Bitter Bust-Up In Filmland

Revolt at Transamerica

It was noisy and public enough to have been the bust-up of a particularly rocky Hollywood marriage, which in fact was just what it had been. The principals were the top executives at Transamerica, the San Francisco-based insurance-manufacturing-entertainment conglomerate, and the management of its United Artists subsidiary. With Oscar-winning smashes like Rocky and One Flew Over the Cuckoo's Nest, United Artists is Hollywood's most successful film producer. But after closing the books on their best year ever, U.A.'s entire brain trust, including Chairman Arthur Krim and President Eric Pleskow, up and quit.

In 1967 United Artists merged with Transamerica, which was built by John R. Beckett, a former investment banker. Krim, now 67, and his longtime colleague Robert Benjamin, 68, U.A.'s finance committee chairman., are among Transamerica's biggest shareholders, with a total of 505,000 shares, worth about $7 million. But when Pleskow suddenly quit, Krim and Benjamin decided to follow. Last week others joined the exodus, among them Senior Vice President for Production Mike Medavoy, 37, who is considered tops at measuring popular tastes and making money-spinning deals.

Krim cited a history of friction between the freewheeling movie firm and the textbook-style conglomerate. "This is one business that is really different," he said. Krim and Benjamin, both New York lawyers, acquired the business in 1951 from Charles Chaplin and Mary Pickford, who helped start the firm as a place that would allow independent film makers to work without the restrictions imposed by major studios. Run from a dingy Manhattan headquarters, U.A. has no production facilities, but operates in effect as a banker and distributor for movie people seeking an honest count at the box office and exceptional artistic freedom. It has attracted such diverse talents as Woody Allen, Francis Ford Coppola and Joe Levine. Laments Producer Norman Jewison: "You could walk into United Artists with any crazy dream, and no one would say it was preposterous." U.A.'s venturesomeness paid well too: its 1977 revenues of $469 million from movies, TV rentals, records and music publishing represented a 24% increase, while net profits for the first nine months alone were $20.8 million, larger than for any previous year.

Yet, Krim says, U.A. suffered all sorts of indignities, including the imposition by Transamerica of a computerized profit-forecasting system that Krim considered "a joke" in the instinctive movie business. But most galling of all were the consequences of the fact that under Transamerica's umbrella, U.A. had become an "invisible company," with no stock exchange listing of its own. Although shares of other moviemakers such as Columbia and 20th Century-Fox have been shooting up on the strength of box-office hits, Transamerica's stock has hung listlessly in the $13-$16 range. The U.A. executives saw the shares drop from a high of 40% in 1968, and Pleskow could not offer his subordinates contracts, bonuses or stock options. Consequently, he said, "as our success story grew, our top men became targets for other companies."

Beckett could share Krim's concern about flat share values. Despite its unimpressive performance on the stock exchanges, Transamerica also had an impressive 1977: its revenues increased from $2.7 billion in 1976 to more than $3 billion, while profits rocketed upward by 46%, to $169 million. (United Artists contributed about 15% of both Transamerica's revenues and its earnings.)

As United Artists' new chairman Beckett named James Harvey, who is also a Transamerica vice president for the leisure-group operations; U.A.'s chief executive will be Andy Albeck, who was formerly U.A.'s vice president of operations. Among other assets, they inherit a fat list of 26 movies planned for release in 1978, including Hair, Apocalypse Now, Lord of the Rings and Woody Allen's first film since Annie Hall. Beckett insists that U.A. will continue to prosper, pointing out that it still has "one of the best distribution systems in the world." Krim and Benjamin, who resigned from Transamerica's board last week and will not sell their Transamerica stock, may see an advantage there. "They are now in a position to go into the production end of the business," notes Beckett. That prospect is by no means definite, and the U.A. refugees are still considering several options. It would, however, afford the brilliant team a method of rewarding themselves handsomely and at the same time continuing their familial relationship with United Artists.

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