Fight in the Lion's Den

For its annual stockholders' meeting last week, Metro-Goldwyn-Mayer took over a cavernous Times Square theater currently showing rival 20th Century-Fox's The Bible. MGM's own epic turned out to be a mixture of real life and reel life. President Robert H. O'Brien showed a 25-minute promotional film featuring clips from the company's latest motion pictures, the theme being that MGM's Leo the Lion has been bellowing forth lately with a "roar heard round the world." For one conspicuous member of the audience, that was not enough.

Proclaimed Chief Stockholder Philip J. Levin: "We want to make the lion roar and move, instead of roar and sit."

Thus did Maverick Levin and Incumbent O'Brien bring their hotly contested struggle for the control of MGM to a face-to-face showdown. During the months that it has raged, the battle has touched off at least six court suits, embroiled filmdom's leading producers, actors and exhibitors, and brought on a barrage of proxy-seeking entreaties that cost the two sides well over $500,000 between them. After the company's raucous four-hour annual meeting ended, the slow process of tallying up the votes of its shareowners finally got under way. The results, due sometime this week at the earliest, could have momentous consequences not only for MGM, but for the entire entertainment industry as well.

Pearl Harbor Day. For Levin, 58, a millionaire New Jersey real estate developer who holds an 11% block of MGM stock (current value: $20 million), it was the second bitter proxy fight against the film company in less than a year. Increasingly critical of management on many matters since his election to the MGM board in 1965, Levin last May forced a stockholders' vote in an unsuccessful effort to block a proposed authorization of additional stock.

The decision to move for outright control came last December. To his detractors, it is somehow appropriate that Levin filed the required papers with the Securities and Exchange Commission on Pearl Harbor day: his intention, they maintain, is to "raid" MGM.

That suspicion derives in large part from the new economics of the movie industry. Buffeted for years by falling movie attendance and rising costs, U.S. film makers have more recently revived themselves by selling movie rights to TV; last fall MGM leased 63 films to CBS for an average of $800,000 each. With potential riches even greater, prudent movie executives recognize the need to ration their film stockpiles instead of depleting them too fast. Because old movies have become such valuable--and easily disposable--assets, Hollywood's film companies are particularly wary of takeover bids by outsiders eager to turn a quick profit.

Disclaiming any fast-buck notions, Levin insists simply that his team could run the company better than O'Brien's. In fact, Levin accuses MGM management of squandering its film library by relinquishing to TV "too many late pictures too soon for too little money." Charging the company with "merchandising the phantoms of the past to cover up weaknesses of the present," Levin calls for greater diversification, feels also that MGM should concentrate more on developing its own movies instead of buying prepackaged films from outside producers. Moreover, he says, the company under O'Brien has suffered from "one-man control and a rubber-stamp board of directors."

O'Brien's most convincing rebuttal is MGM's record since he took over as president four years ago; from a 1963 deficit, he brought the company back to profits last year of $10.2 million on total revenues of $185 million. Levin's charges notwithstanding, O'Brien, 62, takes immense pride in the way he has guarded MGM's film library; fully 150 of its films have never been released for TV, including such cashbox successes as Gone With the Wind, Ben-Hur and Gigi. And the stockpile is being replenished at a rate of 30 new films a year, the most successful being Doctor Zhivago, a $12 million investment which may gross $40 million. Says O'Brien: "Levin is good at real estate, but what does he know about films?"

Comic Relief. There were casts of distinguished players on both sides. Among Levin's candidates for the board: Film Star Rosalind Russell, Labor Mediator Theodore W. Kheel and Producer (Sayonara and Man from Laramie) William Goetz, son-in-law of longtime MGM mogul Louis B. Mayer. For his part, O'Brien engaged the services of Attorney Louis Nizer and Public Relations Consultant Thomas J. Deegan Jr., listed as a faithful ally MGM Director (and Bulova Watch chairman) Omar Bradley. Nobody was immune from attack. At the stockholders' meeting, one man pointed out that he owned 23,000 shares, wondered why General Bradley owned only 300. Bradley replied that he took pride in "being a small stockholder representing a large part of this audience." Noting that he had spent much of his life "in the service of my country, where the pay is very low," he added softly: "I congratulate you on having enough money to buy 23,000 shares. I didn't."

That, as it happened, proved to be one of the day's few inspired moments. Grappling over microphones, stockholders threatened at times to turn the meeting into a shouting match. For comic relief, there were the inevitable professional hecklers, the ladies among them obviously preoccupied with the fact that the Levin slate included Roz Russell (who was not at the meeting). One speaker, flashily decked out in mod-style metallic, cattily charged that Miss Russell was the kind of woman who would "not give younger actresses a chance."

Whether the Levin team gets a chance may well depend on how six investment companies, which together control 19% of MGM's stock, finally decide to vote. Even if O'Brien retains control, as most observers were predicting, he will still have to contend with Levin, who assured shareholders that he would sell none of his stock, "at least in the foreseeable future"--which, he added, "means the next ten or 15 years."

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