Variety (Nov 1948)

PICTURES WediMSsdayf November 10, I94ft See Revised RKO Theatres'Net Ummpred by Enforced Updatim KKO's theatre profits which hit* $7,023,134 in 1947 will not tie iub- fitantially reduced by the enforced liquidation under a consent decree of the new company's holdings m 241 partnership theatres. The new circuit will be well off, insiders say, and the advantageous deal closed by the RKO board with the govern- ment will put its stockholders in a sound spot for raking in future dividends. Of the $7,023,134 theatre-wing profit in '47, only $577,466 came from partnership theatres during tlie vear in the form of dividends. Even this sum is not completely washed up by the decree since the new company will have the right to buy a maximum of 30 houses from Its present co-venturers. ■ Playing up the relative unim- portance of the partner-houses in KKO's scheme of things is the fact that the company's joint interest with the Skouras circuit in 66 houses of Metropolitan Playhouses never brought RKO a nickel in dividends. These Skouras-operated theatres have been liquidating a $6,000,000 bond issue and their Name Vaude as Pk Hollywood, Nov. 9. Indie producer Paul Gordon is to do a Aim made up of vaude sketches and musical interludes by top name entertainers. List al- ready includes Judy Canova, Bert Lahr, Victor Moore, William Gax- ton, Joan Davis, Dinah Shore, JEd Wynn, Benny Goodman and Larry Adler. Gordon's last stint was in co- production with George Mo-skov on "Concert Magic," Yehudi Menuhin starrer now being roadshown. RKO IKvorconent Becomes Ofidsj jnti-Tnist IW Odium's Fffst Reject Rights —--"^^ ToMatchHnglies'RKeTlieafreBids Ending a. 10-year litigation; RKO's consent decrisie -agr*^ with the; pepartmeni;:: —----- -- „„„i,, 1 was approved by the N. V. federal profits have .been slotted exclu- , ^^^t^t^j; ^^^^ at the onset of the sive y to that amorUzatjon. | resumption of hearings in the Gov- Biggcst chunk lf.«*.y^^ ernment's anti-trust action Monday l'°'^^T^^'^^'^t^^^irh^ \(«^■ The three-man court okayed Brims' the decree, requiring RKO to di- atres of the Trenton-JJew Bruns-^ ^^^^^^ holdings, wick circuit in wWch Walter Reade presented by assistant has the other half interest. RKO ceneral Robert L Wright derived $150,000 in dividends from l^*^™^^^ Attorney Gordon .E. 'Youhg'inan. YouiiSmah insisted that the court approve the settlement ih advance 1 of hearihg; testiinony oh thf case in order .tb rsafeguiird 'K liabiUty iii any fiiture exhibitor tripi^aunttages suits, if test im^^^ WM allowe^i Y^^ icoiiis^ht:, d^r^e could be used- as prima fafeie 'sivldehce of RKQ's par- ticipation . In ^ monopolistic trMe practices by exhib lawyers. RKO prez Ned E, Depinet hailed the fcourt's apliroval of. th^ decree, which be said, "will have far-reach- ing and, I believe, very beneficial . effects on our future. In a short court would grant additional time | time," he said, "our theatre com- if the company demonstrates good pgny will commence operations as faith in efforts to close out the an Independent circuit. I believe holdings. Moreover, RKO itself' considers that its right to buy back SO hduses.will prove valuable in afr fording it flexibility in negotiations. No notice of a stockholder meet the chain. Its other substantial div- vies were $107,000 from SKE Op- erating, Ltd., and $45,000 from Col- orado Orpheum Co./ Gross In '47 ' In all, the circuit grossed $45,- 087,661 during '47. Since the com- pany' preserves intact its first-run rabe chain in metropolitan New York, one of the two top circuits in the area, that gross should not de- cline sharply. The one-year period for liquida- tion of partnership holdings im- posed bythe decree is not expected to force their sale at a great sacri- fice. Industry attorneys believe the ^SSat COBtlBUCd rangements except those In which the outside interest was an invest- ment one must be broken up by the sale of the majors' holdings. Plea for a postponement was made by Seymour North Whitney, Paramount's lawyer, who declared he had anticipated the need for calling 20 witnesses from ail over the country. If the court would grant .the adjournment and the Governloient would consent to in- troduction of stipulated testimony instead, the case could be com- pleted within one week of renewed hearings, he said. Whitney also^ first offered to meet with the Gov-- vernment to try to agree on what theatres must be sold or could be kept John F. Caskey, represent- ing 20th-Fox. joined in the request. He asked the time to eliminate the need for bringing in investor part- ners for their testimony. Other t majors then joined in the plea. Estops Any Shifts The postponement was granted on condition that the majors agree, not to expand their holdings or change their theatre situations during the three-week period. This was done on stipulation of the de^ fense. Special Ass't Attorney Gen: eral Robert L. Wright, Govern- ment's chief trial counsel, de- manded the agreement claiming indie exhibs were urgently press- ing for a theatre expansion freeze. . No mention was made of the possibility of renewed settlement talks during the period. However, it is considered a possible if not likely development. As for the Little Three—Columbia, United Artists and Universal—they raised no objection to the delay. Edward C. Raftery, UA attorney, declared "we're trying to find a way of not putting any evidence in." His com- pany would seek only the grant- ing of some new findings of fact. Entire yesterday (Tues.) after- noon was taken up with the testi- mony of W. Stewart MacDonald, Warners' ass't treasurer. He was led by WB's attorney, ex-Judge Joseph M. Proskauer, through a description of the first-run theatre situation in a large number of cities. John Paul Curtin, Repubr lie's ass't to the sales chief, testir Bed briefly on a breakdown of the company's bookings during 1943- 44 season. ■ . ' Indies' Improved Position Both Metro and Warner Bros. Thomson Back to SAG the consent decree is the only way RKO can be assured: of re- taining substantially all its so- called wholly-owned theatres," - , , Depinet said, "Fortunately RKO i tackled the problem , of demon - 11- --.i.«:_.w<:i~n «nn..nt.>.4 cfi-ofino thnf thp film Situation hat t tU«|i)f( Of Floyd 13, Qd^m, board '['i^airtttan <Ct|r^,;:'^^ call on Howopd Hughes' controlling Hollywood, Nov. 9. {stock interest in the ' proposed Kenneth ^'O'^'i;^™^. [ RKO theatre company has chilled a number of financial syndicates interested; in acquiring the new circuit. Odium, it is now confirmed,. has been granted by Hughes the privilege of meeting any bid mad* for the lattei!'Sv24% isiock in^^^ in the ekhibitliift carda are regarded as stacked in his •■ favor to ultimately .take over the theatre company which will be set up under KKO's cbtiseitt dielsree in the anti-trust suit. "It takes the sting out of things to know that Odium has first crack at the circuit," one theatre man put it to VARiETif. Ordinarily, he said, his group would make a strong bid for piBhifot '*Thei !Wi^^^ it is set up, Odliim can sit back " and let the others fight it out— then take over himself," he added. While persistent rumors have 1. credited several syndicates, includ- ing one headed by Malcolm Kings- berg, RKO theatre veepee, and an- other of Robert O'Donnell, Para- mount theatre partner, with mak- ing offers tor the Hughes stock, it Is now. understooid that neither has { come forward with a tahgibie proposition. Moreover, rumored price of $38,000,000-$40,000,000 for the theatres is believed to be high- er than the circuit will ultimately bring. :'--'\:\. In this regard, book value of the chain is fixed at $38,000,000. Against this are mortgages and other indentures \^hich total $25,- 000,000. Book evaluation repre- sents' highiy conservative account- ing practices, and it's said that the theatres are worth considerably more. But it is not believed that the difference between hook, and real value is great enough to hoist the sale figure to $40,000,000. founders and former executive see retary of the Screen Actors Guild, has rejoined that i^up as admin- istrator of the new television di- vision. In addition to Thomson, the current SAG executive staff con- sists of John Dales, Jr., executive secretary; Murray KinneU, agency division administrator; Pat Som- erset, assistant executive secretary, and E. T. B. Harris, public relations director. Since 1944, Thomson has been in the agency and pro- duction fields. 'Utde 3' Fears M(Hre Exhib Sufts Fear that a consent decree could be used in evidence by exhibs bringing private anti-trust actions against major companies has effec- tively barred a settlement of the Government suit by United Artists, Universal and Columbia. Dept. of Justice has strongly hinted that it , is willing to sign a decree with the Little Three incorporating the sel- ling restrictions now validated by the Federal courts. Non-theatre owning companies, however, be- lieve a consent would be used as proof of anti-trust violations. Point was spotlighted when RKO this week' obtained an approval of its decree from the statutory court during hearings.. Gordon Young- man, RKO's general counsel, in- sisted that the court okay the plan without first taking evidence be- cause he feared it otherwise could; play a part in future treble-damage litigation. Court approval without testimony eliminated that possi- bility, Youngman said. will go out until the Federal statu- 1,35 g^J^ce Its organization operated strating that the film situation had tory court approves the consent de-I its theatres independently of its ] materialTiy changed to the advan production and distribution busi- Ned E. Depinet, president of ^ess. We have had a Picture Com RKO, in a statement this week de clared that the new indie circuit would be intact after the decree sheared it from the production pany and a Theatre Company, and from an administrative standpoint each has had its own manafionient . and staff. For that reason, the sGpa- . distribution branch. Depinet said: ration to be undertaken will be a 1946. "I believe the consent decree i.i relatively simple one." ' William F. Rodgers, Metro s the only way RKO can be assured 1 . — ; .sales chief, analyzed a town-by tage oi indies since the first hear- ings were held before the three- judge bench. In the second day of trial (Tues.l, M-G pounded away at the result of its competitive bid svstem which it inaugurated in : town breakdo\*n of bo9kings of retaining substantially aU its , . . . so-called wholly-owned theatres.' KKO 111 Lhl btrCSSeS | .show that indies were now obtain- It al-so has the right under the de-, TUaafi-o'n!ofv5l» Anivt .ing " greater slice of M-G's cree to acquire without further' lIie<lire-t»IMMU /vpdl l ^ ^^.g^.^^,^ product as a result of court approval certain additional 1 Chicago, Nov. 9. 1 bidding m man> situations. Called theatres in which RKO and other Appeal from Chicago federal , to the .stand by Metro's attorney exhibitors presently have an inter- district court Judge Michael Igoe's John W. Davis, Rodgers declared est. Our interest in the theatres ruling last July, in which he held i that Gompetitive bidding had ac- which we must sell is in most cases , that RKO theatres and distribution compllshed exactly what the court by the majors' attorneys during the that of a minority stockholder and , were one and the same, was made | intended. | initial day's hearings was the ne- those theatres are operated by today in the Chi circuit court of' Conceding that the Supreme cessity for full argument before a pany didn't even know through reading trade papers, Davis added. During the opening day's (Mon.) testimony, It became clear that par- tial divorcement was in. the cards for the major defendants. Against argument by Proskauer that the Supreme Court had left open the question of whether the majors : were guilty of monopoly. Judge j Hand declared that he understood ! the high court's opinion as sug- ■ gcsting"some liind of divorcement" j as a remedy. He spoke in even stronger terms against. Wright's propo.sal for "total divorcementi" to < He termed it an "extreme" meas- ure for forcing the Big Four to dis- gorge "the fruit of the evil tree." But the direction of Wright's argu- ment and evidence indicated that the Government would continue to press for complete divestiture. Main point hammered at 1 others' Loew's Bowing Out Of Criterion, N.Y., Also Buff appeals by RKO counsel Miles _ Court had nix6d the system as j Seelev. j compulsory form of selling, Davis While admitting that both com- . declared that used voluntarily it 1 panics are subsidiaries o£ the same voided the Government charge of i be necessary to examine each spe- : parent organization, Seeley argued , discrimination. Judge Hand tagged cific case where the Government I that the RKO Palace and Grand the evidence as "very good proof" : demands it final consent decree Is handed down. If partial divorcement is the j remedy, they argued, then it will r _ i m« I T» ■ i A 1 i theatres here are not leased, con- but whether it has any bearing-on rnfti With Par Sind lltherS trolled or operated by the RKO i the question "in view of the Su- 1 wui fTnu « «i, «•«• wiuv.w, company. To all in-|preme Court decision is another Loew's is selling its 50% interest . tents, he said, RKO pictures and , thing." In the Criterion. Broadway show-1 rkO distribs are two separate [ Rodgers said his company had sal and Columbia wanted relief case in which it partners with B. ' companies. ! also made a thorough national sur- from the trade practice injunctions S. Moss, John W. Davis, attorney j if the appeal is sustained, the 1 vey of clearances. Companj has imposed by the court. Louis Froh- for the company, informed the , Palace and Grand would be exempt' straightened out unfair and ovei-.hch, for Columbia, accused Wright Jil, Y. federal court yesterday . from the two-week limitations and^ long clearances, he added. Ques- of "caUouslv " paving the wav for (Tues.l. Company is also liquidat- ] other restrictions of the Jackson ' tioned by Wright on what deter- ' — -' Ing its interest in the Lee theatre. Park decree. RKO distribs also mined whether a bid would be con" Richmond, and the Parkway, would be cleared of the charge of sidered, Rodgers denied the Gov- Brooklyn. ' being in contempt of the J. P. j ernnient inference that higher ' only take a few tdple"damag*e suits Thirteen Buffalo houses which decree. 1 rentals alone were the objective, to ruin each company," Frohlich Metro jointly operates with Para-, I in instances, he said, bidding ' said, adding that the final decree While the Big Four attorneys concentrated their fire on Wright's argument for total divestiture, at- torneys for United Arli.sls. Univer- a film industry "disaster" by his encouragement of the "immoral" exhibitor antitrust suit. "It will STUDIO PUBLICin ORG Hollywood, Nov. 9. George Brown was named chair- mount are being divided into two nn/v,i«T urtnc AMnD Independent parcels and split be- BROWN HLADS Afflrr tween the two companies, Davis said. Liquidation of the chain would have proceeded at once, he explained, but a third person (.Vin- cent McFaid) with minority in- terests has asked for a holdup until man of the Studio Publicity Di- March so that he can protect his , rectors of AMPP, succeeding John and its'present theatre setup. pension rights with Metro. : [ Joseph, who shifts over to the McFaul wants to remain as an chairmanship of the publicity di- employee of Metro rather than .sell 1 rectors' executive committee. rights were granted . because an j must be so worded as not to have exhib did not have sufficient prod- a prejudicial impact on the mass uct for his theatre. , of exhib-distrib litigations. Davis introduced affidavits of J. ] Wright spent most of his time in Robert Rubin, company veepee; I trying to introduce exhibits of the- Charles C. Moskowitz, veepee and atre ownership structure and al- treasurer; and Jo.seph Vogel, thea-|leged "cross-licensing eonspira- tre veepee, on the history of Metro ^ cies," The court admitted all the I exhibits over the objections of the Hundreds of changes'* in runs defendants, but upheld the latter have been put through, Rodgers in barring data on the earnings of told the court, Davis drew a laugh Republic, Universal and PRC for his fractional holdings, according] With Stanley Shuford heading' when he refused to say whether 1944. The majors' attorneys de-i to Davis. Plan of dissolution is out- the eastern committee, both Holly-' other companies had done likewise, clared they woiild accept such fig- 1 lined and ready and will be sub-1 wood and New York groups arc ^ "We don't confer with the others," ures if they had the right to cross-' mitted to the court within the next 1 chairmaned by Paramount exec- attorney retorted in response to a examine the persons who Compiled three,'months. I utives. I question by Judge Hand. His com- them, | L. A. to N. Y. Eddie Albert Barney Balaban . Richard Beekhard Ingrid Bergman Jack Cardiff Sue Carol ' ■ Morris E. Gohn Sam Cummins Joan Davis Arm and Deutsch . . ■ Billy DeWolfe Howard Dietz ' D. A. Doran Peter Fernandez ' >Vlctor Fleming Paul Fox l?etty Furness - Sheridan Gibney Billy Gilbert Harvey Green Gladys Hellinger. Sonja Henie CharlA Hoffman Russell Holman Jennifer Jones - Arthur KeUy Michael Kirby Berry Kroeger Alan Ladd Joshua Logan Virginia Mayo Gene Nelson Stephen Pallos Leo Robin. ^ Dore Schary Joshua Shelley Steve Slesinger Walter Slezak Dwight Taylor Lee Tracy Benay Venuta Irving Wallace Max Weinberg Edwin L Weisl Mae West N. Y. to L. A. Martin Gosch Ray Mi Hand Ben Thau Lawrence Weingarten Stanford Zucker Europe to N. Y. Fritz Busch Zino Francescatti Fredric March Liddie .Murphy Pola Negri N. Y. to Europe Montgomery Clift Sir Charles B. Cochran Gene Kelly Brock Pemberton J. Aldcn Talbot