Boxoffice-November.24.1951

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BOTH SIDES ARE HITTING HARD IN RKO THEATRES PROXY FIGHT Counterattack Is Launched By Management as Greene Group Repeats Charges NEW YORK—The RKO Theatres proxy battle waxed hotter during the week, with no indication of a letup until the December 6 meeting to elect the board of directors. The stockholders committee headed by David J. Greene renewed its attack on the present management in a second circular mailed stockholders, and the management replied with its own cicrular to supply "a clearer picture of the entire situation." WANT STOCK-HOLDING DIRECTORS The committee circular again argued that the company should have directors with substantial stock holdings and that the certificate of incorporation should be amended to prevent the issuance of stock options at will. It also compared RKO Theatres earnings with those of other companies, and expressed worry about television competition. It noted that the present directors "have bought soine more stock"—700 shares—bringing their holdings to 1,800 shares representing an investment of about $8,100. It charged that of the 15 directors and/or officers who comprise the management, only four own any stock in the company. Securities and Exchange Commission statistics were quoted to show that during 1950 the theatres operated at a profit margin of 8.5 per cent, compared with 12.8 per cent for United Paramount Theatres, 12.7 per cent for Warner Bros, houses and 11.9 per cent for 20th Century-Fox houses. The question was asked what is being done to meet the "formidable competition" of television. UPT was cited as attempting "to secure a foothold in the radio and television industry as a hedge against a possible decline in theatre boxoffice receipts." and the UPT management was called one that "inspires faith in the theatre industry." REPLY BY MANAGEMENT The management's reply, dated November 17, was to the committee circular dated November 1. It asked stockholders to note: 1. The committee's letter makes no charge, and no charge could honestly be made that the present management has not managed the company efficiently. 2. The committee's letter makes no charge. and no charge could honestly be made against the character, business ability and business standing of any member of the present management. A reply to the second committee circular, dated November 15, was planned for the weekend. Under the heading: "Here is what the committee failed to tell you about our board members," the management circular said: "They failed to tell you that two of the present directors. Ben-Fleming Se.ssel and William J. Wardall. a vice-president and director, respectively, of the Irving Trust Co., represent 929,020 shares of stock. They failed Hughes RKO Holdings Pass Million Mark NEW YORK — Howard Hughes is increasing his holdings in RKO Pictures Corp., according to a report of the Securities and Exchange Commission. This, listing him as beneficial owner of more than 10 per cent of the RKO common stock, said he bought 48,800 shares of the common in October, bringing his direct holdings to 1,013.420 shares. Hughes' RKO Theatres stock has been trusteed with the Irving Trust Co., which took over voting rights under the consent decree. Hughes, however, continues to receive dividends. He has appealed to the U.S. Supreme Court over a time limit imposed on his ownership of the theatre stock. to tell you that these 929,020 shares which support the management are abolit 24 per cent of the entire stock issued. "Instead, you are given the impression that the present directors represent practically no interest in your corporation. Simple mathematics will quickly show that the two abovementioned directors represent stock worth close to $4,000,000." The 929,020 shares are those trusteed by Howard Hughes with the Irving Trust Co. in accordance with terms of the consent decree. Irving Trust can vote them as it sees fit. and the management statement indicates it has knowledge that they will be voted in favor of the present management. The Greene group claims current holdings of 231,688 shares and is seeking to add materially to them. The mystery of who, if anyone, Is "behind" the committee in attempting to gain control of RKO Theatres is touched on briefly in the following sentences: "When the chairman of the committee first approached management, repeated efforts were made to find out just whom he represented and the extent of their holdings. These efforts failed." LITTLE DATA ON MORTON RKO Theatres officials said during the week they still did not know the identity of any large interest behind the committee. One wondered off the record if the nomination of Daniel O. Morton had any special significance. Morton is an officer of Albert M. Greenfield & Co., a powerful Philadelphia real estate brokerage firm with offices in New York. The committee statement showed Morton as owning only 1.000 shares beneficially but representing the Greenfield interest "which, through an affiliate. Bankers Securities Corp., owns 37.000 shares of the stock." The RKO Theatres circular contrasted the backgrounds of the opposing nominees, Sol A. Schwartz, president, was credited with 30 years of service to the company in various positions, Leland Hayward with being a leading legitimate producer with wide experience in entertainment fields, and J. P. Dreibelbis with being a vice-president of Bankers Trust Co. whose advice on financial matters is valuable. Sessel was described as similarly qualified. Edward C. Raftery was listed as a member of the law fu-m of O'Brien, Driscoll & Raftery with 25 years of experience m all phases of the industry. Wardall was listed as a director of Best Foods, McKesson & Robbins, Irving Trust Co., Sylvanla Electric Productions and Western Union. 'PROFESSIONAL STOCK DEw\LER' In contrast, the management called Greene "a professional dealer in stocks and commodities," who "claims no experience in motion picture and theatre operations." It noted that Jay Emanuel's name does not appear on the committee, but that he is a candidate for the board, adding: "It would seem that the only nominee of the committee who is experienced in the motion picture business is Jay Emanuel, who is a director of Translux Corp. which operates theatres in New York, Boston and Washington, in which cities certain of your RKO theatres are also located. If elected a director of your company, how would he divide his allegiance?" Robert Parkes Baruch was described as a partner of the stock exchange firm of H. Hentz & Co. and as claiming "no experience in motion picture and theatre operations." A. Louis Oresman was listed as an attorney and a certified public accountant also without motion picture and theatre experience. The management circular called the warning about stock options a "bugaboo." saying it is not an unusual provision, that the board will not abuse its power and "has no plan or intention of issuing any stock options to anybody." It mentioned nine-month net profits in 1951 of $1,053,844, with $502,205 earned in the third quarter and showing an improvement over the previous quarters, and the October 15 payment of a dividend of 10 cents a share, i totaling $391,491. PROBLEM OF DIVIDENDS "This initial dividend." it said, "was declared September 5 because at that time directors had before them results of six months' operation and a decided improvement in third-quarter earnings was indicated. Therefore, in the judgment of your board, a payment could be made to stockholders on sound business principles. When results for the full year are known, the matter of a dividend will again be presented to the board for their consideration." A summary said the board consists of experienced business men. "some thoroughly experienced motion picture and theatre operators." that two of the directors represent the voting power of 929.020 shares of stock in support of the management, that management is concerned solely in continuing to improve the earnings record of the last nine months, and that stockholders shouldn't be misled by the stock option "bugaboo." i 12 BOXOFFICE :: November 24. 1961 i
Fox Earnings for '52 In an Upward Trend NEW YORK—Consolidated net earnings of 20th Century-Fox and its subsidiaries for the 39-week period ended September 29 amounted to $2,147,629, it was reported this week (20 1. While this figure was considerably below the earnings reported for the same period a year ago, business has shown a decided improvement since the second quarter of 1951 when profits slumped badly to $196,337. They were up to $1,076,515 in the third quarter and the fourth quarter is again expected to show an upturn. The net consolidated earnings for the 39 weeks ended Sept. 29, 1950 were $6,595,723, but this amount included $2,401,210 in income of prior years received from countries with currency restrictions. A comparison of the 39-week periods follows: 1951 1950
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Boxoffice-November.24.1951

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