Variety (March 1950)

Wednesday, March 1, 1950 On its D (for divorcement) day,+ now scheduled ft>rv May 8, RKO must meet bank obligations total- ing approximately $6,500,000, After protracted attempts, RKO -has failed to win a new production loan agreement from the three banks holding its notes which would per- . mit the split into two companies without the lOan falling, due. The banks have refused to go for an amended agreement without impo- sition Of stricter terms and a high? i er . rate of interest and RKO has adamantly rejected those demands. Because of the impasse, plus the fact that other hanking houses are shying away from film financing at present, RKO’s high brass may plot out a course of operations without the revolving credit now available to it/ In lieu of the $6,500,000 Which the company must pay up on divorcement,, it Will be receiving $10,000,000 from the RKO theatre chain. / •/ / • 7 Reorganization plan provides that the circuit make an extraordi- nary distribution to the production- sales unit of that sum in cash. Pay- ment is by way of both a dividend and a reduction of capital by the, chain. At the same time, RKO’s/ operations may be somewhat crimped since the original plan of Operation took into account both the divvy from the circuit and the revolving fund. Three holdout banks are the Bankers Trust Co;, First National Bank Of Boston and Securityr-First National Bank of Los Angeles. Original revolving credit, reduced $500,000 yearly from a 1947 high of $10,000,000, Will be $8,500,000 in May. Notes call for 2V&% interest. When the three banks made their original demand for tougher terms, RKOers were inclined to discount the threat since it was felt that the company copld substi- tute one loan for another without too much trouble. Extensive feel- ‘Shanghai’ B.O. Gesture Syracuse, Feb. 28. . Because the current Chines* situation is hot headline news, RKO circuit is testing the b,oi. potential of two Paramount re- issue pix which focus on the Chinese scene. RICO Syra- cuse theatre is booking ‘‘Shang- hai Express,” Marlene Diet- rich starrer, and ‘‘The General Died at 'Dawn*” co-starring Gary Cooper and Madeleine Carroll, for* an April showing. If the package clicks, RKO will groove the pix through the ’ rest of its chain; Circuit induced Par to reis- sue the oldies. • V I (Continued on page 15) Time on Breakups No further delay beyond the March 6 deadline set by the N. Y. federal district court last week for the breakup of theatre partner- ships will be asked by RKO. Com- pany’s top-echelori believes RKO lias already complied with the re- quirements of its consent anti-trust decree in all respects blit one re- volving around its minority hold- ings in Metropolitan Playhouses. Those interests will be trusted on on the March 6 date. Compliance on the requirement to end all joint interests has been met, it is said, by sale of two houses in Cincinnati; Unloading of West Virginia interests; and suits now pending for dissolution of joint interests with Walter Reade and George Skouras. Bringing these two suits in court is said to meet the court’s order on partnership breakups. Meanwhile, talks will continue with SkpUras although RKOers re- fuse to predict any amicable deal in light of the on-and-off nature of previous gabbing. Renewal of ne- gotiations with Reade is also on tap iqllqwihg return of Walter Reade,‘Jr.,7 this week frdffi: a~Swiss Vacation. Deadline has been stalled several times with Government consent be- cause Of the dickering With RKO’s pards. However, if a deal is not reached by next week, company will file a statement of compliance. ■Mrs; StaggV 3d Encore Mrs. Carolyn Stagg returned to Samuel Goldwyn’s New Yoi'k office last week as eastern story editor. It is her third engagement in the /job. She last left the post last June after an 18-month stand. She had previously been there for two years, starting In 1945. One of the questions currently being mulled by both Wall Street- ers and industryites- 1 —Whether Par- amount will continue paying regu- lar 50c per quarter dividends fol- lowing its divorcement— will be answered early in March. On. the return of Barney Balaban, company prexy, from a Florida vacation in the next couple of Weeks, Par’s board will meet to decide the divi- dend question. At that time it is expected that first-quarter distri- bution returns will have developed to the point where they can be studied with reference to the poser. Board is also expected to fix a date tor the company’s annual stockholder meeting which is gen- erally held late in the spring. At that time, stockholders will vote their first new board of directors for the recently-emerged produc- tion-distribution company. Consid-? eration of offers for the purchase of Par’s holdings in DuMont tele- vision will probably also be on the agenda of the March session. Par has been paying regular divi- dends for a number of years. Ques- tion became hotter last week when United Paramount, its former the- atre chain, declared for a 50c divvy in According to latest figures aired, only 114,924 certificates of interest in UP have been converted into shares, while 3,148,352 CIs are still outstanding. This means that the great majority of UP stockholders are also stockholders of the produc- tion-distribution company. Action by Par on the dividend question is believed will be a determining fac- tor in whether stockholders will go for the production stock and un- load their theatre holdings or vice versa. U.S. Pictures In : ; New L.A. Suit Los Angeles, Feb. 28. :'•/ Mrs. Annie Fastenberg, a stock- holder i n Warner Bros.; filed suit in superior court demanding an ac- counting of _ profits on six films made by United States Pictures, headed by .Milton Sperling. Men- tioned in the suit, in "addition to Sperling, are Harry, Jack and Al- bert Warner. Complainant declares the , de- fendants conspired in 1945 to pro- vide unfair financial aid to Sper- ling, a relative by marriage, to the detriment of ; the Warner corpora- tion. After two years of intensive ef- fort, the Big Five has failed to crack the problem or making dis- tribution a - solidly profitable ven- ture. That bald fact, —viewed against the approaching loss of theatre revenues by divorcement, is now a matter of top concern among the company proxies. The odds are heavy, according to inside reports, against any of the big distribs collecting : a bare 6% return on their production in- vestment in current operations. One of the Big Five, RKO, is plunged into deep red while the other companies are either break- ing even or knocking out a profit that is small compared to the gross business. • . ; Twentieth-Fox is a prime ex- ample. Understood that 20th boosted its worldwide distribution gross in 1949 to a peak total of $95,000,000. Backed by strong b.o. entries, 20th’s revenues were boosted an approximate $6^000,000- $7,000,000 during the year over the previous year’s total. Company, however, netted only $2,500,000 despite its gains in revenue for a thin profit of less than 3% on its business. Company toppers are working feverishly on the problem and hope to lick it before the theatres are cut from under them, The smaller distribs, such as Columbia and Republic, have already forged into the black With solid gains dur- ing the past couple of quarters. The bigger companies are still baf- (Continued on page 18) Shavian Oldies Still Potent at B.O. Despite March 20 Start For New Danziger Film ; Hollywood, Feb. 28. Edgar^Tnmer^^'left~for~NT7*Y7:oveir the weekend to start direction March 20 on Danziger Bros.’ pro- duction. “St. Benny, the Dip,” at Eastern Sound Service studios. Dick Haymes stars, with Roland Young and Lionel Stander fea- tured. • - * Metro’sforthcoming appeal front the Federal court’s anti-trust de- cree may win for that company * longer time f6r divorcement than the three years provided in the Film exhibitors need have no fear that the playing of old films on television hurts their boxoffice. That’s opinion of indie distributor Jack Ellis, based on the per- formances in theatres of two films he’s now distributing, both of which are playing concurrently on TV throughout the country. Ellis has exclusive theatrical dis- tribution Tights in the U. S. and Canada to ‘‘Pygmalion” and “Major Barbara,” among others. Both films are among a group now being syndicated to video stations in all parts of the country by the N. Y. Daily News’ WPIX. In Wash- ington, Ellis said, “Barbara” played on video four days before it opened at the DuPont, an art house there, and yet it ran three weeks at the (Continued on page 18) Theatre Owners of America Will sift charges by its members that distribs are using competitive bid- ding as a .price-jockeying device rather than an above-board way of selling their product. That claim and others collected by TO A in the form of letters come up for dis- cussion today (Wed.) in the Open- ing session of a two-day exec com- mittee meet at the Hotel Astor, New York. Some . 20 committee members from N. Y. and the hin- terlands are expected. TOAers will piece together a proposed selling code to present to the major companies from a num- ber of suggestions compiled by a Subcommittee headed by . Walter Reade, Jr. . Meet plans to inaugu- rate a drive to limit competitive bidding to specified situations where exhibs specifically demand the widely-criticized method. Fol- lowup in the form of a. round- table huddle with sales toppers is an expected demand after the con- fab ends. One big gripe in the TOA files is the charge that distribs frequently use competitive bidding as a way of hoisting rentals by inciting ex- hibs to vie with each' other on choice pix. It is contended that product is then awarded on a pre- planned split without regard to the highest bid. The bidding, accord- ing to these complaints, was used only, as a device to jack up the price from the exhib already chosen by secretly advising him of the terms offered by his rival. Also looming large at the con- clave is : the business of ratifying the Council of Motion Picture Or- (Continued on page 16) , Government decision. First delay- ing step in the form of a 60-day stay on. the time to file a divorce- 1 ment plan has been granted the. company on its statement of in- tentions with reference; to another appeal to the U. S. Supreme Court. Longterm delay will be up to tile high court, once the company files; , If the Supreme Court grants the Metro application to. halt all pro- ceedings, company may stall di- vorcement for a total of four years. That is, of course, if it loses its appeal on an affirmance of the lower court decision. It is figured that a one-year delay is involved ; high court and awaiting a decision after argument. j Neither the Goverfimerit nor f company attorneys are . certain ; whether the time consumed in pushing the appeal will be de- ! ducted from the . three years now 1 provided for divorcement, Hovv- ! ever,. court’s granting of a 60-day I stay without. attaching; conditions : is viewed as promising for Metro.. Court order provides that the need for Metro to prepare a plan of divorcement is halted for the 160-day stretch. If the company appeals during that period, it gets another 30 days after filing in or- der to press an application for a j (Continued on page 22) REP MEETS APRIL 4 Republic’s annual stockholder meet is slated for April 4. Stockholders of record March 10 will be eligible to vote for directors j of the company at the meet. . paramount may call a halt to Its production of large-screen theatre television equipment unless the in- dustry wakes up to the need for in- stalling TV apparatus in its thea- tres within short order. Top Par- amounters feel that the c&mpany is bucking for the whole industry Without either recognition or the essential orders necessary to put the operation on a . sound going basis,- As-matters now standi Par’s television Wing is just about break- ing even on its equipment activi- ties. Company has been the first imj the field with its film intermediary system of large-screen video. Sys- tem now is in operation at the Par- amount theatre, Broadway show- case of United Paramount, and the Chicago theatre, the Balaban & Katz Loop house. Paramount Tele- vision Productions, Inc., the ma-. jor’s TV wing, has only four orders to fill for the installation of the- atre apparatus. Moreover, none others appear to be in sight.; Company expects to complete! two installations, those ordered by UP for Boston and Detroit, In April, Two others for UP houses in, Minneapolis and San Francisco will probably be delivered in JUne. Aside from the continuing interest of"UPTn“Ta'rg^^ the expectation of further orders from that ; chain, no other exhib has appeared on the scenfe to keep the TV wing in full operation. Paramount execs, headed by Paul Raibourn, who acts as presi- dent of the television subsid, are aiming to reduce the price tag on equipment now in the ‘ neighbor- hood of $25,000 per set. These offi-, dais, however, continually stress the need for large orders as the only economic way of slashing the per-set cost. Without these orders, no decrease in price is feasible. It is the belief of Par’s biggies that concerted action by 1,000 the- atres would solve the main hurdles blocking effective inauguration of iarge-screen television. Stream of! orders would bring down the price sharply, thereby bringing installa- tion within the reach of all mid* dling-to-big houses. Additionally, it would clinch the ability of exhi- bition to put on attractive, exclu- sive programs. New practice of. incentive bonus- es -o sales forces to spark increased , bookings on given pix is appar- ently taking hold. Following in-' f auguration of the system several weeks back by 20th-Fox, Eagle Lion , has now. set up the same sort of | deal for “Boy from Indiana,” indie- ! produced pic of Frank Melford and I John Rawlins. Two'producers have | agreed to cut in the entire sales 1 force on the profits of the film eur- i rently in release- throughout the country. Proposal calls for salesmen in each branch to collect 20% of the take over a “nominal quota” fixed by the sales org. When any branch has hit over the quota, 20% of all further revenue will be divided among the exchange’s personnel. Twentieth has set a similar plan for four British-made pix, Sir Alex- ander Korda’s “Anna Karenina” and “Ideal Husband” and 20th’s “The Fan” and “Forbidden Street.” ! Sales personnel will get 10% Of all ' further revenues on the quartet. Distrib hit on the melon-splitting ■ device to push the pix which have j been booked in only 23% of all available spots. Mrs. Brandt Exits Metro; Olin Clark Adds Chores . Mrs. Carol Brandt, Metro’s east- ern scenario chief, exited the com- ; pany Friday (24) instead of remain- ing on until expiration of her con- tract July 5. She turned in her; resignation about a month ago, at : which time it was announced she • would remain active until the July date. No reason was given for her premature departure. Mrs. Brandt’s leaving makes Olin H. Clark active operating head of ; Metro’s eastern story department. His new duties will supplement those he has been performing dur- ing the past eight years, prior to and during Mrs. Brandt’s tenure. Clark will report directly to Ken- neth MacKenna, head of the studio scenario department at Culver Mrs. Brandt is going into the agency biz in New York in the fall.