Variety (Mar 1949)

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PICTVBES .V«dwjgdiiy» Marcjb 2, 1949 Par Divests 774 'Hieatres; Retains Prod-Distrib, Foreign Showcases, Certain TV; Ends 10-¥ear Gov't Suit Paramount, the largest integrat- ed film company in the world, will split itself into two unrelated con- cerns, within one yeai?, under the terms of its anti-trust settlement signed with the Government Fri- eldy <23). The industry-shaking event which sets up a new theatre tompany of approximately 650 houses and a semi-integrated, pro- duction-distribution outfit occurred nfter rnonths of negotiations and a 10-year legal joust. To win an end to litigation, Paramount has agreed to divorce Its domestic theatre interests after the circuit is shorn of a minimum ©f 774 liouses. The picture com- pany, for its part, retains its stu- dio, distribution outlets, its 370- theatre circuit in Canada, U showcases in foreign countries, all the 560,000 shares of B stock and 43,200 shares of A stock in DuMont CL-„IJ UIR IH* *_„ television' laboratories, television JUOlllO WD nlll Auy statioh KTLA in Los Angeles, and homeoffice build- Gov't Timetable Several important shifts in the Government a n t i t t r u s t suit timetable have been pushed through as a result of recent settlement' maneuvers. The schedule of court events as now set up is as follows: March 3—Paramount decree presented to the court. ; March 29—RKO stockholder meet on decree. March 30^Deadline on RIfO stockholder consent to decree. April l^Gov't must file final briefs. / April 19—Final hearings be- fore court. Wilder'sN.Y.Baiikrott Tentative deal has beep- made by producer W. Lee Wilder with Chemical Bank & Trust Co., N. Y., to advance coin for his next film. It is the story of a women's prison, temporarily labeled "Once a Thief." Distribution will be made by United Artists, with which Wilder recently made a four-pic- ture deal. This will be the first. His "Vicious Circle" was handled by UA last year, hut under a pre- vious arrangement.^ : Wilder ■ returned to ttie Coast last week after being in New York to arrange th^ financing. He hopes to put thet film into production by April 1. Budget is $550,000. Bank loan hinges on Wilder getting com- plete guarantees. He had produced five pix independently for Republic release prior to switching to UA and the assignment of residuals on these to the bank facilitated the deal. the- Paramount Ing. The proposed decree comes up before the three-judge statutory court in N. Y; tomorrow (Thurs.) for its approval. No opposition is expected from either the defend- ants or outside picture interests. In early April it will be submitted to stockholders for their okay at a special meeting to be called. . It ■will require two-thirds approval «f all outstanding common stock. Terms The two new companies will is- sue common stock to the parent company. " Unlike the case: of RKO, (Continued on page 16) Concessions the Other Majors May Benefit Too Assiertipii' tif Harry , Mi Warnerv prez of Waraer Bros.,' that he will have no tifuck ^ith a settlement of the Government anti-trust cjise, could ultimately lea<i to modifiea- tiohs of the consent decrees now in force or iii negotiation. War- ner's; -no-peace stand means that the suit-^&isted for repewed li^a''" ings Match SO-rWill go oh to a filial decision ultimately., Since; the Paramount and RKO decrees graht the companies the right to take advantage of more favorable clauses in other decreesv any, vic- tory by WB could ease regulations enforced against other majors. However, even an all-out win by Warners, would not result in light- ^ j ¥ M ii» . er divorcement provisions for-the PJv Prhniome i 'iko Hl^' niajors who have settled. Those riX riUUieillb LllVe »"» provisions are hard-and-fast. What Confab with Robert L. Wright, j would not stick would be the re l).S. Tells Indie Recent Decree Moves Will Solve head of the Dept. of Justice's antl trust division, was held in New York, last weelf by James Mancuso, operator of the Mancusg theatre, Batavia, N. Y. Mancuso has'been in a hassle with a number, of the major companies in an effort to get product for his house since it .4)pened nine months ago. Considering legal: action, Man- cuso was advised by Wright to lay off temporarily. Assistant attorney- : general told him that he felt that '; decrees further separating produc-: tion-distribution companies from' their affiliated circuits, expected vithin the next couple of months, ! would cover situation sufh as his. I In the event he finds that his di-[: ' vorcemenf does not give him ade-. quate relief, Mancuso was advised by Wright to go to court. i . Batavia theatre op, who visited ! sales managers or division toppers | of all the major companies during j his stay in New York last week, re- ported that his situation—he is op- po.sed in the town by two Warner . houses and a Dipson theatre^—had eased considerably since he publi- cized his difficulties in a lengthy letter to Variety recently. He said that Paramount and Metro had been particularly sympathetic and cooperative in giving him a fling at ■product to get the house on a pay- ing basis. strictions on the selling of product RKO, Par and no doubt any other company settling have the right on written notice to take advan- (Gontinued on page 63) 'Settlement Better Than 5-Year Fight'—-Bahihan At Luncheon to Reagan Barney Balaban, Paramount's president, last week told a cross- section of the company's executive staff that he preferred the present settlement of the government anti- trust suit "to fighting in the courts for another five years without knowing what would ultimately happen." Balaban declared that the same five-year stretch can he better used to establish the two new companies on a sound eco- nomic basis. His statement was made in the course of a luncheon tendered Charles M. Reagan, for- mer Paramount distrib veepee, at the 21 club Thurs. (24)." Some 26 officers of . the company and close associates of Reagan were Invited, Austin C. Keough, Par's veepee and general counsel, (Continued on page 22) SHERMAN SUES A&C NX Tnnes' ErrfHieons Hn 'Analysis' With the industry ali*eady battling gossip columnists and ca.suai writers who keep insinuating that '.'no one any longer is going to the movies," it found itself another target Sunday (27) in the ordinarily highly-respected. New York Times finaifcial section. In- dustryites close to major company fiscal affairs were shocked by the collection of half-truths and outmoded year-old facts by which ' staffer Thomas E. MuUaney arrived at the conclusion: "Doinestie motion picture companies have reached a turning point; the result of the convergence of a series of unfavorable developments which ■ seem certain to lead the industry to a position of lesser importance ■ au>ong the nation's industries." Among the most easily.^checkable of the misinformation was the statement that "only one major company has' jssued its financial report for 1948" (Universal, with a net deficit of $3,162,812). Ac- tually, statements have also been released by .Metro ($5,309,000 profit), Warner Bros. ($11,837,000 profit) and Columbia ($565,000 profit). MuUaney admittedly got his facts from Mariys S. Jalet, a se- curity analyst, whom he quotes as estimating that income in '48 before taxes and foreign revenue, would drop to $110,500,000 from $218,300,000 two years earlier. Industry financial men were amused by Uie "exactness" of Jalet's figures, since the coi^panies have . never-broken down foreign from-domestic incoihe in their reports' and such statistics coultl be nothing but the broadest of estimates. "Expanding inroads on domestic film revenues" :are partially being caused by television, MuUaney reports. In a check by Variety as recently as last week, company statisticians said they were un- able to detect any difference as yet in gross declines between tele- vision and non-television territories. Going into the losses of revenues froni Britain with year-old info, MuUaney comes up with a dire picture. AetUally,, of course,- the industry has already rearranged its affairs to .discount much . of the British market (so has the stock market as far as film shares are concerned) and, if anything, a brightening of the English sit- uation is looked for as a result of the growing failure oi.the coun-. ti-y's own industry to provide sufficient product to meet quotas. As for the sharp reduction in feature production which th^ Times says is expected, the company's 12 top distribs delivered-392 pix in 1948 and have scheduled 401 for 1949. L.A. Par (F&M) Seeks Out Because of 'Buy Par Pix Only' Clause FRED F0LAN6IN UPPED Los Angeles, Mdrch l. Frederick N. Polangin, director of Buchanan & Co.'s Coast film dept., has been upped to the post of exec director of the ad agency's Los Angeles oflSce. Promotion of Polangin, according to Rudolph Montgelas, agency prez,, is part of an expansion of the Coast office. Charles Coleman has been named veepee in charge of com- mercial accounts. Polangin was elected a v.p. last week. Saul Bass is Coast art director for film ac- counts. . . .^n oblique atta:ck on the Para- mount consent decree has beeii lauhchcid by Fan.chon; &; Marco's I*artmar' *.eorp,;,- operator :ii)f; the PiiraiiHdunt-^^ th^^trei Los ^Angeles, which. charges the ■Goverhitneht and the filtn coiApaiiy - with .seek^ ihg to skirt the directiveii of the tJ.S. Supreme Court. Partmar, as FOR BACK COMMISSIONS ^{;!ght%o interv^nTln rittlement , . ■ ■ , , I heanngs. It has been f eudmg with „,Angeles, March 1. Paramount for some time in an T, ^j'"i'^u^^f'""5'V former agent for j eviction action brought by the ma- Bud Abbott and Lou Costello filed . j^r to which Partmar has counter- superior court charg- claimed for $4,500,000 treble suit in L.A, ing the comics with failure to go through, with provisions of a set- tlement of their contract, arranged last year. Settlement agreement, according to Sherman, calls for 10% of the team's earnings at Universal-In- ternational for five; years, in lieu of numerous commissions owed him in the'past. Agent declares A&C paid him $12,000 up to last Dec. 24 and then ordered the studio to make no n^re payments. Sherman said he negotiated the team's film contract with U-I call-: ing for two pictures a year at $200,000 a picture, plus 20% of the net. - His commissions under the five-year deal, -he asserted, would have amounted to approxi- mately $450,000. damages. Actually, the subject of Part- mar's attack is a clause in the (Continued On page 63) N. Y. to Europe John Baragrey Jack Cummings Frederick Lonsdale Eleanor Powell David E. Rose Roberto Rossellinl Rudy Solmsen Europe to N. Y. Lou Bunin Augustus Goetz Ruth Goetz GUbert Miller Film Equipt. Export Falls Off From 1947 Par^s 650 Nationwide Houses Make It Still The Largest Theatre Chain The new Paramount circuit of approximately 650 theatres will embrace every section of the coun- try and probably remain the largest single group of theatres in the U.S. Paramount will end its joint qpera- tions in the ioUowing giant chains: Wilby-Kincey circuit; Butterfield. group; Buffalo Theatres; Arkansas Amusement Corp:; Central States Theatres; Interstate Circuit; Jef- Washington, March 1. It will retain, almost intact, some ; ferson Amusement; Maico chain; powerful wholly-owned chains such i Maine * New Hampshire; Para- as Chicago's Balaban & Katz cir- mount-(E. V.) Richards; Comer- cuit and the strong New England I ford and Tri-States circuit. group besides operating many key i rrUA .. ^u^"' %. it de-luxers. (Twenlxeth-Fox-s Na I company, however, has the equipment fell off last year from,""""' ^« *""^e«^»u<, yer, j^j.^^^ i„ 248 of these houses the record high of 1947, but the 'P'""^"' .''^^ ^l*''?.': «f« 7 ■ right is not a blanket one, trade nevertheless continued good. I ^, « Wceii/ to whittle , tg^^^ ^ ' ^ The but ex- group .) to a lower total than Figures released today (1) by the ] ii ,' U. S. Commerce Department dis- close that 383,482.000 feet of mo- I Addition of other theatres to the tion picture raw stock was exported I chain, after termination of mpst in 1948. This was a drop of about partnership holdings, is not 15% below the 1947 total. The ex* banned. New houses can be ac- port of exposed feature films to^ quired if the court is satisfied that taled 294,677,000 linear feet, only j the expansion ''will not unduly re^ slightly less than during: the previ- i strain competition." Not requir- cus year.; ! ing court okay would be the re- Exports of such motion picture i placement of wholly-owned houses equipment as cameras, projectors, Most through destruction or con- Bound units, arc lamps, and screens | version _td non-theatrical purposes has a dollar value of $10,972,000 This was. 30% behind the preceding year, with all types of equipment sharing in the decline. Largest drop in raw stock export was in the Standard 35m stock, which slumped by 25%. Renewal of leases or the tion of additional interest in whol- ly-owned houses can also be pushed through sans coui-t supervision. Of the more tiian 1,000 partner- ship houses, the circuit must cut [ the ties in 945 houses. This iueans in various named situations. From another 16 theatres bracketed as partnered with an investor, the ties must also be severed, but Par has the right to buy back nine of these theatres. Partnerships must be severed in at least one-third of the houses within one year after entry of the decree. Two-thirds must be sold within two years and the balance in three. To protect the company ifrom holdout partners, Par has the right to buy out the partnership in- terest in verboten theatres provid- ed the company sells the theatres within six months after their ac- quisition. With reference to the 449 whol- ly-owned theatres. Paramount must seU a specified 69 of these within two years. This action is required to open up all closed situations In towns exceeding 25,000 population. However, the new company or the parent outfit may withhold up to 12 from the market if it is unable to sell on reasonable terms. This dozen would then be sub-leased to outsiders until the market eases up. 35 In Florida The sale of wholly-owned houses particularly hits the Florida States circuit. In Florida, Par must get' rid of 25 houses alone. Other the- atres are scattered through Illinois, Minnesota, North and South Da- kota, New York, Tennessee, Utah and Ohio. All pooling agreements must end. The Buffalo tieup with Loew's terminated yesterday (Tues.) under the decree. The Buttterfield hold- ings in which Par and RKO are pards must be sliced by Nov. 8. Several restrictions apply to the new theatre unit: For-one, it can- not operate, book or buy features through any agent who is known to be also acting for any other exhib, indie or affiliate. Circuit is also barred from making or enforcing a d6al which restricts the right of any other exhib to acquire a film. B&KsBigBreaii Under the Decree That old saw about the ill wind and its penchant for goodness works out for Paramount so far as one situation in the consent de- cree Is concerned. While Par's Balaban & Katz circuit blankets Chicago and ordinarily would be fair game for the Government's divorcement epidemic, B&K es- capes almost 100% under the terms of the settlement. Out of approximately 100 theatres, only - four houses—the Iris,. McVickers, North Center and United Artist! —must be divested.- Ironically, new theatre company won this break because of the re' strictions on;'selling and booking effective in Chi as a result of th« (Continued on page 16) N. Y. to L. A. Paul Ackerman Watson Barratt Anthony Bartley ' Sidney Bernstein David Butler Alexander Cohen William Danziger Marlene Dietrich Roy O. Disney J. J. Donohue Humphrey Doulens Glenn Ford Howard Hawks.^. Russell Holman Deborah Kerr Dorothy Kirsten Charles Levy William B. Levy Gordon Lightstone Marijane Maride Rudy Montgelas Oscar Morgan Richard Morgan Ted O'Shca Hugh Owen H. C. Potter Paul Raibourn Cesar Romero Per Scavlan Alfred W. Schwalberg George Weltner Richard Whorf L. A. to N. Y. Rupert Allan John Beck Joseph Bernhard Carol Brandt Harry Cohn Bullets Durgom Lee Eastman Richard Erdman Mai Ferrer Cy Feutr William Guthrie Al Horwits Johnny Johnston Gilbert tCurland Keye Luke Paul MacNamara : 'Joseph Mankiewicz Charles C. Moskowitz Virginia O'Brien Milton E. Pickraan Robert Rosscn: Mendel Silberberg Lee Tracy