Giants Pinned

More than one big cinema company has been, during the last two years, like a wrestler who is within inches of being downed, heaving, struggling, just keeping shoulders off the mat. While the Law has watched closely as referee, spectator-stockholders have squirmed on their chairs waiting for escape or final collapse. Last week decisions came in two giant bouts-- both adverse. Paramount Publix Corp. and Radio-Keith-Orpheum Corp. went into receivership in quick succession.

First to go was Paramount with $166,000,000 in assets, 1,500 theatres. In the late days of the Coolidge bull market it was regarded as the model of the industry. Its bankers are conservative Kuhn, Loeb & Co. Direct cause of the receivership was the company's inability to meet interest on a $13,000,000 bond issue. Frank Arthur Vanderlip, onetime president of National City Bank, now famed for his market sponsorship of volatile Auburn Auto stock, promptly organized a protective committee.

RKO, a 200-theatre, $105,000,000 unit controlled by Radio Corp. of America, went to the mat next day. President Merlin Hall Aylesworth wearily explained: "The corporation is unable to obtain cash necessary to provide for its maturing obligations." Reorganized last year but not drastically enough, RKO last fortnight moved from dingy offices near Times Square, Manhattan, to elaborate quarters in Rockefeller Center. Subsidiaries operating the two new Rockefeller Center theatres were not affected.

Downfall of the film industry was largely caused by the notion that a huge chain of theatres was necessary to the successful distribution of pictures. Messrs Fox, Zukor, Warner et al. tumbled all over each other in their rush to buy theatre properties. The idea was to have a "well integrated'' concern, comprising production, distribution and exhibiting divisions. When Depression set in, Fox, Zukor, Warner et al. found themselves hung up with theatres bought at boom prices on which they had to pay heavy mortgage interest or fancy rentals. William Fox segregated his exhibiting division as Fox Theatre Corp., with the result that Fox Film is still in the ring although the theatre company has been in receivership for six months. A trend toward decentralization has now set in with many theatres returning to their old owners. Paramount and RKO will probably dispose of unprofitable units, in any event will have the courts behind them in their efforts to scale down or abrogate burdensome leases. Courts will probably also take a realistic attitude toward salary scales.

Despite the Paramount and RKO collapses, reports persisted in both Hollywood and Manhattan last week that Fox and Warner Brothers were negotiating a merger. Fox stock sold at $1.88 a share, Warner at $1.50. Only film company still squarely on its feet last week, only company which held aloof from the pre-Depression scramble for theatres, was Loew's Inc., whose stock pays a $3 dividend, sells at $16 a share.

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