The Winning Numbers

When Howard Hughes sold control of RKO four weeks ago, the buyers promised to clean out the company from stagehands on up. They did, lopping off a batch of executives and underlings. Heading the new cast of characters were President Ralph Stolkin, 34, and his father-in-law, Abraham L. Koolish, 60, a member of the board. Chicagoans Stolkin and Koolish had put up 40% of the down payment* made by their five-man syndicate.

Having swept out the top floors of RKO's disordered house, Stolkin and Koolish last week announced that there would be no more mass shake-ups--"only constructive additions." Actually, movie-men have wondered whether the Stolkin-Koolish combine itself would be a "constructive addition'' to RKO. Last week the Wall Street Journal raised the same question in a series of stories that stirred up Hollywood and Wall Street.

Riding High. Director Koolish had a life story as full of ups & downs as a movie serial. He got his start with the K. & S. Co., founded with a Chicago partner in 1915, to sell cameras, jewelry and novelties by mail. Sometimes K. & S. mailed out unsolicited merchandise, gambled that enough people would send in their money to turn a profit. Often Koolish mailed out punchboards, furnished the merchandise prizes for the lucky winners. He spread out to candy (Chicago Mint Co.), counter devices such as peanut vendors and handgrip measurers (Pierce Tool & Manufacturing Co.), silk stockings and insurance. Koolish was so successful that he made a fortune now put at $4,382,348; he also built a fat record of complaints with Better Business Bureaus.

Three times the Federal Trade Commission ordered one or another of Koolish's enterprises to halt its "false and misleading" claims and other practices. One Koolish company, Westminster Life, sold mailorder insurance that offered payments of "up to $7,500" on premiums of only $1 a month for an entire family. The Chicago Better Business Bureau was told by postal inspectors that 67% of the death claims were rejected, and 24% brought payments of $10 or less. Among the small-print conditions on Westminster health inSurance: policyholders were insured against chicken pox, mumps and measles--provided they were over 60 and under 80. Westminster and Koolish were indicted for fraud in 1948, but the charge was" dropped because the indictment was faultily drawn. To such charges, Koolish, who gave up punch-boards years ago, says: "That's going back a long way." Now one of his major interests is Empire Industries, a company specializing in direct-mail promotion.

Punchboard Empire. In many of his enterprises, Koolish was associated with son-in-law Stolkin. Through Monarch Sales Corp., Stolkin himself built up a punchboard empire to sell radios and ballpoint pens; he sold out for $1,000,000 in 1948 (he recently said he was worth $3,433,690). Stolkin had his troubles too. Complaints to Chicago's Better Business Bureau against Monarch swelled to 298. The FTC cracked down on "deceptive sales practices." Postal authorities also warned Stolkin against unlawful use of the mails to conduct a lottery. (Stolkin satisfied all but 28 B.B.B. complainants through settlement, and agreed to stop the activities the Post Office Department objected to.) Together and separately, Koolish and Stolkin branched out into other fields, including oil, cattle, radio stations, a loan agency, and TV tubes.

RKO's other new owners:

P: High-living, chance-taking Ray Ryan, 48, who started as a trucker in the oilfields, and now claims his oil production exceeds 5,000 barrels a day. Ryan figured briefly in the Kefauver hearings when it turned out that he and Racketeers Frank Costello and Frank Erickson had an interest in the same oil lease. Ryan has gone 50-50 with Stolkin and Koolish in many oil ventures and in the Martin & Lewis movie, At War with the Army.

P: Director Edward ("Buzz") Burke, 32, a millionaire who is a partner with Ryan in oil, and with Stolkin in West Coast radio stations at Portland and Seattle.

R Vice President and Director Sherrill Corwin, 44, a Los Angeles movie-theater owner and a director of the Theater Owners of America.

$2,000 a Week. To run RKO's administration and finances, the new owners signed up Arnold Grant, 44, as chairman. A top motion-picture lawyer and partner in the Hollywood firm of Bautzer, Grant, Youngman & Silbert, Grant had met Stolkin & Co. a few months ago when they asked his firm to wind up the final details of the RKO deal. He made such a good impression that they gave him a five-year contract at RKO at $2,000 a week. Grant, who was given no hand in production, knew the syndicate members as oil and TV parts men; apparently he was unaware of their other activities in the past. But after last week's furor, there was little doubt that, in the interests of the company, Grant would insist that changes be made in the board of directors and an independent board named.

Chairman Grant and RKO, whose stock has dropped nearly a point (to $3.87) since Hughes sold out, will have their work cut out for them putting RKO back on its feet. Not a picture has been started on the lot in four months. The new management hopes to get production up to a rate of 18 to 26 pictures a year within the next twelve months.

Wall Street and Hollywood gossiped that RKO's real gold mine lay in its huge library of old films, and that the new owners could clean up in a hurry by selling the library to TV stations. The mere rumor of such a deal was enough to get theater owners up in arms last week. But actually, such a move would make little economic sense to RKO at present. In addition to its old films, RKO has a backlog of upwards of $35 million worth of unreleased pictures. If exhibitors boycotted the new films, as they threaten to do if RKO jells to TV, the studio could easily lose more than a TV deal might make. President Stolkin also soothed the exhibitors with word that RKO was planning no such sellout to TV at present. Said he: "RKO movies and television are not married, but engaged."

* The sale price: $7,345,940 for 29% control, or $7 a share for stock that was being traded at $4.75. Because of the premium they paid, the buyers were allowed to make a down payment of only $1,500,000, given 2 1/2 years to pay off the rest.

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