be until after legal agreements are drawn and presented to the boards of the various companies. All three men said they expect this phase to be completed in three weeks. Ostrer To Be Chairman The statement declared that no change in management is contemplated but questioning on this point revealed that Mr. Ostrer will become chairman of the board of GaumontBritish, that the post of president which he now holds will be abolished and that his brother, Mark, who is now chairman and managing director, will continue in the last named position. Joseph Schenck said that this move is to be made at his request and his brother's because they both wanted Mr. Ostrer to take a more active part in the affairs of the company under the new alignment. Details of the transfer to Metro-GoldwynMayer of half of the Twentieth Century-Fox interest appeared to be the simplest phase of the proposal. Neither of the Schenck brothers would give any hint of the price to be paid. Nicholas Schenck denied that Metro will have to make any financing arrangements to pay for the stock and said, "When the time comes it will be paid from the treasury." Asked what the holdings brought when William Fox bought them during his whirlwind expansion program in 1929, Joseph Schenck answered, "About $18,000,000." He was corrected by Mr. Ostrer, who said that the figure was approximately $16,000,000. The three smiled at the suggestion that anything like this amount would figure in the transfer of half of the stock. After the first rush of questioning the reporters discovered that the third point on the typed statement was "that GaumontBritish shall have the benefit of distribution of their pictures in the United States and the world through Metro-Goldwyn-Mayer and Twentieth Century-Fox Film Corporation on specially favorable terms, thus greatly reducing the cost of distribution in (.Continued on page 28)