Fox's Fix

Familiar is the story of the small merchant who, unable to meet his notes, said to his banker: "Were you ever in the pants business?" The banker replied that he certainly never was. "Well," said the small merchant, shrugging his shoulders. "you are now."

Often was this story repeated last December (TIME, Dec. 16) when William Fox turned over the management of his cinema business to his bankers and creditors, Halsey, Stuart & Co. and American Telephone & Telegraph Co. Last week, however, it appeared that Mr. Fox was not altogether willing to admit that the bond house and the utility company were in the cinema business. Some of Mr. Fox's stockholders seemed more gravely concerned than ever about their equities in the Fox companies. These stockholders, indeed, threatened a receivership and thereby produced not only a decline in Fox securities but a general bear raid on the entire Market.

Fox v. Bankers. Owing some $90,000,000 in short term notes, Mr. Fox had in December consented to the formation of a voting trust in which he had one vote, Halsey, Stuart & Co. one vote, American Telephone & Telegraph one vote. Halsey, Stuart held Fox notes for $12,000,000 and American Telephone & Telegraph (through Electrical Research Products, Inc.) held notes for $15,000,000. According to a Halsey, Stuart official, Mr. Fox agreed to turn in the resignations of a majority of the directors of Fox Film Corp. and Fox Theatres Corp. But when the bankers asked for these resignations they were not forthcoming. Inasmuch as the present management cannot be displaced until April 15 (the annual stockholders' meeting) Mr. Fox has three and one-half months' grace. During this period he might, of course, succeed in paying off his notes and resume unquestioned control. So the bankers, who had planned to lend the Fox companies $100,000,000 (by underwriting an issue of first mortgage bonds) held up their financing plans and waited to see how successful Mr. Fox might be in getting the money elsewhere.

Fox v. Stock A Holders. Both Fox Film Corp. and Fox Theatres Corp. are organized on the basis of 100,000 shares of Class B voting stock and 900,000 shares of Class A non-voting stock, with Mr. Fox and his immediate associates holding the Class B and its attendant control.* Knowing that $900,000 in dividends were coming due Jan. 15, and that the trustees were planning to merge all the Fox corporations into a single holding company, holders of

Fox Film Class A threatened to institute a receivership suit, preferring a public settlement to whatever arrangements Mr. Fox and his bankers might or might not reach. But when Mr. Fox announced that Fox Film assets were $73,000,000 in excess of liabilities, the stockholders, reassured, decided that no immediate receivership was necessary. As another sedative for stockholders, the company also last week announced that it will soon launch a $20,000,000 production schedule, the biggest it has ever undertaken.

Sheehan. To many an observer of the tangled Fox situation, Winfield R. ("Winnie") Sheehan appeared as man-of-the-hour. Vice president and general manager of Fox Film Corp., Mr. Sheehan has been the operating genius of the Fox company. Joining the Fox organization in 1914, he organized Fox Foreign Exchanges in Canada, England, Scotland, Wales, Ireland, on the Continent and in South America and the Far East. He was the first cineman to concentrate on the foreign market, from which today comes 40% of the industry's revenue. He founded Fox News and Fox Educational Department. In 1915 he opened the first Fox studio in Hollywood. _ It was Mr. Sheehan who boomed Fox Films from a production standpoint, his first great success being What Price Glory? Other Fox-Sheehan successes included Seventh Heaven, Four Sons, Street Angel. Among cinemactors discovered by Mr. Sheehan are Janet Gaynor, Charles Farrell, Victor McLaglen.

General Manager Sheehan lives at Beverly Hills in a house of which he supervised the design and building. It has tapestry-covered walls, a sunken garden, a library ceiling imported from Spain. Three butlers serve dinner guests from gold plates and golden goblets. To summon them, Mr. Sheehan keeps on hand a dented, rusty cowbell which he jangles loudly when service is required.

Mr. Sheehan was born in Buffalo, N. Y. in 1883. His father came from County Cork. His uncle was the late Bishop Richard A. Sheehan of Waterford & Lismore. Winnie Sheehan, at the age of 15, fought in the Spanish American War (as private, then corporal in the 202nd regment). His first job was reporting for the Buffalo Courier. Later he went to Manhattan, was police reporter for the New York Evening World. During the administration of Mayor William J. Gaynor he was secretary to the Fire Commissioner and later to the Police Commissioner. He joined Cineman Fox on Jan.1, 1914.

Together with Sales Manager James Grainger and Cortland Smith of the Will Hays office, General Manager Sheehan is now one of a committee of three who are actually conducting the Fox business. He is popular with the cinema industry, with Wall Street.

*Last September Fox Films authorized increase of Class A from 900,000 to 4,900,000 shares but these additional shares have not been issued.

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