Variety (November 1950)

Wednesday, November 1, 1950 P^^iETY PICTURES 9JM m PICONS’ FOR IfWOOD Howard Hughes’ projected deal 4- WB, Justice Dept Following a year’s maheuveririg, Warner Bros, and the Department of justice have reached a new and with the Harry Brandt group ap- pealing less a certainty than ever, likelihood is that the N. Y. statu- tory court, which heard the indus- try antitrust case, will determine the manner in which Hughes must dispose of his 24% stock Interest in the new RKO theatre company upon divorcement.^ M con- sent decree makes no provision for disposition of the stock, other than it is to be placed in trustee^ ship. Decree states, “the interest so trusteed shall be held and dealt with upon terins approved by the Gourt.” Left open, consequently, are such matters as control of the shares, possible restrictions on dividends and a time, limit for dis- position of the stock by the trustee. Persons representing Hughes in the negotiations with Brandt stat- ed they ’ believe Hughes would be free to collect dividends on the stock for an indefinite period, i,e., so long as he could show he had no “reasonable” purchase offers. On the Brandt side, it was incon- ceivable that the court Would ap- prove any setup not placing re- strictions on Hughes. ' At least a partial precedent was seen by observers in the Para- mount consent decree provisions on exchanging of stock. In this, dividend payndents on theatre com- pany stock were limited to 50% of the total amount, with the balance held by the trustee for payment when the holdet dropped his shares in one of the two compa- nies. The thought widely ex- pressed is that Hughes, similarly, may collect only 50% of theatre dividends until sale by the trustee of his stock. Additionally, it is anticipated the N Y. court will place some time limit on the stock disposal by the trustee. Extent of control which Hughes will have on the securities during the trusteeship also must be determined. All this, of course, leads to the possibility that the Brandt syndi- cate might await these future de- velopments if interest in buying the Hughes holdings remainSt un- changed. Brandt feels he doubt- less has made the best offer to Hughes and has no competition from other bidders. Thus, it is reasoned, he could deal with the trustee When appointed by the court and in that way may swing even a better deal, with less aggra- vation, than in negotiating direct- ly with Hughes and his represen- tatives. Brandt Itep Optimistic Houston, Oct. 31. Sam Dembow, Jr., at Theatre Own- ers of America convention here, continued to express optimism on possibility Harry Brandt’s deal for purchase of RKO circuit was being consummated. Chief negotiator for Brandt, Dembow said he may go directly to the Coast for further talks with Howard Hughes when he deaves here Friday (3). Hollywood, Oct 31. Allen Wilson resigned as v.p. in charge of studio operations at Re- public after 15 years on the lot. He became associated with Herbert J. Yates at the old BiOgraph studio in N. Y. back in 1930.' Five years later he accompanied Yates to Hol- lywood when the latter took over the Republic lot. Wilson plans to vacation for at least a year. After that he will de- cide whether to return to pictures or to retire permanently. The Scene Liked Best Hollywood, Oct. 31. Among the questions on a com- ment card at a sneak preview here last week was: “What scene in the picture did you like best?” One answer was: “1 liked the scene in the lobby after the picture, when the producer was bawling out the director.” Philly Outfit Maps Booking Expansion Philadelphia, Oct. 31. Already representing some 55 theatres as a buyer and booker, Allied Motion Picture Theatre Service, Inc., mapped plans for fiir^ ther expansion at its annual stock- holders meeting held last Wednes- day (25). Detailed reports of offi- cers and an audited financial state- ment for the combine’s second year of operation were approved by stockholders. Following the election of an li- man board of directors, the new board named Sidney E. Samuelsoh as prexy; Ben Fertel, veepee; Al- bert M. Cohen, secretary; E. B. Gregory, financial secretary; Cecil Felt, treasurer, and E. Roy Sullen- der, assistant treasurer. Active Operations of the organization are supervised by SamuelsOn. Defense in Suit Eagle Lion Classics’ complaint of monopoly and conspiracy in its $15,000,000 anti-trust suit against Loew’s and RKO Theatres in the N. Y. area is expected to draw the reply that the distributor’s prod- uct simply failed to meet the standards of the two circuits. While formal answers to the charges are not due until Nov. 27, spokesmen for the two N. Y. chains admit there was some “exclusion” of ELC films, as charged. But they, hasten to add that the preference of major company pix was pre- dicated only on quality and was not fOr the purpose of excluding ELC per se. While the plaintiff has been steaming Over the N. Y. booking situation over a long period,.it is apparent that the brush given its “Destination Moon” by the two circuits constituted the boiling- over factor which led to the suit. ■Theatremen associated with the de- fendants acknowledge the film was a handsome grosser when it played the Mayfair theatre bn first run in N. Y. However, they say this was a “flash affair” and the film would not have stood np in the nabe runs where audience demands run high. Meanwhile, ELC executives are to submit to examination before trial on Nov. 7 on an RKO petition. STBXMAN’S ‘SOUND’ IN 4-THEATRE TEST Intensive test of Robert Still- man’s “The Sound and Fury,” to determine national sales and pro- motional approach, has been set for -four theatres. Film will run a week in each situation with UA spotters on hand to gauge reaction. Story buiidis to violent Climax wherein in- furiated townsfolk seize a pair of kidnappers from local jail and then stage a twin lynching. Test runs haiVe been set for Nov. 15 at the state theatre, Lincoln, Neb.; Granada, South Bend, Ind.; Victoria, Wheeling, W. Va., and the Sothern, York, Fa. Advance screen- ings for special groups are now be- ing held in each spot. During the regular engagements: the UA reps will directly poll audiences,-rather than invite comments on preview cards. Following the runs, the fleldmen will confer in N. Y. with Irving Rubine and Arthur SachsOn, Still- man v.p. and sales chief, respec- tively, and Gradwell L. Sears, UA sales head, on mapping national re- ^.leasing plans. Rubine and Howard Le Sieur, UA ad-pub head, collab- orated on two separate promotion campaigns also to be tested at the 1 four theatres. Broadway continues to offer slim pickings to Hollywood in the way of suitable screen properties, Out of 13 openings so far this sea- son, no more than two plays have piqued film interest, and reaction to them has been mild rather than enthusiastic. Story editors for the major com- panies are looking forward to the coming crop witb some hope. They see more possibilities for film yarns ahead than behind them. There will be few, if any, film sales, however, unless prices are r.plative- ly low, since studios are still on ah economy kick that has them favor- ing original stories at the mbrnent. Major interest created so far has been by Wolcott Gibbs’ “Season in the Sun,” story of a writer at Fire Island, N. Y. Metro has made in- quiries, but hasn’t gone beyond that. Feeling of the story eds is that the play would take a lot of working^ on to build sufficient ac- tion around the characters to get a suitable script, but that it could turn put very well. “Affairs of State,” Louis Ver- rieuil comedy starring Celeste Holm, has attracted a bit of film interest. ’Madam’ Tod Topical “Call Me Madam,’’ the Irving Berlin-Lindsay & Crouse musical smash, is attracting no Hollywood bidders because of its topical na- ture. Since it is likely to run for several years on Broadway before it would even be possible to start filming it, studios feel it an unlike- ly candidate. Furthermore, its kid- ding of a U. S. ambassador abroad and general satire on American for- eign policy is believed to make it unacceptable for foreign niarkets. Studios would neither like to of- fend the State Dept, nor be ac- cused of lack of patriotism, “Curious Savage,” comedy by John Patrick, has been pretty much eliminated as being “in bfid taste” for pix in satirizing inmates of an asylum. “Daphne Laureola,” “Leg- end of Sarah,” “Pardon Our French,” “Burning Bright” arid “Day After Tomorrow” have all been pretty much dismissed as uri- likely possibilities. Among the^ future entries that the Hollywood gang are looking forward to are “Guys and Dolls,” in which Paramount already holds an interest through ownership of one of the Damon Runyon stories on which it is based; “Bell, Book and Candle,” the John van Druten play, on which there’s some ques- tion as to whether: the public vdll accept a kind of witchcraft in mod- ern dress; “Hilda Cranj,” “Coun- try Girl,” “Man and Wife” and mebbe “Second Treshold,” Sol Lesser already owns screen rights to “Black Chiffon,” having acquired them in England prior to opening of the play in New York. “Strange Santuary,” which Albert H. Rosen will produce this winter, is already set for Universal-Interna- tional production. Rathron Scotches Talk He’s Di^atisfied With ELC Film financier N. Peter Rathyori, prior to returning to the Coast this week, expressed complete satisfac- tion with the way that Eagle Lion Classics has been marketing “Des- tinatiori Moon.” Former RKO preXy, who financed the film in part, scotched trade reports that he had been irked with ELC’s selling of the space fantasy. Rathvon said “Happy Go Lovely,”, a Vera Ellen-David Niven starrer which his Motion Picture Capital Gorp. backed, has wound up shoot- ing in , Ertglahd. But whether it will be released through ELC, he added, is undecided at the moment, since “several other people” are also involved in the decision. Produced by Marcel Heilman in association with Associated British Pictures Gorp., “Lovely” is the sev- enth film which MPCC has bank- rolled, either in whole or in part. His financing organization, Rath^ von said, is now considering “three or four” other properties. Salt Lake Judge OKs Hawk'Co.’s^^^^% Salt Lake City, Oct. 31. Order allowing inspection of the books of eight theatres in this ter- ritory operated by the Claude Hawk Corp., defendants in a Per- centage action brought by the eight distributors, has been en- tered in U. S. district court by Judge Willis W. Ritter.' VanCotti Bagley, Cornwall & McCarthy are local attorneys for the plaintiffs, and Sargoy & Stein are N. Y. counsel. Loew’s Seekiiig While Warner Bros, and; 20th- Fox appeared finally exiting the industry’s antitrust battle through settlements with the Department of Justice, Loew’s is still searching out a possible means of averting divorcement. Major is said to be heading back to the U. S. statutory court in N. Y., or at least .consider- ing the move, with a petition for amending the tribunal’s three-year divorcement edict. ! Reports are the company is pin- ning its hopes on argument that the need for divorcing is precluded by the fact that competition con- tinually is being restored to the industry. Representing itself as unique among the majors because of its limited theatre holdings, Loew’s stand is that divorcement by it would be too drastic in view of its industry position and would contribute nothing in way of open- ing the competitive market. How far Loew’s can get with such a move is a debatable ques- tion among observers. It’s pointed up in some quarters that the film firm has a precedent to rely on which considerably bolsters its po- sition. This took the form of an amended decree in the Govern- ment’s case against the Aluminum Corp. of America (Alcoa). With this in mipd Loew’s reportedly feels the way is clear for the N. Y. court to revise its decree so that the company could escape the divorce remedy if, after a period of three years, the firm can prove that competition is fully restored to the industry. Following entry of the decree against the majors, Loew’s attor- neys privately expressed the opin- ion that the company’s promise to show competitive conditions after the three-year period would have been, accepted by the tribunal if co-defendants ^Oth-Fox arid War- ners had not pursued the same course. Loew’s legalites Said at the time that if the company was the only one to offer the divorce- ment-escaping proposition the court probably would have approved it. They added, however, that the three judges on the bench ap- parently failed to see how they could favor any one company over the others when all three defend- ants were tarred with the same monopoly brush. When Loew’s decides pri the new approach to the court, there’s no doubt that the Department of Jus- tice will be on hand with strong opposition. Plaintiff, said to be mindful of the idea which the com- pany is entertaining, can be ex- pected to charge that the major is seeking actually to beriefit from the divorcement by RKO, Para- mount, ^ WB and 20th. Depart- ment’s argument would likely be that all firms were guilty of the monopoly charge and there’s no reason why one of them should escape the sentence which in effect Was given the other four. apparently final agreement on terms of a corisent decree in the industry antitrust suit. Accord is now before the Treasury Depart^ ment, which is expected to give its approval momentarily. This is to be followed by consummation of the deal by the department and the major’s bowing out of the case with plans to effect divorcement within a year, Actually/the firm may try to effect the split of its theatres from distribution-production the latter part of August, when the new fiscal year begins. On the second front, involving 20th-Fox, agreement on divorce- ment also has been reached with the Department as basis for a con- sent decree, it is reported. How- ever, this company and the plaintiff still have a few divestiture iSSues to be resolved and these will mean more pegptiating. In any event, it is clear that both the Department arid WB are con- vinced they have a deal, although there have been no official state- ments from either side. Treasury’s affirmative ruling, okaying the tax- ation aspects of the firms reorgan- ization, is expected to be imme- diately followed by formal closing of the deal and, the announcement by the Government. Decree reportedly provides for a . straight exchange of stock on the basis of one-half share in each of the two new companies to be. formed for each share of present parent corporation securities. Each of the three Warner brothers will be called upon to place their shares in one of the two firms in trustee- ship, with intentions of eventually disposing of the holdirigs. Resembles Par Plan Divestiture schedule for the new Warner theatre company appar- ently will bear close semblance to the Paramount plan agreed to by the Government, but with far fewer, theatres to be dropped. Terms of the WB decrefe direct the disposi- tion of 70 to 80 theatres on the basis of one-third of the proper- ties each year for a period of three years. WB presently operates about 425 theatres in the U. S., thus the new exhibition firm ultimately figures to wind up with approximately 350 houses. Theatre holdings outside the U. S.,’ including the 37V^% ownership of Associated British Pictures Corp., operating about 425 theatres in Great Britain, will inure to the new picture company. Financial standing of the two firnis to be created promises to be healthy. Parent corp. has a net working capital of close to $50,- 000,000, it is understood, with out- standing debt continuing on a downward trend. Important bol- stering factor is that more than one-half of the WB domestic the- atre properties are said to be owned in fee, free and clear. In preparation fpT the divorce, WB has been buying its own stock on the open market fori the past several months. In the period from mid-June to the end of last Seplemr ber the major had acquired a total of 304,400 shares as a means of reducing the capital structurei Twentieth similarly has been ac- tive in stock purefiases irt anticipa- tion of divorcement, with a pro- gram mapped for retirement of its preferred issues; Bank Gets’Stampede’ Los Angeles, Oct. 31. Bank of America obtained com- plete rights to Prudential Pictures’ “Northwest Stampede’’ through foreclosure of its first lien on^ the property. Fprieclosure also wiped out all other subordinate liens and deferments. Picture, made nearly two years ago, Was financed by the bank to the extent of $650,000 while the budget mounted to about $1,500,- 000. Among those whe took de- ferments Were the distribiitori. Eagle Lion, for $300,000; Joan Les- lie for $25,000; Manning Post for $50,000, and Al Rdgell and the late Dave Hersh for $37,500.