Hollywood Happy Ending

The most potent force in U.S. moviemaking is a pair of Manhattan lawyers: Robert Benjamin, 49, and Arthur Krim, 48. At a time when things in Hollywood are going from bad to worse, they have demonstrated a new way to make fat profits and good pictures--or possibly vice versa. When, in early 1951, they took over United Artists, one of Hollywood's oldest and biggest film-distributing companies, it was losing $100,000 a day. Last week, in the first annual report since a public stock issue last spring, President Krim reported record profits of $3,262,000 on record sales of $70 million. Furthermore, the fast-moving company's first-quarter sales are up a handsome 17% over last year, and volume this year is expected to top $80 million.

Benjamin and Krim furnished U.A. with a happy ending by building up the independent producer to be a major factor in moviemaking. They put stars, directors and producers in the drivers' seats, a practice that Hollywood once regarded as "putting the lunatics in charge of the asylum." This attracted a notable collection of talented moviemakers who turned out dozens of pictures that won high profits and praise--High Noon, Man with the Golden Arm, The African Queen, etc.

Though overall movie profits have plummeted, the prospects for profits on good pictures, says Krim, have never been better. "When you have a successful picture these days," says he, "the success goes beyond anything dreamed of years ago." When Hecht-Hill-Lancaster, now the most successful independent film maker, was just starting out, it asked U.A. to back it in what Benjamin called "a lovely picture we thought we might lose a little money on." It was Marty. It cost $300,000, has so far picked up $5,000,000 plus Academy awards.

Lucky Gambles? Many Hollywoodians regard Benjamin and Krim as merely cool and lucky gamblers. But they are much more than that. They have a keen artistic sense, will not agree to finance a movie and distribute it unless the "package'' is right; i.e., the script, stars, producer and director all fit together. They read 50 to 60 scripts a week, back their artistic judgment with two of the shrewdest business brains in moviemaking.

They first met when they joined the Manhattan law firm of Phillips & Nizer (now Phillips, Nizer, Benjamin & Krim). Benjamin had worked his way through the College of the City of New York and Fordham Law School; Krim was a Columbia Phi Beta Kappa and editor in chief of the Columbia Law Review. They specialized in accounts in the entertainment field, became so well known that in 1951 United Artists came to Krim for help.

Started by Mary Pickford, Douglas Fairbanks, Charles Chaplin and D. W. Griffith, United Artists had been skidding for years, was on the verge of bankruptcy because its two surviving owners. Chaplin and Pickford. could not agree on how to run it. Krim agreed to take over, but drove a hard bargain. He and Benjamin got control of the company for nothing. If they turned a profit within three years, they were to get half the 20,000 shares outstanding at $1 a share.

To keep the company going, Krim borrowed $3,750,000 from Chicago Financier Walter E. Heller, who still backs many U.A. films. To get movies for U.A. to distribute, Krim bought the distribution rights for 200 films from Robert R. Young's Eagle Lion B-picture company, swiftly sold them to distributors for cheap, middle-of-the-week pictures. Within four months the company turned a profit, and Benjamin and Krim got half the stock. U.A. bought out the rest later, issued $17 million in stock and convertible debentures a year ago.

3-D Boomlet. With the company in the black, the pair decided that the best way to get more and better pictures to distribute was to build up a stable of independent producers and stars to make them. The independents were only too anxious; they not only had free artistic rein, but by capital-gains deals could make millions if their pictures were successes. One of the first U.A. pictures, Bwana Devil, drew no critical hosannas, but it cashed in heavily on the 3-D boomlet it helped launch.

U.A. followed with such pictures as Moulin Rouge, Trapeze, Summertime, was willing to take chances that major studios balked at. When Mike Todd could get no backers for Around the World in 80 Days, U.A. rescued him with $2,000,000, arranged a further bank loan. To date, the picture has paid more than $16 million to U.A. in rentals.

Not all the movies were successes. Alexander the Great was a flop and lost $1,000,000; so was St. Joan, which U.A. somewhat reluctantly backed because the leading lady was unknown. But U.A. has taken the big loss on St. Joan without a murmur because it feels that Producer Otto Preminger was a moneymaker before--with The Moon Is Blue--and will be again. So U.A. will back him.

U.A. bets not on one picture but on the independent's record. If a producer runs over his budget, U.A. lets him alone, keeps its fingers crossed; the extra cost may be made up at the box office. Says Director William Wyler, who is $1,000,000 over his budget as he winds up making The Big Country: "I wish these guys would squawk. It would make me feel better."

U.A. could lose its shirt if it backed a long string of bad pictures. But Krim and Benjamin, whose U.A. holdings are worth $6,500,000, are protected by the fact that, in addition to owning a piece of the pictures, they get 32% of the gross rentals for distributing them. They have a further hedge in their TV operations, have the TV rights to 200 films they have distributed so far, plus 45% of Associated Artists Productions, which owns the Warner Brothers' pre-1950 library.

This year U.A. plans to release 36 major features at a cost of $60 million. The fact that U.A. is betting so much money worries Krim--but not for long, because he thinks the pattern set by U.A. cannot miss. Says he: "We're in a growth industry."

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