The Cincinnati Enquirer from Cincinnati, Ohio • 30

30 THE CINCINNATI ENQUIRER Friday, December 21, 193 Lavish Grand (Aegas) Hotel May Mean End of MGM Productions can survive In that atmosphere is still to be seen. For the meantime, MGM's yellow brick road leads to Vegas, where, if you get tired of playing the slots, you can settle into the Grand Hotel's MGM theater and watch old movies and remember. facturing a product a movie or an Edsel you better examine the method by which you are manufacturing that product. "If you have to change a formula that Is historic and may have been once beloved, you go ahead and change it. I'm an MGM stockholder and if it was decided that MGM had to go out of pictures entirely, and if it went into ball ings and made money I'd cheer'." echoes of the footsteps of Dorothy on the yellow-brick road and see visions of Gene Kelly dancing in the rain, this sounds like nothing less than blasphemy.

And it is a little sad. But nostalgia freaks may fail to remember that even in the old days, movies were made to make money. More often than art was a lucky Now, with impossibly increasing costs, the film business is 'falling to the men Tun the giant conglomerates. Whether a glimmet of artistic integrity I JESUS CHRIST Piv SI1PERS1AR fl To those who still hear "1 FHnc-371-9SOO THE ALL-OUT COMEDV RIOT! II nishings. The rest was to come from internal MGM earnings.

The hotel was built without floating additional stock or diluting its value to stockholders. But the growing over-costs and the pressure to rush the Grand Hotel to completion so it could start paying for itself brought heavy strains on the film production end. "Kirk needed money. He couldn't wait for a year to have the master tlan operate," said one. knowledgeable insider.

"He got caught in a bind and had to liquidate in areas not previously anticipated." Bautzer denies this. "Kirk's personal situation has no stress, no strain at all. The assets we sold recently would have been sold whether we had gone into the Grand Hotel or not. There is just no surefire way under current conditions to successfully manufacture and distribute films' on a profit-making basis. What MGM sold off was a lot of overhead that had more value as real estate than as operating theaters." Kerkorian, says Bautzer, is concerned with one thing: making profits.

Sentiment or nostalgia does not enter the picture. "He believes MGM presented an opportunity for profit. I don't think he cared whether it was producing fabricated steel or movies, as long as it made money. He has said. 'If you can't make money manu made In terms of balance sheets and investments (although many of the stone-age techniques still linger).

Kerkorian acquired MGM because he became convinced that films, with their television re-sale potential, could be converted to a profit-making situation. It didn't take him long to change his mind helped by the shocking realization that MGM was $82 million in debt. That, and the 1969-1970 recession, made it an uphill battle, although eventually MGM did cut its debt to $24 million and began, temporarily, showing a profit. By 1971 Kerkorian was convinced that diversification was the only way MGM could survive. At a brainstorming session in October of that year, attended by Kerkorian's executives and Gregson Bautzer, the Beverly Hills lawyer who represented Kerkorian in the MGM takeover, the decision was' made to go with the Vegas hotel.

"The germ was born after Kirk saw the earnings of International Hotel the year after he sold it to Hilton," said Bautzer. "He saw that the biggest, newest luxury hotel could take most of the money in that town." The original estimated outlay for the Grand Hotel was $75 million, more than $30 million below its probable cost. MGM raised some 'of the money with a 150 million bond offering, a $15-million bank loan collateralized by the interior fur By LEORY F. AARON'S The Washington Post LAS VEGAS, Nev. The MGM Grand Hotel opened last week with some of the greatest publicity buildups since the London Bridge came to Arizona.

It repre- sented the first phase of a massive campaign to promote the $106 million leviathan into the most successful resort hotel in history. Success, in Vegas terms, means money. And the Grand, with its rip-off on the MGM movie nostalgia gimmick (the hotel takes its name from the lovely old 5arbo film of the same title), its jai-alai fronton, its 5000-seat grand ballroom, its 300 miles of draperies and so forth, was conceived executed with the hard reality of cash profit in mind. Reports have it that whose niovic-making facility in Culver City, is limping painfully from the near-fatal wound of the recent, sell-off of many of its assets, hopes to recover $10 million a year in net profits after taxes from the (irand Hotel's, gaming casino, largest in the world. MGM executives, nervous about charges that they were prepared to sacrifice the venerable studio's film rple to finance the huge overruns mounted by the Grand, Hotel ($30 million)-above original ae 'not talking about any- thing publicly these days, other than their 1000 slot machines, 2100 rooms, 44 marble columns and 300,000 plumbing fixtures.

They flatly refused repeated re- mm 'Vyfl II Wm EKEND WITH THE quests for interviews by this reporter. But. usually reliable industry sources speculate that MGM's movie-making days are at an end. "It's my opinion," said someone with access to the. internal thinking at the studio, "that as soon as the Grand Hotel is operating for a quarter say by March and show- ing profitability, all of MGM's film operation, ex- Cept for television, will be dumped." The MGM "master plan's" master is one Kirk Kerko- rian, the sly, reclussive wheeler-dealer described by Variety as "the biggest closet millionaire since Howard Hughes." Kerko-rian, now in his late 50s, was a self-made man who rose from the son of a poor fruit" rancher in Fresno, to great wealth via a long career of entrepreneurial legerdemain that culminated in the sale of 1965 of his unscheduled airline business for nearly $I5Q million.

With the proceeds of that, sale, plus some fancy financial manipulations with United States and Kurope banks, Kerko-. flan built the International. Hotel in town, and gained control of both Western Airr lines and MGM. That was. in 1969.

Since then, Kerkorian has spent nearly 'all of his time arid reportedly much of his fortune trying to dig both firms out of the. hole. Now, reliable reports have he has all but given up on the possibility of MGM off of more film has shifted full atten-. tion to the Grand Hotel, television production and the rental of MGM's library of 1400 films (including the surefire re-release, "Gone With The In recent months, to the shock and dismay of MGM-ophiles, Metro sold off all of Its film distribution business, it foreign theaters, its music publishing and record company and sublicensed the film library to other distributors. To seasoned observers of.

movie industry, the latest steps virtually emasculated the 50-year-old studio as a movie-making entity, despite insistences by the new management (mostly business executives and lawyer types) that selected quality films would still be pro-' duced. The signs darkened when MGM's president, James T. Aubrey resigned in Navcnihcr. Aubrey, controv ersial former CBS president, had made a lot of enemies in his time, hut he was the last symbol of MtiM's active effort to produce movies. His departure and replacement by Kerkorian himself as chief executive officer seemed like the handwriting on the wall.

Aubrey is not talking I color by deluxe DUDVOITTCn about it, but friends say he left because he came to feel that Kerkorian, yielding to the pressure of his own economic problems, was making hasty and disadvantageous moves on MGM's behalf. MGM, however, has left it be known that Aubrey's days and his $210,000 salary were numbered when several key films this summer Garrett and Billy the Kid" and "The Man Who Loved Cat flopped at the box office. Some sources say Kerkorian may be in deep financial trouble. He was forced to sell the International to the Hilton chain at about half its value to finance his other ventures. (It later became the most successful hotel in Vegas history, setting up the incentive that led Kerkorian back into the, Vegas hotel line).

More recently, Kerkorian sold his $900,000, 147-foot-ocean-going yacht, and his $4 million personal DC-9 jet plane, as well as a block of-his Western Airlines stock. MGM recently declared a dividend for the first time 1W nearly: five years. Kerkorian, as the stockholder with 48 of the shares, received $5.2 million, the first return he ever got on his MGM investment. The surprise dividend raised the question of why MGM was paying dividends with a $2.3 million net loss in its third quarter this year, and a drop in its operating profit of nearly 60. Much of the money for the dividend came from sale of the distributing business, the foreign real estate and other assets, fueling speculation that part of Kerko-rlan's motivation in the sales was to set himself up for some much-needed ready cash.

Reports filtering from inside indicated that there were some MGM directors who strongly objected to the dividend decision; and there are rumblings of possible stockholder suits over the issue. MGM's next annual meeting this January should be a lively one. Obviously, the subject is complex and convoluted, but it does reflect the. state of movie-making' today, where the decisions are Dchner "Kising" HOLLYWOOD Dehner has been made a regular member of the cast of "New Temperatures Rising" which stars Paul Lynde and Cleavon Little. IF it 3 -''V.

ail iff dmd I 4 CHAPERON ft JOHNSTON PARTY BOAT Reserve Now For Best Reservation Dates For 1974 421.4455 LAST 2 DAYS! TONIGHT at 8:30 Mot. Sat. at 2 Good Spcitt Avoilobif Shelley Mimi Ikniuin I lines lYisoncr Second Avenue Neil Simon DHJfrltPKV Mike Nichols Pmi mm pi flPFN lid ELECTRIC IN-CAR Start 7-00 HETERS lOptionall prS'S COLOR; MICHAEL AN5ARA 4 Tr 1 agaj i'c1i: It'll II 1 OrI metrocolor IB SAVAGED. HE S033 Mad Hon Rd '271-4600 ELECTRIC IN-CAR OPEN 6 30 HEATERS lOptionall 5r 7 qq COLOR qi 1 icrv 4 fllr NESTRICTCO Unddf rQuirs ompflnyng Pif.nt fit Adult GiU'fl'Sn TEL. INFO.

671-6884 licFf if I i I INI I "I ii ff fj WILLIAM PETER BLATTY'S jiPvL Meet isA hood Qym merry S1' MENagerie -dS IN A WILD NEW CART00N feature 'jxrm0sLA yTrSk pVfijMLlVt DALE "HALT DISNEY prodlcoSV 'M Wmmt 7 With thi Mints ot I I PETER USTINOV PHIL HARRIS BRIAN BE0F0R0 TERRY-THOMAS ROGER MIUER PAT BUTTRAM GEORGE UNOSEY I 1 ANDY DEVINE 061-2000 I I Western vfoods NOW 2713237 Shpf IMaricmontjrNoftKftAtc 1 Princeton I sT Mmgmant Swan NorthgaU Mall CwLf Tn-Coumy am i.tai i in THE EM3KIST DircctedbWILUAM FRIEDKIN PREMIERES WEDNESDAY DECEMBER 26 ELLEN BURSWN'MAXVON SYD0W' LEE J. COBB 'KITTY WINN -JACK MacGOWN JASON MILLERasFatWKarras LINDA BLAIRfep ydbyWLLIAM PETER BLATTY Executive Producer NOEL A4ARSHALL Screenplay byWILLIAM PETER BLATTYbased on hi5 novel From Warner Bros. A Warner Communications Company INCINNAi rS KNTERTAIN.MKNT SHOVVPLAC (SHOWCASE CBNEMAJT 1234) ROUTE 44 1-275 NEAR THE TRI COUNTY SHOPPING CENTER, CINCINNATI EXCLUSIVE, RECLINING, ROCKING CHAIR LOUNGES ACRES OF TREE LIGHTED PARKING GIFT CERTIFICATES ALWAYS AVAILABLE 4.