Variety (May 1946)

Wednesday, May 1,. 1946 PICTURES PIX NOT A LUXURY - - WALL ST. WBs Loan Prepayment Points Up Fine Finandal Status of Fix Shares —♦ D-Rank's Worldwide (Except U. S.) Deal for 16m Distrib; France First . London, April 30. ♦ Already committed to a joint dis- tribution setup for 16m non-theatri- cal pix in the foreign market, Uni- versal and J. Arthur Rank are cur- rently la.vi"S plans for the estab- lishment of a new company to handle theatrical distribution on narrow-gauge stock of all U and Rank films throughout the world, excepting the U. S. Arrangements tor the new organ- ization arc being worked out . here at the present time between Joseph H Sicdclman. U International prexy, . a iid lan Crcmieu-Javal, chief of Rank's present 16m operations. Seid- elman, who came here for Rank's recent convention, stayed on after the meet, reportedly to talk things over for the new company. This week he's (jiving the Belgian scene 'the usual o.o. but will return to Lon- don for further confabs before head- ing for home in about a month. Plans for the new org are still tentative, according to Javal, who declared that the company didn't want to take any definite steps ahead until it had succeeded in con- vincing the established 35m exhibs who presently book Rank and U product that the lCm program would not be competitive to them. Javal recently returned from Scotland, where he reportedly impressed Sir . Alex King, operator of the biggest circuil in that country, that thea- trical -.'distribution of 16m pix would create new audiences for regular 35m films among people In the hin- terlands, rather than harming the S5m market. With King's coopera- tion thus virtually assured. Javal will press exhibs in other foreign countries for similar results. Bl[ Inroad on V. S. Cos. With the extensive inroads already established by Rank in the foreign market, coupled with the exchanges of U International in most foreign markets, it's believed that the new company might dwarf the operations of any of the American majors who plan entry into the. expected lush market for 16m films. Films will not be shown in. the U. S.. where Rank has a deal with Bell & Howell to handle 16m non-theatrical dis- continued on page 27) Cosman Pleads Guilty On Unfair Labor Charges Jack' T. Cosman, president of Producers Laboratories, Inc., 1000 Broadway. N. Y., pleaded, guilty Tuesday (30), in U. S, District court before Judge James P. Leamy, to charges of 26 .violations of the Fair Labor Standards Act of 1936. According to Assistant U. S. At- torney Saul S. Sharison. Cosman in the course of his business of process- ing motion picture Alms failed to pay his employees proper overtime and maintained improper records. Cosman and his Arm are subject to fines totalling $260,000. Pix Issues Zoom Last 12 Months ATA POWWOWING ON FINANCIAL SETUP The American Theatres Assn.. newly-formed national group, will probably call upon its financially well-fixed members for its first four- month cash requirements, an official of the ATA disclosed this week. Es- timated sum of $30,000 would bo borrowed, it is understood, to pro- vender the organization until its machinery clicks to the point where state assessments meet cash outlays. Current plans for institutional ad- vertising and extended barnstorming Avill not mark time because of a ' dearth of coin, it was disclosed. With finances due for immediate attention, the financial committee is slated to meet today (1) in New York to mull the problem. Conclave will be ruled over by Sarri Pinanski, Boston circuit operator, who was tapped for the post last week. Si Fabian. ATA prexy; Ted Gamble, i board chairman; Robert Coyne, exec If TV rnrnontprc Wnrk *' . director; and Arthur L. Mayer will ' U » A,arpeilierS WOTK also attend. Meanwhile, ATA officials • were running into difficulties in attempt- ing to set up a legislative clearing Tiousc. The organization, to date, has been unable to locate any agency, governmental or otherwise, with a compilation of existing theatre lax Regulations. Forced to turn to a locale-by-locale canvass on .legisla- tion. ATA execs riow'expect a delay Just how violently the film com- pany stocks have been churned up- wards in the past 12 months is re- vealed by the fact that the'seven major "company, shares appreciated $550,435,111 in value in that time. Advance has been so sweeping dur-, ing the past year that only one film issue. Columbia Pictures, showed less than a $12 advance over this lime a year ago. . Paramount, which has taken over the role of bellwether of amusement stock group, was the outstanding per- former, the common shares rising $171,499,579. in value, with stock climbing $48.37% over April 28 last year. Shares climbed, from $30.62% to $79, the price this week. Talk continues in Wall Street of a pend- ing stock split-up with latest re- ports hinting even higher prices for the shares. Next biggest showing was made by ■Warner Bros. Although the points gained in a year was slightly lower than 20th-Fox. the common shares appreciated $148,727,584 in value since this time in 1945. Stacks rose $3!).12'i, going from $14.37% to $53.50. 20th-Fox common, which advanced $39.75, showed appreciation of $87,- 605,090. climbing from $20.87 to $60.62',;. . , Loew's, which was amusement group bellwether until the 3-for-l splitup last year, climbed $12.87%, after giving effect to such split. This meant an appreciation of $(15,087,329. RKO's climb from $8.25 to $27, price this wqek. was one of the eye- openers among the picture rhares.in the last 12 months. Fact that the common now is on a regular divi- dend basis, aside from the greatly improved financial status of lh«s com- pany, tips that the rise was justified. That plus the improved product ap- parently justified buying, of these shares. Stock appreciated $53,848,743. Universal, which Went on the big board in May last year, shows appre- ciation of $18,221,732, although the common rose $22.37%. This peculiar situation stems from the fact that there are only nbout 815.000 shares currently outstanding. Columbia Pic- tures climbed $9.12%. shares, showing 55.133,454 appreciation. RATE FILM STOCKS ASK STABLE By DERB GOLDEN Continued upbeat of film stocks for at least another year is forecast by Wall street sources specializing in amusement securities, They regard the film industry as being on as stable a base and as economically sound as any class of business in America. One Wall streeter explains it: "Film shares are in no sense cur- rently overvalued and can be ex- pected to continue climbing. They are on~a 100% solid foundation, since motion pictures are no longer a lux- ury to the American public. Low- priced entertainment must now be recognized as a basic necessity of life in this country." / Financial circles are particularly bullish on the new 16m phase of the film industry and are only slightly less inclined to view television op- timistically,' although they see it much farther in the future than the upped income from distribution of narrow-gauge film. Take from 16m users abroad is expected to be re-- fleeted in earnings statements just as soon as equipment is available and; initial kinks are ironed but of the distribution setup. "Each 16m account, we realize, is going to amount to very little in in- come." it was explained, "but there are going to be thousands of such accounts and the aggregate rental will be considerable; We recognize, too, that virtually ail of the 16m ac- counts are going to be off the bottom of the barrel. In other words, flat rentals. Yet the 35m business has long since proved that the flat rental account of today is the . per- centage account of tomorrow.. Wo fully expect the same to hold true of the 16m business." Video shares are viewed by the Wall streetcrs as definitely a good buy. but for a long pull. They fore- see television as a big business of the future, although with prospects too vague at the moment to expect any important spurt in values for some lime, unless caused by a condi- tion peculiar to an individual com- pany. Foreign market conditions for films, although considerably upset, are no concern of trie Wall streeters as long as the British $3,750,000,000 loan rides safely through Congress. Present business in the United States, plus income from England, is held more than sufficient to sup- port current market prices of stocks Any rentals obtained from the rest of the world they consider as just that much gravy. Should the Brit- ish loan fail to pass or British-made product succeed in seriously cutting into Hollywood income, Wall street- ers foresee the necessity of slicing as much as one-third from production costs to maintain present profit levels. Out on 72 New Sets Hollywood, April 30. ' Heaviest construction surge in the history of Universal is Under way this week with the building depart- ment working on 30 sets for "The Plainsman and the Lady." 25 for ' That Brennan .Girl" and 15 for ' The Angel and the Outlaw." In addition,.- the studio is putting .. — .— . up two buildings on its western of months in setting up the proposed I street for the- use of saddle pictures •information'center. and serials. Sturgeset Divorcing _ • Hollywood, April 30. Preston St urges- was sued yestei -. RKO's 'Bad Man's' Sequel I Hollywood, April 30. f RKO liked its "Bad Mans Tcrri- day (Mon.) foi" divorce "by"hfs wife tory"'so well that it will make a Louise Sargent Sturges. * sequel, 'Trail Street," with the She charges the producer-director with on "ungovernable temper" and asks ownership of home and "rea- sonable support." James and Dalton boys riding again. Nat Holt, producer, is currently scouting locations for the wild west- ern tale. . COMMERCIAL FILM CO. BUYS PATHE BLIHL, N.Y. Purchase of the Pathe building. 12-story New York indie production center, was made this week by Trans film, Inc., eastern producer of edu cational and commercial films. Deal for. an undisclosed figure brings Transfilm a structure equipped with film storage vaults, cutting rooms and built-in projection faculties The building, erected in 1915, cur rently houses the State Dep't film section and a number of commercial and documentary film producers. Transfilm, organized in 1941, plans expansion of motion picture, slide- film, commercial still photography, three-dimensional photography, ani- mation and editorial departments. During hostilities, the company pro- duced shorts for the armed forces and civilian agencies. Transfilm staff is well stocked with cx-GIs. Included in roster arc Walter Lowendahl, veepee in charge of- production; Maury Glaubman. writer-producer; Jerry Gottler, writer; and Bob Olds, editor-camera- man. Larry Madison, OWI producer- director of the "American . Scene" series, has also joined up. Kelly Okays Back-to-Work Pronto, M-G-ites Go West Gregory LaCava, Harry Kurnitz and Charles Lederer left New York for the Coast yesterday ■ (Tuesday)- after a week in the east to sell Gene Kelly on appearing in their "Lights for the Living" at Metro. Kelly, on terminal leave from the Navy, af- ter first declaring himself for an indefinite holiday,. finally agreed to go back to ; work pronto. Kurnitz will return east May 21 to wrap up the deal. LaCava will direct "Lights," for Which he and Lederer did the orig- inal and Kurnitz the screenplay. WB's Stock Split Sets Pension Plan Warner Bros, will, cut its bank loan, amounting to $37,000,000 in August, 1945, to $23,865,000 by May 1 under a plan adopted Wednesday (24) by the WB board of directors. Reduction of $13,135,000 includes a prepayment of $4,773,000 and a reg- ular installment outlay of $8,362,000 due on the May 1 date. The board also voted a 2-1 split for the 3,801.000 of outstanding common stock after • retiring 100,254 shares currently in the company's treasury. The WB action calls for matching a new share for each one held by stockholders of record on Aug. 1, 1945. Additionally, the -board ap- proved a move to amend the War- ners certificate of incorporation to permit a boost in the authorized capital ■ stock from 7,500,000 to 10,- 000,000 shares, valued at a $5. par. Under the stock-split proposal, the bookkeeping will be handled, by charging the capital surplus with $18,505,450 and crediting capital stock .with the same amount. Figure is reached by fixing a $5 par on the 3.701,090 shares to be issued. The board declared it would, in all likelihood, fix a quarterly dividend of 37%c per share on outstanding stock after the split payable in Oc- tober. Meanwhile, it ordered a 50c per -share quarterly dividend on cur- rent outstanding common stock pay- able on July 3 to stockholders of record on June 7. A pension plan, currently being mulled by a director-appointed com- mittee, will be submitted to stock- holders at the Aug. 1 board meet. Action is in line with that of several other film companies that have al- ready launched pension systems, Heavy Support for Studio Plan Hollywood, April 30. Unofficial checkup indicated heavy support of the company's projected insurance plan for Warners studio employes. Proposition has been un- der consideration for several months by Jack, Harry and Albert Warner and Samuel Schneider, veepee of the company. Project will be offered for ap- proval of the company stockholders at the meeting Aug. 1. Excellent financial shape in .which all film companies find themselves as result of peak wartime earnings is pointed up by the Warner Bros, de- cision last week to make a prepay- ment of almost $5,000,000 on its out- standing term bank loan. Industry has. never before been so free of debt as at present, with most companies reaching new lows for recent years on lohgtcrm' loans. As happened at WB, several other firms are likewise planning to ac- celerate the payoff of principal on their indebtedness. In addition, of course, there has been a concerted move recently to take, advantage of present low interest rates available for refinancing. AH this, in addi- tion to the extreme liquidity created by the fact that payoffs of obligations have been pushed well into the future, is responsible for the gen- erally fine financial situation. Paramount, with a particularly excellent first-quarter earning state- ment in prospect, by the end of July- will owe only the $2,000,000 it bor- rowed on a personal loan from prexy Barney Balaban in 1944. It has cut down sharply on its out- Standing obligations, and even after refinancing of its Paramount Build- ing Corp. bonds owes only $2,500,000 now, in addition to the indebtedness to Balaban. Plans are to pay off the $2,500,000 before July. Balaban loan, made at 2%% for a five-year term, may also be repaid well before it is due. In any case, it .won't affect the stock option Bala- ban received in return for the loan. This gives him the right to purchase about 75,000 shares of common stock at the then current market price of about. 26. It's now worth around 78. Metro about a year ago borrowed $40,000,000 in a deal with the First Boston Corp. It runs 20 years, with payments due semi-annually. Com- pany has the right to accelerate the payoff, but has given no official in- • dication yet that it will do so, Aside from the $20,000,000 in new financing entered into the National Theatres last week', 20th Fox has no outstanding long term obligations. The NT deal was partially a re- financing at better rates of $7,80d,000 in underlying mortgage debt (old rate, 4.4%; new rate, about 2.8%). Balance of fund will be used for gen- eral corporate purposes. Advantageous terms on which the industry can now get coin is demon- strated by the fact that the com- bined average annual charges for Interest and debt retirement on the entire $20,000,000 obtained by NT is about the same as on the $7,800,000 of underlying mortgage, debts being refinanced. RKO recently entered into re- financing, obtaining about $22,000,000. Universal has about $6,700,000 in de- bentures outstanding, while Colum- bia has no bonds at all out. Rep Carries FnD Load Hollywood^ April 30. Republic's stage .space is crowded to capacity with three starters this week, making .a total, of six in pro- duction. Ncwics arc "That Bren- nan Girl." "Shine On, Texas Moon" and "Vigilantes of Boomtown." Continuing from last week are "The Plainsman and'the Lady," "G.I. War Brides" and the. Magnacolor western, "Out California Way." N. Y. LOCATION SHOTS Hollywood, April 30. Director Stuart Heislcr leaves for New York today (Tucs.) to be. fol- lowed by Susan Hayward on Friday for filming of scenes in Central Park and Gotham njteries for Walter Wanger's "The Smashup." Stanley Cortcz, lensman, and Alex CHAPLIN RENTS MORE SPACE AT M&S STUDIO Hollywood, April 30. Charlie Chaplin, who has owned a studio in the heart of Hollywood ever since Hollywood was invented, signed a deal for added shooting space on the Morey & Sutherland lot for his forthcoming picture, "Com- edy of Murders." Picture starts June 4, and the space contract covers June and July. The old Chaplin studio is not big enough for modern production. New M&S Stages Set Construction on a new sound stage is scheduled to be- started at the M&S lot within . 90 days, to be followed by a. second in nine months. That will give the lot a total of three stages with latest equipment. New structures will be used for live action films to augment the present cartoon slate but no attempt will be made to lure other indie producers, unless sufficient time if found, between films to allow for rentals. New stage will be 120 by 100 feet and. will cost $150,000. Height will be 60 feet, 10 feet over the average Golitzen, art director, left with Heis- stage size, in order to accomodate ler. I musicals.