Fox Out

The four-month battle for control of Fox Film and Fox Theatres companies (together the largest cinema enterprise in the world) last week ended with the decisive defeat of William Fox, who saw the direction of his companies pass into strange and hostile hands. To General Theatres Equipment. Inc., Mr. Fox sold 150,101 shares of Class B stock in his two companies--this block representing his personal holdings and including all the voting Theatres and a majority of the voting Film stock. As the major issue in the entire Fox litigation had been the possession of these 150,101 shares, and as the purchasing company had been closely allied with the anti-Fox party, there was no question but that Harold Leonard Stuart of Halsey, Stuart & Co. and John Edward Otterson, of Electrical Research Products, Inc., major Fox opponents, were unqualifiedly the victors.

General Theatres Equipment, Inc. organized last July in a merger of several theatre equipment companies, is headed by Harley L. Clarke, also president of Utilities Power & Light Corp., potent Midwest utility holding company. It was Utilities Power & Light which two years ago invaded the British Utility field by securing control of Greater London & Counties Trust, Ltd., which supplies power to London, Birmingham and many another English city and of which the Earl of Birkenhead is chairman. In addition to his duties as utility organizer and promoter, Mr. Clarke has cultivated an interest in Shakespeare to the extent of financing the Chicago Civic Shakespeare Society headed by Fritz Leiber and at present playing in Manhattan. The theatres equipment company has been interested chiefly in the manufacture of new cinema-projection equipment, controlling the patents covering Grandeur (oversize) pictures. The close (although not corporate) connection between Mr. Clarke, Mr Stuart and Mr. Otterson has been evident since the announcement early in March of the Halsey, Stuart plan of Fox financing--a plan which provided for new Fox film stock to be underwritten by the theatres equipment company.

The virtual retirement of Cineman Fox indicated the prompt abandonment of a series of State and Federal suits which for many weeks had engaged the attention of a considerable portion of Manhattan's Bench and Bar. The most bitter part of this litigation had centred about an agreement signed on Dec. 3, 1929. At this time Mr. Fox, who during 1929 had spent some $90,000,000 in purchasing control of Loew's, Inc., and of the Gaumont chain of British cinema houses, and whom the collapse of the stockmarket had left in debt to the extent of about $65,000,000, had consented to the formation of a Trusteeship consisting of Mr. Stuart, Mr. Otterson and Mr. Fox. Mr. Fox quickly fell out with his fellow trustees, but as he had already deposited his 150,101 shares in the Trusteeship's name, Mr. Stuart and Mr. Otterson refused to recognize his repudiation of the agreement, prepared to vote the controlling shares in their capacity as majority trustees. Thus, although Mr. Fox later succeeded in escaping his financial difficulties by enlisting the banking support of Bancamerica-Blair, Dillon, Read & Co., and Lehman Bros., he faced the possibility of having his own stock voted against him at the annual stockholders meeting on April 15, and of the control of his companies passing directly into his opponents' hands. The sale to General Theatres (in spite of its obvious alliance with the Stuart-Otterson interests) evidently appeared to Mr. Fox as the solution of lesser evil.

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