R. C. A., K-A-O, F. B. O.

Out of the swirls of scientific research, industrial promotion, amusement purveying and financial synthesis, the greatest U. S. amusement enterprise became imminent last week. Last spring Radio Corp. of America organized as a subsidiary R. C. A. Photophone Inc. to exploit a method of making and reproducing sound-pictures. Photophone is similar, and interchangeable, with Fox's movietone films. Both change sound waves to light waves, and reproduction reverses the process. Warner Bros, vitaphone uses phonographic discs for sound accompaniment with its pictures. Vitaphone and movietone had close tie-ups with cinema producing, distributing and exhibiting companies (TIME, July 9). Photophone did not. R. C. A., photophone's parent corporation, sought such tie-up.

During photophone's development the Keith-Albee vaudeville enterprise was swinging in a great, open parabola. It had only theatres and actors. But it was not a closed corporate entity, such as is currently found most profitable. Then Keith-Albee merged with the Orpheum circuit of vaudeville-cinema houses. That made KAO, which soon had tight alliance with Pathe Exchange (cinema producers) very potent. The eccentric amusement curve was closing toward an ellipse. Joseph P. Kennedy (TIME, May 28) closed it by becoming K-A-O's chairman. He was already chairman of Film Booking Offices, cinema distributors and theatre managers. This was an alliance, not a merger. It was weakly tied financially. It was weaker than the Paramount-Famous-Lasky, the Fox Film and Loew organizations. Warner Bros, merger with the Stanley Co. of America and First National Pictures three weeks ago also was stronger.

But imminently K-A-O with F. B. O. and their new accretion--R. C. A. Photophone Co.--is to be stronger, probably a $500,000,000 corporation.

Last week investment bankers, Lehman Bros, and Blair & Co. announced that a new corporation was being formed to include all three. R. C. A. is to own considerable, perhaps controlling stock. But of course R. C. A. itself will not be included in the merger. It will continue to dominate U. S. radio manufacture and wireless communication.