Variety (Mar 1949)

BACK TO BALLY KEYS PIX SELLING Ramifications in RKO Theatres Buy Difficulty being encountered by several syndicates whibh are aim- ing to get coin together to bid against Floyd Odium for the RKO theatres is Federal Reserve Board regulation "U," it was said in New York banking circles this week. This regulation, which gov- erns margin purchases, limits tHe use of stock as collateral beyond 25% of the loan. That means that any group desiring to buy- RKO theatre control from Howard Hughes would have to have 75% of the cost in cash, since bank loans on such a deal aren't permissible beyond 25%. Hughes, when the RKO producing-distributing and theatre cdm- panies are broken up in accordance with the recent consent decree^ will hold 24% of the circuit stock, which he is forced to dispose of. Odium, from whom the wealthy film-oil-airplane magnate bought RKO, has first refjisal on the theatre shares. He must match the best outside ottetK- A, number of syndicates are known to desire the stock and are attempting 'to either raise the coin themselves or make a deal to ■ join forces with Odium. Minimum price agreed to by Odium is $4,500,000. Under the Federal Reserve regulation that means at least $3,37Si000 would have to be put up in cash, whicb is obvir Qusly difficult for anyone with less - than the vast resources of Odium's Atlas Corp. Banks feel that the shares representing 24% of RKO merit a much larger loan than 25% of the value, but their hands are tied. : . In the meantime, Hughes announced in Hollywood yesterday ; (Tuesday) that he had designated Merrill Lynch, Pierce, Fenner & jseane and The First Boston Corp; to receive proposals from pros- pective purchasers of his holdings in the new theatre company. He said he has received many inquiries and had selected the in- vestment banking firms to simplify and centralize negotiations. If Outbid Exhibs Want to Know What Rental Terms Beat "Wm Exhibitors casting about for some means of knocking the pins from under competitive bidding have come up with a new com- plaint—that if they lost out on a picture, the distributors will never permit them to see . the winning bid. New squawk follows close tfn the heels of reports that the Gov- ernment is standing pat on bidding as the only non-discriminatory method of selling pictures. Distrib chiefs, in answer to the complaint, declared their attorneys have assured them they don't have to reveal a winning bid under the decree, as it's presently set up. In line with this, some sales execs revealed for the first time that many exhibitors bidding over their heads in order to buy a picture away from competitors often are able to get an adjustment on th6ir losses. Because the decree states the film must be awarded to the best offer, the adjustment cannot be below the second highest bid^ (Continued t>n page 24) Bernkrd East For Bankroll to Split FC from Cinecolor Hollywood, March 1. Joe Berrihard* prexy of Cinecolor and Film Classics, left for New York over the weekend to raise capital to bring about divorcement of the two companies. Plan is reported for Bernhard to promote coin so that FC can pay off Cinecolor obligations owed . by distribution firm, which has been a subsidiary of color company for several years. Approximately : $1,000,000 is Involved, it's under- stood. Bernhard will huddle with four eastern groups in effort to raise . this financing, he announced, prior to trip east. Scheme would split t\ii!o companies into separate or- ganizalions having no- connection with each other, and Bernhard would liead Film Classics and bow i put of Cinecolor. At annual meet* i ing Feb. 14; he was reelected prexy o£ both companies. Project has been in smoulder- Choose Your Partner The business of splitting RKO's personnel into two groups to man the two new companies which will ultimate--: ly emerge from the company's consent, decree is now being pushed. Company's legal staff has been asked to choose sides. Legalites have been told that they can indicate their pref- erence for either exhibition lawyering or productioh-distri- bution. Seek Extra 500G In NT Rebate Dissident 20th-Fox stockholders, in a hearing yesterday (Tuesday) before N. Y. Supreme Court Jus- tice Ferdinand Pecora, argued that a $3,500,000 settlement by Charles P. Skouras and three other Nation- al Theatres execs of a 19144 NT stock option deal is "insufficient" on the basis of todaiv's returns. Through their'"attorneys they ar- gued that the quartet should kick in with another $500,000 to com- pensate for inflation. Settlement was previously okayed on Feb. 15 by Referee Jacob De- mov as a "fair and reasonable" of- fer. Latter bid was first made early last year in connection with the 1944 stock transaction which gave Skouras and the three other NT officers a 20% share of the company. Two years later they (Continued on page 16) BEST FORM OF P.i. ^ Revival of ^ the hoopla days of olditime showmanship, in which 20th-Fox is now attempting to pace the industry, can- be one of the most potent forms yet devised for bettering the industry's public rela- tions. That is the opinion of other trade observers who believe that getting the stars out to rub should- ers with the public will do more to stimulate the boxoffice, plus reviv- ing general enthusiasm for pic- tures, than any of the intricate p.r. systems riicently aired. . Attempt to retain the boxoffice vitality, of course, is still the most important factor in current film exploitation, according to these in- dustryites. Indicating the other things to which the public can turn for amusement,.it was pointed out that penny arcades are spring- ing up throughout the country, just as miniature golf; bridge, and other home games enjoyed a tre- mendous fad during the last gen- eral b.o. dip. Twentieth, which has. come up with a series of ballyhoo stunts in the last several weeks plugging its new pictures, is putting its main emphasis on getting the stars 'out to the- public^ That was the reason for its "Down to the Sea in Ships" junket to New Bedford, Mass., locale of the film, two weeks ago and its current touring of such (Continued on page 22) : - O'Shea Upped As Par Streamlines Sales Setup For Theatreless Future Ed Raftery't Wisecrack . Washington, March 1. Federal Trade Commission continued hearings here last. Friday (25) on its charges that United Artists failed to prop- erly indicate in its advertising tliat it had cut J. Arthur Rank's "Colonel Blimp" when it distributed in the U. S. At- torneys are to file proposed findings next month. At Friday's hearing, FTC attorneys produced a femme witness who testified that she. did not like the cut version. To which UA counsel Edward C. Haftery replied: "I'm not surprised. . We couldn't find anybody who liked either ver- sion." ■ Small-Ratoff Film, 'Black Magic' (Italo) ViaUAat25%Terms Reversing its previous stand against accepting films for distri- bution for less than a 27V&% fee, United Artists closed a deal over the weekend for release of Edward Small's "Black Magic." UA will handle it for 25% under a single- picture contract, with the distrib sharing in the advertising to the extent of 25%. UA's willingness to take the pic under the first 25% pact is has accepted in several years is due to the fact "Magic" is classed as a "big" film and the company hopes to get a heavy gross out of it. It was made by Gregory Ratoff in Italy for Small with Orson Welles, Nancy Guild and Akim Tamiroff. First American ^ic to be made in Rome after the war, it uses the lo- cale for scenic and background Negotiations have been going on for weeks between UA prexy Grad Sears, his assistant, Paul Lazarus, Jr., and Harry Kosiner, Small sales chief, in New York. It has been a tug-of-war on the distribution fee, with Kosiner refusing to give any- thing beyond the 25% on which Small previously distributed films via UA and Sears and Lazarus holding out for at least 27V^%. They also wanted the producer to commit to them several additional pix; which he refused to do. SIMPP Not To Oppose Decree Society of Independent Motion Picture Producers, which had been awaiting with much interest the ■Paramount consent decree, will take no action to oppose it when it is presented to the court in New York tomorrow (Thursday). £llis Arnall, SIMPP prexy, en route east from the Coasts hailed the decree as a break for indie pro- ducers. Despite Arnall's statement, it has been learned that all the indies do not see eye to eye with him on all points. They feel that the divorcement aspect of the decree is very favorable, but feel that more study is needed of the trade practice provisions. These include clauses which permit a return to modified block booking and grant- ing of franchises to certain inde- pendent theatres. SIMPP's great interest in the de- cree reflects its constant effort to open up competitive situations in order to get its members the best (Continued on page 55) Hollywood, March 1. Parmount's big studio meet has swung into fast action both in pro- duction aindv distribution to trim the company's sails for its new course as, a major without domes- tic theatre holdings. As to produ^i tion, the company is going into a larger volume of films—undoubted- ly, an immediate reaction to the need for hypoed pix rentals and volume of business. In distribu- tion, Par's sales setup has been re- aligned in a shuffle which brings on five - division chiefs and: a new assistant general sales head. B. K. (Ted) Q'Shea has been tapped for the new No. 2 job un- der Alfred W. Schwalberg, recent- ly-named general sales manager. O'Shea steps up from the post of mid-eastern division chief. New division heads are Harry Goldstein and Harold Wirthwein. Goldstein. takes over a newly-cre-' ated' mid-eastern division with headquarters in Kansas' City, He formerly was Cleveland -district manager. Wirthwein's new spot is midwestern division manager, a promotion from ass't Coast division chief. Other division jobs stay as is. George . A. tSmith continues as Coast topper; James J. Donohue as central division head; and Hugh Owen as eastern. ■ Oscar Morgan is reaffirmed as general sales man- ager for shorts and newsreels and Gordon Lightstone as Canadian sales head. . Production-wise, decision has been made that Par will spend as much in '49 as in the previous (Continued .on page 24) - EARLE SWEIGERT EXITS PAR AHER 32 YEARS Karle W. Sweigert, Paramount's Philadelphia district manager, has handed in'hiS resignation following 32 years with the company. Sales exec will stay on until the company names his successor in Philly. Sweigert formerly was mid- eastern division chief for Para- mount befoi^e being switched recently to the district spot. His division chores were turned over to E. K. (Ted) O'Shea. Ankling of his job follows closely on the switch. Sweigert is currently negotiating for a new spot In the film business. Weitman^ Hyman^ O^Brien^ Netter^ Reagan Mentioned In Par Theatre Reshuffle With the ink still wet on the Paramount consent decree, the groundwork has already been map- ped, for the new operational prp- ^^^^ ^^^^ cediire and top personnel of the ing statr forLme" tinie, buVis'^un- ] independent Paramount theatre derstood to have finally broken out] circuit. The new chain coming at annual meeting, which saw A. 1 »nto existence Jan. 1, 19o0, will be- Pam Blumenthal resigning as chair- divided into three separate dm- man of board of both companies, sions, it is rehably reported, and ' a trio of h.o. exces will handle the managerial chores. Understood that Robert M. Weit- man, managing director of the N.Y. and Brooklyn Paramount theatres, will head up one division. Edward LV Hyman, Paramount circuit yee- pee and chief aide to topper Leon- Mail Oscar Ballots Hollywood, March 1. i^inal ballots in the Oscar Derby Were mailed today (Tues.) to 2,000 jnembers of the Academy of Mo- wn Picture Arts and Sciences. .. . . , Votes must be returned by i ard Goldenson, will take over an- Wareh 15. nine days prior to the other division besides continuing presentations at the. Academy I as assisitant to Goldenson. A third Award Theatre. 1 man,- it isi, said, will be brought ih from the field to direct the third' division. Goldenson, of .course, will hold' down the skippers job. His .chief, legal counsel and the head of the reaf estate division is reported to be Walter Gross who is currently one of the mainstays in both de- partments of the present theatre wing. Robert O'Brien, at present secre- tary to the present company, who was active in effecting the Govern- ment settlement, is said to be I marked for a top job with the I new theatre circuit. According I to one report, O'Brien will be a i combined secretary and treasurer I in the newly-welded chain, i Leon Netter, another veepee in the present theatre subsid, is heikding'for an independent com- mand over a newly-created Florida States theatrp circuit. This chain, it is understood, will probably be pieced together out of theatres which Par must sell under the con- sent decree in Florida. StiU speculative but persistently rumored is that Charles M. Rea- gan, former distrib veepee of Par, will take over a number of part- nership houses of the Northio cir- cuit in Ohio. Reportedly, Reagan is now dickering with the banks to raise sufficient coin to make the deal. While the Paramount decree is brand new, plains looking towards its adoption have been in the mak- ing for many months. Belief is that Par has a step-by-step blue- print for unloading its partnership houses. Rank Arrives 23d in N.Y. And Due in Court 28tli In Nathanson's Suit Vs. U One of the reasons for J. Arthur Rank's early arrival in the U. S. ,wiU be to appear as a witness in the $1,000,000 damages plus injunc- tion action brought against him and Universal by Paul L. Nathan- son, head of. Empire-Universal Films, Ltd. Trial is slated to begin in the N. Y. supreme court, March 28, and Rank is slated to dock here March 23. Besides Rank, a number of other biggies will take the stand as de- fense witnesses. Scheduled to ap- pear are Nate J. Blumberg, U's prez; Robert Benjamin, head of Rank's U. S. organization; Matty Fox, veepee in U; and G. I. Wood- >ham-Smith, Rank's general counseK- Nathanson's action charges the defendants with breaching a pact which would have given his com- pany : exclusive distrib rights in Canada to eight British pix to be handled by United World Pictures. Latter outfit was later absorbed by U and the deal was dropped. Hp claims the loss of $1,000,000 on distribution fees which he I would have collected, ranging from ' 17% to 22%. Suit also seeks fu- ture distrib rights in the Dominion on Rank product. After appearing, as a witness in the case. Rank will: entrain for Florida to visit Robert R. Young, railroad magnate and controlling stockholder of Pathe Industries. He then heads west-before return^ ing in time to participate: in the Anglo-American Film council metts scheduled to start April 20. See AMPA Slate Set Nominating committee for the Assn. of Motion Picture Adver- tisers will present its slate of officers for the^ .coming year : to AMPA's membetship next week. Understood the committee, chair- manned by David Bader, will urge Max E. Youngstein, Eagle Lion's ad-pub. veepee and incumbent chairman of AMPA, to hold down the job for another term. Young' stein's term expires at the end of March. Committee meets Monday (7) to make its selection. Other members are Vincent Trotta, Gordon White, Blanche Livingston and Chester Friedman.