Motion Picture Herald (May-Jun 1946)

ON THE MARCH ^^i^ban ates by RED KANN Theatres Not Hit By U. S. Decision THOSE who flatten out close to the ground so that they can catch rumblings as they reverberate say the tempo is giving out in greater volume these days. They refer to the increasing number of deals under which important talent-producer, director and star, and principally the latter — is being cut in on profits. It isn't always salary against net, either, but commonly salary pins profit. By way of justification or not, advocates of the drift, which is getting ever closer to tidal wave proportions, fall back on the history of the legitimate theatre as the original from which today's carbon copy is drawn. They emphasize that older day when control of theatres fortified the brick-and-mortar men with the outlets without which a show could not get very far. It made possible a hard deal from the creative point of view and profits without conscience, they also argue, for those who held control. But in this newer day, whatever pie is around is being cut up in all sorts of directions. The essential factors get their royalties, or profits if you prefer, under a system of splitups now recognized as standard practice. There is sufficient evidence on hand to indicate more than circumspectly that this system is reaching broadly into Hollywood. Profit-sharing contracts are on display all over the place. This can be taken to mean that, in Hollywood where patterns establish themselves easily, such a plan as this will grow, not diminish. There are reasons, moreover. One traces, of course, to the tax structure and the advantages seen in spreading the load over a period of years. As important, and some believe more so, is the desire to build equity values. Perhaps as convincing to talent as either is a determination to be "in on the show." This is merely a reflection of talent's opinion the traffic can bear more than it now gives up. When theatre business enters its inevitable period of readjustment and a condition approximating normal is reached, the answers — all of them may be something else again. But that time has not yet arrived. Insofar as the producers are concerned, their competitive scramble for top names maintains the field day on a perpetual basis for the creators. As long as this policy pays off at the box office, no one may be expected to become genuinely concerned. As one topmost level executive was remarking the other day — and he represents part of a trend, at least : "I've learned two things all the years I've been in this business. One is that I'm better of¥ owning 50 per cent of a sure bet than 100 per cent of a flop. The other is that the exhibitor, somehow or other and despite the yelling and the clamoring, will always find time for a picture good enough for him to play." And, as the Treasury Department reported out of Washington, D. C, last weekend, Leo McCarey was the nation's highest wage earner in 1944. Salary for producing and directing "Going My Way": $75,000. Earnings on stock and an interest in the film: $1,113,035. See what we mean ? HISTORICAL ROLLBACK: Although Warners' acquisition of Brunswick-BalkeCollender back in '30 for purposes of rounding out the musical corners of their sound picture development later was regarded by some as a dubious venture, actually it proved a blessing copiously disguised. How and why : Attorney for Brunswick was Willis H. Taylor, later patent counsel for Warner in the famous Tri-Ergon patents case. After Tri-Ergon had won rulings up to and including the U. S. Supreme Court, it was Taylor who played a leading part in preparing the petition which caused the highest tribunal to reverse and to hear the case again. That procedure on the part of the supreme bench, in itself, was decidedly unusual. The result was a victory for Warner. Now. If the Tri-Ergon patents had not been held invalid, the probability is Warner and other film companies would have had to pay out fantastic millions in damages as well as royalties. The question, perhaps never to be conclusively answered now, is how many companies could have survived. Maybe including Warner, too. Brunswick to Warner meant Taylor to Warner. The petition, the reversal, the saving of the day — that was the blessing. Monday, Paramount paid $2,500,000 in notes due three to five years hence, thereby freeing itself of all funded indebtedness aside from $2,000,000 in company notes, due 1951, which are convertible into common stock. Thus a 10-year financial program was met in five. It was in this connection several weeks ago that the major part which Barney Balaban played in this achievement in corporate management was noted. Tuesday Stanton Griffis, who is chairman of the company's executive committee, gave formal recognition to Balaban's role at the annual meeting of stockholders. "It was 10 years ago that the stockholders met under different circumstances. The company owed $100,000,000, the meeting lasted 10 hours and not a kind word was spoken by anybody," he said, then observing "the genius who was largely responsible" for Paramount's debtclear condition was Balaban. Long and loud applause recorded the stockholders' approval. "Paramount has interests of over 95 per cent in a large number of its principal theatres which are among the best in their respective communities, and the court ruling does not affect these interests," Barney Balaban, president of Paramount, told the annual meeting of stockholders in New York Tuesday as he outlined the court's decision in the Government's anti-trust action against the major companies, handed down last week. Among these interests are the Paramount theatres in New York and Brooklyn; the Metropolitan and Paramount in Boston, Chicago and Salt Lake City, and others of the Balaban and Katz Circuit, in addition to such wholly owned subsidiaries as the Minnesota Amusement Company and Intermountain Theatres. Too Early to Forecast "It is also too early to forecast the effect of the decision on the company's business when the court's decree has been settled. Careful study is being given to the decision and the situation which may result from it," Mr. Balaban said. "I am confident that the problems presented will be successfully solved." Paramount also hopes to commence operations during the current year in the 16mm foreign field, Mr. Balaban revealed. Mr. Balaban also said that the results achieved in foreign business since the end of the war, on the whole, were satisfactory, although the company had made no progress in the countries dominated by Russia. At the meeting the stockholders reelected as directors for one year Mr. Balaban, Stephen Callaghan, Y. Frank Freeman, Harvey D. Gibson, Leonard H. Goldenson, A. Conger Goodyear, Stanton Griffis, Duncan G. Harris, John D. Hertz, Austin C. Keough, Earl I. McClintock, Maurice Nevd;on, Charles M. Reagan, E. V. Richards, Edwin L. Weisel and Adolph Zukor. Approve Dropping Preferred They also approved the elimination of 44,211 shares of authorized but unissued first preferred stock and 5,819 shares of authorized but unissued second preferred stock and 1,349 shares of common stock to be held in the treasury. They further approved the increase of the authorized common stock to 9,000,000 shares of the .par value of $1 per share to provide sufficient shares to effect a stock split on a two-for-one basis. There are outstanding 3,752,136 shares of common stock. After the split 7,504,272 will be outstanding, and 1,495,728 will be authorized but unissued. The board of directors has no present plans in respect to the 1,495,728 figure of authorized but unissued common stock. 18 MOTION PICTURE HERALD, JUNE 22, 1946