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HUGHES-RKO
'5
NO
DEAL SETTLED;
MAJOR CHANGES PLANNED
Payment Over $8,825,000;
Atlas Corp. to Retain
Big Stock Interest
HOLLYWOOD—RKO Radio began a new
phase of its lengthy and checkered industry
career when, bringing to completion of one
of the most important transactions in recent
motion picture history, Howard Hughes' bid
for Floyd Odium's Atlas Corp. Interests in
the company was accepted by Odium as "firm
and final."
In announcing acceptance of the Hughes
offer (involving payment of more than $8,-
825,000 for some 929,000 shares of RKO stock)
Odium disclosed that since he had reached
a tentative agreement with Hughes some
days previously, a "higher cash offer" had
been received from other quarters. Odium
said he accepted the Hughes deal, however,
because of Hughes' "indicated plans with respect
to the future of the company" and because
Atlas Corp. will continue to hold a
block of RKO option warrants.
lai-ge
FULL STATEMENT BY ODLUM
Odium's complete statement:
"The tentative contract that Howard
Hughes and I entered into several days ago
permitted me to withdraw if within a period
of time I should obtain a higher cash
offer from others. I have received such an
offer but not withstanding this, I have today
made the purchase agreement with Howard
Hughes fii-m and final and the shares wUl
change hands within the next day or two."
(Odium's statement was issued May 11).
"I accepted the Hughes deal in preference
to the alternate bid having in mind Mr.
Hughes' indicated plans with respect to the
future of the company. These plans are important
to Atlas Corp. not only because it
has been the sponsor for RKO during more
than 12 years past, but also because Atlas
Corp. eliminated from the sale to Hughes,
and will continue to hold, a large block of
RKO option warrants and is therefore maintaining
a direct and heavy financial interest
in the company's progress and future."
Thus Hughes, multi-millionaire oil and
aviation tycoon and film producer, moves into
RKO with control of 24 per cent of the stock
in the company, finalizing negotiations which
See Goldwyn Renewal
Of RKO Release Deal
New York—Samuel Goldwyn Productions
is expected to renew its distribution
deal with RKO for another year within
the next few weeks. Goldwyn is reported
to have denied that he was planning to
drop his option to renew.
Reports that Goldwyn was planning a
merger with Robert Young's Pathe Industries
and Eagle Lion have been called
"improbable" by a Goldwyn representative.
Goldwyn's present commitment with
RKO expires June 30.
No Changes Reassured
Rathvon Statement
HOLLYWOOD — Definitely setting at
In
rest any and all rumors of widespread
changes in management and lower-strata
personnel because of the Hughes takeover,
President N. Peter Rathvon issued
a blunt and reassuring statement to RKO
employes.
"The protracted negotiations between
Mr. Hughes and Mr. Odium," Rathvon
said, "have given rise to many groundless
rumors and the circulation of much misinformation.
"I have had numerous conversations
with Mr. Hughes and we seem to be in
agreement in all matters of policy and
there is no reason to assume that it will
be otherwise in the future.
"Mr. Hughes has no hungry army of
relatives looking for your jobs, nor substitutes
waiting to step into the RKO
management.
"Mr. Hughes has many and wide business
interests and much experience in our
industry. I believe he will be a valuable
and constructive influence in our company.
"Now that the excitement is over, let's
all settle back to work."
Hughes himself issued no statement.
had been under way since last winter and
which, at one point, were reported definitely
dead.
Studio spokesmen reiterated—as reported
previously by BOXOFFICE—that to the
best of their present knowledge Hughes
planned to make no immediate changes in
personnel, operations or the company's commitments
to release the product of several
independent film-makers.
Dore Schary, vice-president and production
chief, had no comment to make on culmination
of the Hughes-Odium negotiations. As
disclosed earlier, his five-year contract has
approximately four more years to run and
contains a clause permitting him to bow out
should he so choose in the event of a chahge
of management.
HISTORY OF RKO CORP.
The present RKO Corp. stems from the
old Mutual Film Corp., organized in 1913 and
which, through various transactions, emerged
as FBO (Film Booking Offices of America).
This was merged in 1928 into the Keith-Albee-Orpheum
Corp., which in turn gave way
to the Radio-Keith-Orpheum Corp., taking
over control of KAO and the Orpheum theatre
circuit. A subsidiary, RKO Radio Pictures,
absorbed Pathe News and other Pathe
production assets in 1931 and two years later
RKO Corp. went into receivership.
A plan of reorganization was approved in
1939 whereby a new company, financed largely
through Odium's Atlas Corp., was formed
and over which Odium, until his deal with
Hughes, had exercised control.
Executive command at the studio itself has
run an equally chameleon-like course through
the years. In charge of production under
RKO's various previous corporate entities
have been William LeBaron, Merian C.
Cooper, Pandro S. Berman, Samuel Briskin,
Harry Edington, Joseph I. Breen, the late
Charles Koerner, President N. Peter Rathvon
and Schary.
Hughes, born in Houston, Tex., in 1905,
took over active control of his father's business,
the Hughes Tool Co., at the age of 20
and entered the film production field in 1927
with the organization of the Caddo Co. Subsequent
production endeavors included the
Sturges-Hughes company, in association with
Preston Sturges; California Pictures and
Howard Hughes Productions. He has produced
such top pictures as "Hell's Angels,"
"Scarface" and "The Outlaw."
No Du Mont Control
Raibourn Tells FCC
WASHINGTON—Paul Raibourn, vicepresident
of Paramount Pictures, insisted before
the FCC last week that Paramount does
not have control of Allen B. Du Mont Laboratories
and is willing to dispose of its 29 per
cent holdings for $10,000,000. Allen B. Du
Mont has offered $6,000,000. Paramount's
original investment in Du Mont cost $164,000.
The FCC has been holding up three applications
for television station licenses
sought by Paramount subsidiaries. The company
already holds two and has been seeking
its quota of five. The FCC contends that
Paramount's interest in Du Mont constitutes
control and that, therefore. Paramount
is not entitled to three more stations, as
Du Mont already has its full quota of five.
After the hearing the FCC took the case
under advisement.
Raibourn stressed that at no time has
Paramount attempted to dictate policies for
Du Mont, or to participate in its daily business
operations or conduct joint research.
Originally, he said, Paramount's holdings in
the television company came about through
the conversion to stock of a $108,000 loan
made to Du Mont for television equipment.
Paramount had wanted to experiment with
television, he added, and were having difficulty
getting equipment. Du Mont was the
only place they could get it.
Replying to questioning by Jack Blume.
FCC hearing officer, Raibourn asserted that
Paramount is not in control of operations at
Du Mont, that therefore the operations meet
Du Mont's needs and not Paramount's. He
said that Du Mont is interested in the manufacture
and broadcast of television and Paramount
feels that they are not yet certain
that such is the most advantageous use of
television.
Raibourn left the intimation that Paramount
Is vitally interested in theatre television
but wants to continue to experiment.
BOXOFFICE :: May 15, 1948
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