Canadian Historic Sites: Occasional Papers in Archaeology and History No. 13
by Hilary Russell
In the same year as RCA Photophone was organized, the Radio Corporation of America (RCA) bought the theatre chain interests of two of the biggest vaudeville circuits, B. F. Keith and Orpheum, as well as the film producing company FBO or Film Booking Office owned by Joseph P. Kennedy. The deal was officially closed in February 1929. The new company, Radio Keith-Orpheum (or RKO), was firmly established in the industry both in exhibition and production. The amalgamated theatre circuits provided outlets for "Radio Pictures," the sound movies of the producing company.1
In Canada, the merger was compounded by an agreement reached in 1929 whereby RKO and Famous Players Canadian Corporation formed a new company, Radio Keith Orpheum Canada Limited, to operate 12 first-run houses. Ottawa's RKO Keith theatre was included in the deal.2 The theatre became the RKO Capitol in 1931: as Famous Players eventually supplanted RKO, a few years later, the initials RKO were discarded.
It would be an oversight to write about the history of Canadian exhibition without reference to the circuits that controlled most movie palaces and other important houses. However, only those circuits that owned the Ottawa Capitol will be examined in detail.
In the United States and Canada, circuit ownership had a fundamental impact on the entertainment presented in a theatre, the decor and size of the house, as well as on film production in Hollywood. Only large corporations could afford the investment involved in building movie palaces. They could retain expensive architects, and could indulge in the rivalry with other giant corporations which resulted in progressively more gaudy and outlandish developments in theatre architecture, decoration, stage entertainment and special effects. With affiliated exhibitors, large circuits virtually monopolized first-run exhibition in large urban centres.3
Many circuits were also involved in film production and distribution. Famous Players-Lasky Corporation, a huge New York-based company enmeshed in all phases of the movie industry, began to acquire theatres in about 1919 to provide adequate and profitable playing time for the prime interest, Paramount Pictures. Loew's, on the other hand, entered production in 1919 to protect vast theatre holdings from Famous Players films and profits. B. F. Keith's was not involved in film production until the RKO merger.
The film-producing arms of the companies had guaranteed exhibition in hundreds of first-run houses, and could finance productions with the assured box office. The circuits were thus able to squeeze independent exhibitors out of business or into affiliations. Independent producers could be denied access to chain theatres, and an independent exhibitor could be refused popular films or forced to rent a "block" of company films in order to secure one of exceptional commercial value.4
B. F. Keith's and other vaudeville circuits maintained booking offices to provide contracts for vaudeville acts. "High class" acts at competitive prices were booked mainly into chain theatres with large seating capacities. The contracted performers, of course, toured the circuit.
Three vast continental circuits operated Ottawa's movie palace during its lifetime. The Capitol became the object of interesting circuit rivalries from the time it opened.
Loew's Ottawa was built as a link in the Eastern Canadian chain of Loew's theatres which offered vaudeville and photoplays in luxurious surroundings.
A subsidiary Canadian corporation supervised the venture, which was at least partially financed through sale of stocks. Some of the contractors had a vested interest in the theatre: at least one company was paid in gold-based bonds issued on the first mortgage at 12 per cent interest. These bonds were cashed at a handsome profit when the theatre was sold in 1924.5
Loew's Ottawa was one of the last houses in the chain to be built in Canada. An Ottawa newspaper announced in 1920 that Loew's planned five theatres in western Canada, but the programme was never carried out. By the end of 1920, a building boom that had swept Loew's was over.6
The vaudeville acts Loew's Ottawa presented were arranged by Marcus Loew Booking Agency in New York. The theatre showed many films made by Metro Studios,7 Loew's producing company.
The same month as Loew's Ottawa opened, Famous Players Canadian Corporation announced that the company would open within the next year a theatre on Queen Street with a capacity of 2,600. The circuit was well aware that Ottawa probably could not have supported two similar houses with capacities over 2,500. In these days, it was common for a circuit to challenge another's new theatre (or the promise of one) by threatening to build a bigger, more expensive theatre within a few blocks of the original. In a small town or city, the latter might be ruined by such competition, and the challenger hoped that this awareness would prompt the owner to lose his nerve and sell or would encourage a would-be owner to give up his plans to build.8
Famous Players Canadian Corporation was a homegrown, aggressive theatre circuit. It had acquired the name Famous Players Canadian and the franchise for distributing Paramount productions in 1920. Initiated in 1916 as The Regent Theatre Company and financed by a coterie of Toronto businessmen, the company prospered, and by early 1919 it owned a number of theatres in Ontario and had procured another name, Paramount Theatres Limited, although the circuit as yet apparently had no connection with Paramount films. These were distributed in Canada by The Famous Players Film Service, an Allen concern. In June 1919, Select, Triangle and Metro films were among the major releases handled throughout Canada by Regal Films Limited, the distributing arm of Paramount Theatres Limited. (Their officers were practically identical, J. P. Bickell headed Regal, and its managing director was N. L. Nathanson.)9
That month, two rumours were published in Moving Picture World: Famous Players-Lasky of New York would deprive the Allens' Famous Players Film Service of the Canadian distributing rights for Paramount pictures in September and would award the franchise to Regal Films Limited: and the New York company had "acquired a substantial interest in the theatres controlled by Paramount Theatres Limited." The magazine's vigilant Toronto correspondent was substantially accurate.10
Famous Players Canadian was incorporated in January 1920 with a reported capital of $15 million and an 18-year Paramount franchise. Adolph Zukor, head of Famous Players-Lasky (later Paramount Publix) was the president of the new company and, it was later maintained, had invested $100,000 in the venture. Contemporary news releases acknowledged that Famous Players-Lasky had made "a large cash investment in the new Canadian company," but that "the majority of directors" would be Canadian and "the bulk of the securities and control of the enterprise would be in Canadian hands."11 Nearly $12 million in shares was offered to the public, $4 million in first preferred and the rest in second preferred and common stocks.
Royal Securities Limited of Montreal underwrote the capitalization for $4 million.12 This finance and bond-selling company had been sold to W. Killam by Lord Beaverbrook in 1919. Contemporary and certain secondary sources consulted made the assumption that in 1920 Beaverbrook's spectre was still with Royal Securities.13 The link between Famous Players Canadian and Beaverbrook appeared the more real as he had recently acquired "large motion picture interests" in Great Britain. Moving Picture World recorded an announcement made in Toronto in March 1920 which went so far as to "understand" that Beaverbrook was a "heavy investor" in Famous Players Canadian. It continued, "he was slated for a place on the company's board, but felt that it would not be good policy to appear as a director."14 Possibly in this instance Beaverbrook's name was being exploited in the hope of winning investors.
Famous Players Canadian took over the 20 theatres previously operated by Paramount Theatres Limited, and set its sights on acquiring 20 more. An extensive building programme was immediately launched, and theatres were bought or built in Montreal, Peterborough, Toronto, Hamilton, Sault Ste. Marie, Winnipeg, Regina, Calgary, Vancouver and Victoria.
The building of a Famous Players" Ottawa theatre also got under way. Its walls had attained a height of ten feet when construction ceased. Ostensibly, the theatre was placed on the unfair list by the Building Trades Council of Ontario for not abiding by approved wage scales.15 Possibly Loew's had called an elaborate bluff.
The contest between Loew's and Famous Players was complicated by the announcement in 1923 that B. F. Keith's planned to construct a half-million dollar vaudeville theatre, possibly on Famous Players' Queen Street site. On the heels of this publicity came the announcement that Famous Players was going to buy Loew's Ottawa. It had just purchased Loew's Montreal.
Negotiations ended when the B. F. Keith Company of Canada Limited, newly incorporated with a reported capitalization of $5 million, took over Loew's Ottawa in September 1924. The new company's headquarters were in Montreal, and its president was Edward F. Albee of New York. The corporation did its own financing, and no stock was to be issued to the general public.
Five other theatres were purchased by the new company, the Princess and Imperial in Montreal, Shea's Hippodrome in Toronto, the Lyric in Hamilton, and the Majestic in London. An American source wrote that these theatres previously constituted Canadian United Theatres, a chain operated by Mike Shea and Joe Franklin. The Canadian Moving Picture Digest merely reported "a number of Canadian interests are merged in the new Keith undertaking."16
Though a new company had been formed, the Keith vaudeville circuit was not a newcomer to Canada. In 1913 it had erected two deluxe vaudeville theatres, the Imperial in Montreal and in Saint John, and since at least 1906, Keith vaudeville acts had been booked into affiliated Canadian houses by its subsidiary, United Booking Office. Neither was Keith vaudeville new to Ottawa audiences in 1924. The Franklin theatre, operated by J. M. Franklin, and Bennett's (subsequently the Dominion) theatre had presented Keith acts. B. F. Keith's was one of the oldest circuits, begun in 1893 when it opened one of the first super deluxe vaudeville houses in Boston.
B. F. Keith initially provided the money and gave the circuit its name. He died in 1914, long before the circuit had peaked. (In 1920 it reportedly controlled more than 400 theatres.) Before and after Keith's death, Edward F. Albee was the driving force of the circuit. It became renowned for building palatial vaudeville theatres, for helping to "clean up" vaudeville, and for instistituting the "continuous show."17
Loew's Ottawa theatre was not in financial difficulty at the time of the sale to Keith's. The fourth annual meeting of the board of directors of the local holding company (Loew's Ottawa Theatres Limited) reported that the theatre had earned $40,000 profit in 1923, compared to a small deficit the year before.18 Following the sale, Loew's holdings in Canada dwindled to two theatres in Toronto and one in London. Famous Players Canadian Corporation had acquired Loew's theatres in Hamilton and Windsor. Loew's disengagement was seemingly voluntary: in April 1923 the company had proclaimed that it planned to dispose of all its Canadian holdings in order to pursue expansion in the New England states.19
Coincident with the B. F. Keith takeover in Ottawa came the announcement from N. L. Nathanson that Famous Players was proceeding with the construction of its Queen Street theatre. He added significantly that Famous Players was the distributing arm of Paramount, MGM, Pathe and other producing companies, and that his company was a Canadian organization, 95 per cent of its stock being owned by 1,700 resident Canadians. The Canadian Moving Picture Digest retorted in an article entitled "Famous Players Patriotic Line of Defense," "he forgot to mention that Famous Players Canadian Corporation is a subsidiary of the Famous Players Company."20
Famous Players Canadian had grown from strength to strength since its incorporation. Sidney S. Cohen, chairman of the board of the Motion Picture Theatre Owners of America, was so alarmed by the company's might in 1924 that he felt constrained to issue
Yet only five years before the Allens had owned the predominant Canadian theatre chain (Fig. 119). Following the transfer of the Paramount franchise, the Allens' fortunes had plummeted as those of Famous Players Canadian soared. Only a year later, Jule Allen had to deny a report that his circuit had capitulated. In 1922, the Allens were in deep financial trouble. With an array of creditors at their heels, they were forced into assignment. In February of that year an Allen spokesman had confirmed that the sale of the circuit to Famous Players Canadian had been approved by both boards of directors. The cost to Famous Players of taking over about 50 Allen theatres was reputed to be $5 million. Apparently the Famous Players Canadian offer was later withdrawn "because of alleged changes in the Allen circuit." Further extensive negotiations were embarked upon, during which First National (an American concern) and "other interests" made offers for the beleaguered circuit.22
By 1923 the surrender was complete. At the annual general meeting of Famous Players Canadian in December, N. L. Nathanson related that the company had paid $392,073 in cash and stocks for the assets of Allen Theatres Limited to the company's receiver, thus gaining control of about 20 theatres, and bringing the total number of theatres operated by Famous Players Canadian and affiliated companies to 64, a number without precedent for a theatre chain in Canada. In less than a year their holdings had increased to 82.23
But the company remained unsatisfied with its lack of the largest theatre in Ottawa. One month after the B. F. Keith takeover, it was rumoured that Keith and Famous Players Canadian were combining to operate a few houses for mutual interest, foreshadowing the combine of 1929. Nothing immediately came of this, nor of Famous Players' offer to sell its Queen Street site. In July 1925 it purchased a large adjoining property in order to accommodate "a huge picture palace."24
New plans for this site were advertised every year until 1929. In 1926. it was to be occupied by a 12-storey building with a theatre "at the rear." In 1927 the circuit was going to build a legitimate theatre on the site, as Ottawa's only legitimate theatre, the Russell, had closed. In 1928 Thomas Lamb was said to be in Ottawa planning a $1,250,000 Capitol theatre. Many details were announced. It was to have only one box a royal one reserved for visiting members of the royal family and their Canadian representatives. Atlas construction was building the theatre, which would be permanently equipped for sound movies. Ray Tubman would manage it, and the opening was slated for January 1929. The last theatre proposed (in March 1929) was going to introduce to Ottawa an interior finished in "gorgeous Oriental style," it was to cost $750,000 and to accommodate 2,400 patrons.25 After the 1929 RKO-Famous Players agreement, the Queen street site was finally sold. Famous Players Canadian had achieved its goal of owning the biggest theatre in Ottawa.
About two months before on 7 March 1929, the public was informed that control of Famous Players Canadian had passed into Canadian hands, fulfilling N. L. Nathanson's longterm ambition. American shareholders were bought out although the Paramount franchise was retained.26 Adolph Zukor could not be counted out of the company's dealings. Though he relinquished his position as president, to "protect" the contract between Paramount and Famous Players, he became a member of a newly formed three-man voting trust. He could be outvoted by the other two members, N. L. Nathanson and I. W. Killam, the latter the principal stockholder in Famous Players Canadian.27 Though Zukor could have retaliated by withdrawing the lucrative Paramount franchise from the Canadian company if he had been frequently outvoted, it was also to his advantage to maintain the contract with a chain in Canada which, in 1930, had a near monopoly on first-run exhibition, was afforded a substantial proportion of all revenues from theatre admissions and controlled 207 of 299 chain theatres.28
The corporation's publicity at the time of the voting trust agreement stressed that the company had grown steadily more Canadian as it expanded, so much so that a week before the agreement, "the only Broadway factors left in this large, many-millioned growth of a few years were two words of a name, the rentals paid for films, and the dividends to a minority of shareholders."29 No records listing the various shareholders in the company could be found for this period. It is doubtful, however, that Zukor's hold on the company was as tenuous as that described in the previous paragraph. Though Zukor maintained effective voting control before 1929, apparently Nathanson was allowed considerable latitude in directing company policy.30
In the fall of 1929, Nathanson was brought down by the marshalled forces of Adolph Zukor, I. W. Killam and several of his fellow directors. They rejected his plan for an alliance with the British Gaumont company for the stated reason that it was controlled by the American Fox concern. In all accounts, Killam took at this time an especially firm and patriotic stand against the scheme. Outvoted by the voting trust who refused to place the offer before the shareholders, Nathanson resigned as managing director, his position being assumed by Arthur Cohen.31
Less than a year later, in August 1930, the voting trust and a majority of the company's directors and shareholders agreed to Paramount Publix' offer to exchange five shares in the Canadian company for four of its own. After the exchange, J. P. Bickell assured the shareholders that the affairs of the company would be carried on "under the same policy and the same progressive manner" as before, and the returns from dividends would be higher because of "the underlying assets of the larger company with its diversity of operation."32 Paramount Publix assumed complete control, securing 93.786 per cent of the total issued shares. In about 1953, Paramount trimmed its holdings to 51 per cent. These shares were taken over in 1967 by Gulf and Western Corporation. The Canadian Film and TV Weekly attested in 1969 that Canadian investors had lost two opportunities in the last decade alone to gain control of Canada's biggest theatre-owning company.33 Famous Players Limited now controls over 400 theatres, including the few remaining movie palaces.