Variety (Aug 1939)

Wednesday, August 2, 1939 PICTURES .VARIETY mm SALES CONDITION Warners and Skouras (National) I 'gg-jfl nLM D[I1LS Heal Selling Breach; WB films Open | pf|(]gf|[SS SLOililLy To F-WC Houses Where StiU Unsold Rupture between . Warner Bros.' distributing organization and the Na- tional Theatres (Fox-West Coast) circuit, which several weeks ago in- spired heated statements and dec- larations of discontinuance of busi- ness relations, has been healed. In such situations where Warners has not already sold away or has com- mitted its new season's ('39-40) prod- uct to theatres in opposition to Na- tional and West Coast, there will be Immediate resumption of dealing. Matters in dispute, including ques- tion of adjustments on previous sea- Eons films, have been settled to mu- tual satisfaction! WB closed around 50 deals with indies in National towns. Restoration of peace removes from the scene of new season selling an Issue that portended developments 'Which theatre and exchange men an- ticipated would, in a short time. In- volve widely separated sections of the country in a major trade dispute. Neither Grad Sears, distribution chief of WB, nor,,Spyros Skouras, operating Head of National theatres, both of whom issued statements at the beginning of the business breach, had any comment to make on the peace settlement. Total filnv rentals to be paid to WB for the new season, in the competi- tive spots not already precluded by previous sales, is presently specula- tive, as all deals will carry percent- age terms, with allocations yet to be established in all spots. In the state- ment issued by Spyros Skouras at the time of the breach between the two, he declared that film renta's paid to WB was abTsut $500,000 in 1932, and wilt be 'over $1,500,000 for the year 1939 for the same number of theatres.' Skouras also declared that the two- year contract under wRfch Wamerf and the National (F-WC) circuits have been operating is expiring with deliveries of the last of the 1938-39 releases. Criticism of Skouras theatre oaer- ation under the dual feature policy was included in the Sears' statement, notifying termination of negotiations betwen the two. In reply, Skouras said that the theatres -were opposed to double-billing, but that competi- tive conditions at present necessitate th« use of double feature programs in certain localities. Independent theatres in opposition to National and Fox-West Coast are reported to have eagerly sought the new Warner product. Rep's NT Deal Republic on Monday (31) closed one of its most important product deals to date, negotiating-a-contract with National Theatres to cover its 1939-40 product in the San Francisco, Los Angeles, Salt Lake,- Denver, SeatUe and Portland territories. Grover C. Parsons, western divi- sion manager for Republic, came on from the Coast to sit in with Jimmy Grainger in the huddling oil the deal. He flew back, west yesterday (Tues,). Bill Powers and George Balsdon represented National in the negotiations. HERB MARSHALL'S HUSH MONEY TAX DEDUCTION Washington, Aug. 1. Payment of hush money by Her- bert Marshall, film actor, came to I'ght last week in answer to a Gov- ernment tax claim. Performer de- nied he owes $87,893 additional Income taxes and penalties for 1933- 35 and complained to Board of Tax Appeals about the Internal Revenue Bureau's refusal to allow certain expenses. Among the various deductions in- •°'ved in the dispute is 'payment of ♦227.05 to prevent the publication of an unfavorable story,' with no hint "s to the recipient or the nature of 'he yarn, . Skirbail-Wydberg To Produce 'Angela' East Hollywood, Aug. 1. Jack Skirball, head of Arcadia Pictures, planes east today (Tues- day) to confer with John Wildberg on plans for filming Sinclair Lewis' 'Angela is 22.' . . Play had a road tryout last season but never reached Broadway. Wildberg will produce in the east at the Astoria (L. I.) plant of East- ern Sei-vice Studios. LEROY QUiniNG EXECJOB AT METRO Hollywood, Aug. 1. . Mervyn LeRoy is giving up his executive producer job at Metro at his -lOwn request, to become a pro- ducer-director on ■ the same lot. Shift is effective after the preview of IWizard of Oz' this week. His first chore in his new berth will be 'Ziegfeld Girl,' with Hedy Lamarr, Margaret SuUavan- end Lana Tur- ner tentatively penciled in. Since he took over the executive producer post in Culver in March, 1938, LeRoy has personally produced 'Dramatic- School;' -'Stand'"Up and Fight,' and 'Wizard,' and supervised the production of 'Babes in Arms.' Too Many Uncertainties at Present — Trade Practice Code's Delay, One Factor —Bickering Over Terms, Stalling, Etc. No RKO Underwriting Presented On Mod. (31), but Atlas (Odium) Ready with $1,500,000 Any Time INDIES DO BETTER 4 Months to Edit Hollywood, Aug. 1. A Metro preview will preem Mer- vyn Leroy's production of 'Wizard of Oz' at the Carthay Circle Aug. 9 and picture will open at the Chinese and Loew's State Aug. 16. A year in the making, it was ac- tually four months before the, cam- eras and took four months to edit and insert the sound efTecls. FINAL WASHUP IN ORPH BANKRUPTCY Federal Judge Murray Hulbert in New York today (Wed.) will hear the application of Peter B. Olney. Jr., referee in bankruptcy, to OK his final report and discharge him as referee in the Orpheum "Theatre bankruptcy. The report grants allowances .of $495 to Kenneth B. Umbreit, and $1,500 to his attorneys. Davis, Auer- bach, Connell & Hardy. The i-rferee asks $2,003 for his own services. The estate has $28,516 left. Gen- eral allowed claims total ,$1,425,- 335, which will allow a dividend of 1/977 of 1,000% to creditors. Creditors include Irving Trust as RKO's trustee, $770,706, based on a guarantee of Orpheum Circuit's sec- ond mortgage notes. RKO Orpheum is the second credi- tor as assignee of Stadium Theatre;!, being owed $510,807. Paramount Pic- tures, Inc., is owed $90,462 for rent; Irving Trust, in a second capacity for RKO, on a note of the bankrupt's for $44,000 plus interest since 1933, $53.- 320; and lastly RKO Distributing Corp., for film license fees, $38. The petition states that all other allowed claims have been paid. The bankrupt was n Missouri cor- poration, and prior to 1933 operated theatres in St. Louis.' In April. 1933, it went out of business, filed a bank- rupcy and has been liquidating since. A static condition exists on sales covering the 1939-40 product due, ac- cording to both buyers and sellers, to the general uncertainties pre- vailing at present, the delay on the trade practice code, the bickering over terms demanded on the new season's pictures and, in some in- stances, because of the situation con- cerning adjustments. Exhibitors report that some of the major companies are hedging on ad- justments under the current (1938- 39) buys, taking the position that while the product may not have panned out to bigtime proportions, the gamble on percentage was a fair one in the long run. The result has been that some old customers of cer- tain companies have been sitting back waiting for the film salesmen to get tired begging for a contract for the 1939-40 pictui *-. The film buy- ers are burned over some of the companies that refuse to acknowl- edge that certain of their pictures weren't worth what the -salesman promised they would be, no decision being considered, but are inclined to look to various competitive distribu- tors in a much friendlier light since they are willing to call oft a lot of bets in view of a new contract. Compromising An attorney for one of the largest distributors is authority for the fact that his company is usually willing to wind up by having accounts drop as much as 20% of yearly buys, not only including the usual amount en- joyed under the exclusion privilege, but an additional 10% if they will go for another year's product and play ball, particularly if the films haven't been sd good. According to a check of sales in- formation, contract-taking does not compare favorably with last year. This is saying something out of the ordinary, since last summer. In the merchandising of the 1938-39 film, selling reached the lowest ebb ever. Situation as of the moment would indicate that some companies are ahead of last year at the same time in the number of accounts closed, while the majority is behind. U and WB Pace Majors One of the most unusual situations is the fact that Universal is running two-to-one against 1938-39 in the sales .of its coming season's pictures under bracketing that places seven in the top groove at 35%, seven at 30% and 10 at 20% or 25%, with the balance flat. The company's ter- rific advance is due not only to the high-powered selling campaign di- rected from the top by Bill Scully, former Metro distributor, but also to the showing that U made last year. This is also true of Warner Bros., which is claimed to be running ahead. Metro is holding to an even keel with last year, this company being one that deals with over 10,000 ac- counts each season and leads the pack in that direction. The opinion is expre.ssed in sales quarters that in addition to the other angles this season which figure as a retarder on sales, a large number of long-term franchises have run out and negotiations on those require a long period of time. Some of these term renewals have been in the process of dickering for more than a month and are 50 or 75% closed, time being required to figure all the details when a large number of the- atres, each a different situation unto itself, have to be taken into con- sideration. One of the more impor- tant of these franchise deals is the renewal of the franchise which Metro has with Warner Bros, the- atres, a three-year agreement reach- (Continued on page 55) A! Christie's Features To Be Made in the East Hollywood, Aug. 1. Al Christie may enter production as an indie producer of features in Astoria, L. 1., where he previously made shorts. Understood Christie, who has been directing Educational and Arcadia films, has been offered financing for a series of pictures, to cost $250,000 each. TALK OF KORDA PROD. OUTSIDE UABANNER London, Aug. 1. There's considerable speculation in film circles here as to whether Alexander Korda will become active in production outside the United Artists banner. A new company has been formed and contract signatured July 28 whereby Zoltan Korda is director and Vincent Korda is assistant di- rector for three pictures to be made at Denham for Charles M. Woolt Both are brothers of the producer Will start early in September with Conrad Veidt in an original story, 'The Conjurer.' Most recently released Alexander Korda feature, 'Four Feathers,' for UA release, was directed by Zoltan Korda. Woolf also is expected to sign lease on Shepherd's Bush studios to make quota pictures for his distributing organization, General Film, Ltd. RKO MAY RELEASE LEE GARMES' N. Y.-MADE PIX RKO may distrib Lee Garmes' series of three pictures to be made in New York, independently fi- nanced, starting next October. Deal, if closed, will call for RKO's re- lease of the first picture, 'And So Goodbye,' original by Mildred Cramm and'Adele Commandini; with option on the other two. Produc- tion money' has been arranged, four banks participating, through Eastern Service Studio in Astoria. Two other features will be pro- duced at the same .studio by John J. Wildberg and Jack Skirball for Co- lumbia release. Eastern Service Studios is plan- ning to provide financing and dis- tribution for independent producers who can turn out a schedule of 12 films a year. Aim is to attr.ict I makers of 'A' budget picture.':, for I whom there will be no limit placed on financing or releasing oppor- nity. . Electrical Research Products, Inc., associated with the studio, which is a division of Audio Productions, Inc., an Erpi subsidiary, is not in- terested, as a corporate unit, in any financing of plays or pictures. Like- wise claimed that the studio has no interest, participation or profit in any picture tr€nn.sactions other than to encourage independent produc- tion in New York by making pro- duction facilities available. In order to encourage indie pro- duction, E. S. S. arranges financing deals with independent banking sources, chiefly as a service. What the bankers charge is a matter, that docs not concern the studio, accord- ing to its executives. No . RKO underwriting agreement was forthcoming at the hearing held before Federal Judge William Bondy in. New York Monday (31), but Ham- ilton C. Rickabyi representing the Atlas Co.. proponents of the plan of reorganization, told the court that Floyd B. Odium, president of the company, had informed him that At- las is willing, at any time within the next 60 days, to underwrite the new RKO stock for as many shares as is necessary to reach the $1,500,000 as provided by the plan. The price Is not yet determined, and Odium is willing to have the judge fix the price, or have the board of directors determine it. As for Atlas' compen- sation for underwriting. Odium is also willing that the court have it fixed now, or wait until Atlas puts in its bill for services in the reorganiza- tion. Judge Bondy declared that he would not want to fix a price until all persons involved had had a chance to have their say. The courf was then informed by Rickaby that the price of the new stock would probably be under the market price of the stock on the curb, as it was in- tended as a valuable right for un- secured creditors to subscribe to. It is believed that an approximate price of this new stock will be $3. Rickaby also disclosed that the certificate of incorporation of RKO had been filed a week ago in Dela- ware. He is now prepared to submit the revised estimate of what will be the final certificate of incorporation. This will call for the issuing of 130,- 000 shares of preferred stock (plan calls for 127,000), and 8,000,000 shares of common. The common is broken down by giving 602,697 to the old de- benture holders, 400,000 to Rockefel- ler Center, and 800,000 to the un- secured claims. The old common stock will receive 429,593 shares, and the new stock to be offered the-un- secured creditors, 500,000 shares. Reserved for conversion on the preferred stock will be 1,040,000 of common, and reserve for the option warrants for the common stock is 2,577,554. Some 250,000 shares will be given the management of the company on option warrants, making (Continued on page 22) Trada Mark ReKlsiared FOVNnED nT StMB -Sir.VRHMAN rubllJilird Wcrklr bjr V.\RIETV. Inc. .SI(J Silverman, Pre.ildcnt tS4 Weat 4Ctb Slreat. New York Clir INDEX Bills 48 Chatter 53 Dance Bands 42-44 Film Reviews 18 Film Showmanship.. 8 House Reviews. 20 Inside—Legit 52 Inside—Music 42 Inside—Radio 35 International News. . 17 Legitimate 49-52 Literati 22 Music 42-44 New Acts 46 Night Clubs..; .45-47 Obituary 54 Outdoors 55 Pictures 2-29 Radio 30-41 Radio Reviews 40 Radio—International 34 Summer Try outs 50 Unit Review. 46 Vaudeville 45-47