Loew Blow

From Wilshire Boulevard to Wall Street, stockholders in the world's biggest moviemaking company chose up sides in the most colossal management fight in Hollywood history. The prize: control of Loew's Inc., which encompasses Metro-Goldwyn-Mayer, M-G-M Records, some 170 U.S. and foreign theaters, plus a $33 million funded debt. To head off the battle, Joseph Vogel, Loew's president of three weeks, flew from his Manhattan office to Hollywood, hustled through the first leg of a monthlong, no-martini inspection, promised to find out what was wrong.

In New York a spokesman for Wall Street's Lehman Bros, and Lazard Freres claimed that together they can control 3,000,000 of Loew's 5,142,615 shares and throw out the board at the next annual meeting on Feb. 28. If it takes over Loew's, the Lehman-Lazard group would probably keep Vogel in charge of Loew's Theaters division, which he headed until last month, and hire a president who would drastically cut MGM's staff, replace Movie Production Boss Dore Schary, sell off some money-losing Loew's theaters, and possibly consolidate MGM's high-overhead moviemaking facilities with Warner Bros.

"Best Studio, Worst Production." Lehman and Lazard Freres own 150,000 shares of Loew's stock outright, reckon they can count on the stock support of several hundred thousand shares held by their customers and friends, 144,000 shares held by Affiliated Fund Investment Trust, 262,000 held by Manhattan Brokers Thomson & McKinnon for an unidentified Canadian group, some 150,000 shares claimed to be represented by Manhattan Attorney Ben Javits (brother of New York's Attorney-General Jacob Javits), more than 200,000 shares held by customers and associates of Manhattan Broker Arthur Wiesenberger, about 90,000 more owned by French and Swiss interests.

The investment houses feel that Loew's "has the best assets of any company in the business--fine theaters all over the world, a record company, a fine music company. It has the finest studio in the U.S. and the finest in England, plus the greatest film library of all. Yet it is doing worse in production than any other movie company."

Last year, M-G-M studio, geared to make 45 to 50 pictures a year, made only 25, lost money. The movie losses, say the dissidents, were made up by Loew's generally profitable theater operations, The re-release of several old films (Gone With the Wind, The Wizard of Oz.), the leasing of MGM's film library to TV (returns to date: $26 million). Loew's overall 1955 profits amounted to $5,311.733, or just 16% of the total profits of Hollywood's Big Six moviemakers, v. Loew's 32% slice in 1950, when profits were $7,854,454.

In all, the Lehman-Lazard interests charge that the M-G-M movies made during the tenure of MGM's Production Boss Dore Schary, which dates from 1948, have lost an estimated $25 million. (Schary claims that he went in the red only two years.) The dissidents note that MGM's successful box-office movies, such as The Blackboard Jungle and Trial, have been outnumbered by the flops--The Prodigal, Jupiter's Darling, The Swan, Somebody Up There Likes Me, etc.

Family Affair. Some insurgent stockholders are also fueling their campaign with charges of excessive salaries and nepotism indulged in by M-G-M brass. Says New York Judge Louis Goldstein, who says he represents more than 200,000 shares: "In 1955, Nicholas Schenck, then Loew's president, received $171,786 in salary and nontravel expenses; Charles Moscowitz, vice president and treasurer, received $156,429; Schary, $200,000."

Judge Louis Goldstein also asserts that Schenck and Moscowitz farmed out to companies partially owned by their relatives Loew's Theater candy concessions (1954 sales: $3,589,423), plus all Loew's business for advertising and publicity ($4,026,000 in 1954), carpets and furniture ($325,000), posters ($201,000).

The insurgents want to rid M-G-M of the influence of aging (74) Nick Schenck, now honorary chairman. They have two hurdles ahead. Not only must they actually line up enough proxies to oust Schenck and Schary, but they must find a competent man to replace Vogel. They have already offered the presidency to Leonard Goldenson, president of American Broadcasting-Paramount Theatres, Abe Schneider, vice president of Columbia Pictures, and Lew Wasserman, president of Music Corp. of America. All three turned it down. Said the Lehman-Lazard spokesman: "At February's annual meeting, the two investment companies will be able to walk in and take control without a fight--provided they find the right man to direct the company. If they do not find the man, it is anybody's guess what will happen to Loew's."

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