The Years of the Lion — 2 By JOHN and ROY
BOULTING (At the end of last week's thrilling instalment, the five directors of British Lion had, most reluctantly, agreed to buy the company from an exigent NFFC. After months of negotiation, the price agreed, con- tracts drawn up, and then—surprisel The President of the Board of Trade, the Right Honourable Reginald Maudling, vetoes the deal. Everyone is told to go back and start all over again. At this point, the working directors, like Britons of old, address a 'Groan' to the President, pleading with him to clarify their position, as well as his own. The gentle reader may now read on.) , MUST admit,' said Mr. Maudling, embracing
I the directors with a smile at once confident and confidential, 'you chaps have certainly been messed about.' Only he didn't say 'messed.' The word he used was something much stronger.
The confrontation took place on an early winter's morning. The directors had no need to daub on the woad : they were already blue with cold. The President, eyes twinkling behind horn- rimmed spectacles, his bulk seeming to threaten the miserable specifications of a Civil Service armchair, was extremely genial. There was also an impression given of manly frankness and even of sympathy. British Lion, he told them, was now showing signs of recovery. The pur- chase figure acceptable to the NFFC some months ago, was not agreeable to him (he, of course, possessing the advantages of hindsight); and with the appearance of profits after so many lean years, how could anyone expect him to stand up before Parliament and defend a sale at this time and at this price? He certainly had no intention of doing so. And that was that.
Mr. Maudling was not only reasonable, but right. The directors now knew where he stood, but were not so sure of their own position. On this point, the President was similarly direct and concise. He suggested an extension of the exist- ing service contracts to the end of March, 1964, backed by a personal assurance that, during the contract period, there would be absolute freedom frnm further disturbance. In other words, British Lion would not be sold.
Once again the directors said 'Snap.' Once again the lawyers sat down to express this simple directive in the lengthy and complex terms be- loved of their profession. There was, of course, the question of the position of both parties at the end of the extended period. This was determined by Mr. Maudling's insistence that the Govern- ment should have art absolute right to acquire the five directors' shareholding if it wished. Only if the Government did not exercise its option would the five directors be entitled to acquire the com- pany. In such an event, they would be allowed a six-month period in which- to raise the money.
Mr. Maudling's promise was kept. Whether a hint was dropped, a request made, or an instruc- tion given, the British Lion boys never knew. Certain it was, however, that for the next three years they were to enjoy a respite from attempts to sell the company by way of the back stairs. As for Sir Nutcombe Hume, off he toddled, back to the City of London, perhaps to succour the Charterhouse Investment Trust, one of his principal companies, involved in the financing of hire purchase. Surprisingly, and despite an absence of 'difficult artist fellows,' Charterhouse seemed to be getting out of hand and was to face losses running into millions of pounds.
There followed, at British Lion, the halcyon days. Peace, uninterrupted peace and progress. Shepperton Studios filled to capacity, and some-
times more than capacity; a snap survey on one day revealed more than 1,200 cars parked on the studio lot. Not only British, but American and European film-makers found its ambience warm and stimulating: It was a genuine studio— not a factory. Big steps too, in other directions. On the initiative of one of the 'artist' directors, a joint distribution alliance had been forged with Columbia Pictures of America, reducing annual distribution overheads by some tens of thousands.
Most important of all, the films being pro- duced not only by British Lion itself, but by its associated companies, were scoring some notable successes both artistically and commercially, at home and abroad. Saturday Night and Sunday Morning, Expresso Bongo, I'm All Right Jack, A Taste of Honey, Only Two Can Play—one after another they appeared, together with a number of brilliant innovations in the ex- perimental field, like John Cassavetes's Shadows: If the spirit of the company was buoyant, a positive exhilaration was reflected in its accounts. March, 1960, had seen, losses turned, at last, into a profit : £126,771 net. At March, 1961, the figure (excluding a large non-recurring item) was £318,285 net. March, 1962, showed a further rise to £426,000 net and a dividend to the tax- payer for the first time. Again in March, 1963, a further dividend was paid to the taxpayer and net profits recorded were the highest yet at £468,910 net.
It was an astonishing transformation. To the chartered secretaries and computer minds so busily engaged in preparing their downward- curving graphs, this was an expanding success hard to understand or explain. For here was profit based primarily on film production, the one area of the industry in which, over the years, both Rank and ABC had admitted to financial failure.
At the same time, the results proclaimed the value of Independence, a Third Force and (even if in too small a measure) Competition.
Had the cockahoop British Lion boys been listening carefully around this time, they might well have heard the sound of another cock crow- ing in Soho Square.
The National Film Finance Corporation, in contrast to the exuberant health of the Lion, was suffering from pernicious anaemia. In numerous unsuccessful investments its blood had been drained away. The prospect of a further trans- fusion from the Treasury blood-bank was clearly out of the question. A doleful John Terry, Managing Director of the NFFC, revealed his Corporation's desperate plight, to the Board of British Lion. Prepared to aid its indigent, if awkward relative, British Lion decided to repay £591,000 of the £600,000 capital invested by the Government in 1955, and thus put the NFFC in funds. For the remaining £9,000 at risk, the Government owned a half-share in a company eventually to be valued at over £1,500,000.
Alas for the best-laid plans. The £591,000 had to be posted by way of the Treasury; and the Treasury hung on to it.
In the late spring, and to the sound of the cuckoo, Sir Nutcombe Hume reappeared on the scene with an all too familiar glint in his eye. In March,' 1964, the agreements with the five direc- tors would end. Did he See in this fact an oppor- tunity to reconcile his profoundest political and financial principles with a means of replenishing the coffers of the NFFC, over whose fortunes he had presided for so long and, as he took trouble
to point out from time to time, without financial reward? Maybe.
Whatever the reason, it became quite clear that spring frolic was merely a preliminary to Harvest Home. A period ensued of pleasantly in- formal chats, of affection elegantly expressed, of quiet confidences. Particularly, quiet confidences.
It was a time, in fact, of much probing and not a little fencing, with each party concerned for its own virtue. The result was impasse. It seemed that Sir Nutcombe, the protagonist of free enter- prise, had arrived at a strange position involving the rejection of competition, at any rate so far as the film industry was concerned. This fascinating metamorphosis was manifest in one of his pro- posals to sell British Lion to a consortium which would include both Rank and ABC—the very forces with which British Lion ostensibly existed to compete. Naturally, this scheme was rejected.
What was significant throughout this period of courtship was the underlying assumption on both sides that there would be a continuance of the existing management in one form or another. For their part, the five directors clung tenaciously to their belief that the Government must remain in British Lion.
By July, with the Treasury still hanging on to the repaid capital, the NFFC began to force the Pace. They urged on the five that they agree to a valuation to be made at a date earlier than that called for in the contract. It was desirable to re- duce the period of uncertainty, and allay any anxiety among the employees. After all, they said, no decision on the Government's option to buy could be taken without the NFFC first of all knowing the company's real value. All this, of course, in the strictest confidence. To this appeal the directors felt obliged to agree.
On November 8, an independent valuation by the eminent Sir William Lawson was received. The company (stated by the Government six Years earlier to be worth substantially less than £600,000) was now valued at at least £1,590,000. From this moment„ the former urgency evaporated. No smoke signals arose from Soho Square. All was silent. On November 25, David Kingsley, Managing Director of British Lion, despatched a gentle reminder. On November 27, Sir Nutcombe summoned him to the City of London for a fifteen-minute audience. He told Kingsley the NFFC were minded to exercise their option to buy out the private shareholders. Sub- ject to their obtaining Government permission, their intention was to re-sell the company. Given this permission, they would first offer the com- pany back to the present directors, but the option period accompanying the offer would have to be brief. The bonne bouche he held back to the end. If the directors did not buy, they would be expected to offer their resignations. Their ser- vices, either in management or as film-makers, would not be sought. As for Kingsley himself, he was now persona non grata with Rank and ABC and, therefore, of course, it would be im- Possible for him to continue as managing direc- tor.
One final word: there must be no rocking of the boat; and the British Lion directors were enjoined to secrecy on these matters in the in- terests of the company. • A shaken Kingsley reported to his colleagues. Nutcombe's declaration of intention, they felt, should not be taken too seriously. After all, Profits are not without honour in Whitehall and, if their experience at the hands of Mr. Maudling was a reliable guide, the chances were, that, once again, Sir Nutcombe's ambitions would be frustrated.
Nevertheless, on November 29 the directors thought it necessary to remind Hume that, not- withstanding their having agreed to the earlier
valuation, they would expect him to adhere to the option arrangements and periods specified in their contracts.
Events now moved rapidly. On December 9 the toe of the golden boot was inserted in the
door. The NFFC formally exercised its option to buy at a sum not far short of £800,000. Late in the afternoon of Friday the 13th, a letter arrived at British Lion by hand. Government permission for the sale of British Lion had been given. The company was now formally offered to the direc-
tors at valuation, their acceptance had to be given by December 31 (a period of just over two weeks with Christmas intervening), and the money in the bank by January 81 The offer to sell back in this way was, at first, received with puzzlement, and then alarm. An
option had been exercised; there was no obliga- tion to 'offer the company back. And if they really wanted the directors to buy, why the time- limit that made nonsense of the offer?
Aroused and now convinced that Sir Nut- combe, Terry and the Board of NFFC had been less than frank with them as to what they had been doing and intended to do with a valuable, publicly-owned asset, the five directors, now, per- haps, too late, decided to take the initiative.
A parliamentary debate on the film crisis had been tabled for the Adjournment on Friday, December 20. It seemed essential that what was going on should be brought out into the open and subjected to proper scrutiny. Having that in mind, a request was made for an immediate meeting with Sir Nutcombe so they might be freed from their pledge of secrecy. Unhappily, this presented difficulties. Suggestions for a meet- ing at his convenience, any time on Wednesday, ur even breakfast on Thursday morning, proved equally unsuitable. Lunchtime, too, was out of the question: he was being entertained by the Stock Exchange Investment Council, a fact he reported with understandable pride. The five were insistent. There had to be a meeting. They would • await his pleasure throughout Thursday.
Sir Nutcombe, willingly suggested Friday even- ing. After the debate. Thursday, the directors persisted, it had to be. And with apparent re- luctance, Sir Nutcombe surrendered.
The encounter late on Thursday was a revela- tion. 'Nut' oozed goodwill, gratitude and some- thing more. As always, eyes fixed on the ceiling, he delivered himself: 'HMG has exercised its right to buy. We hope you are satisfied. Never have so few, earned so much, in so short a time . . . [effective dramatic pause] . . . honestly.' There was no laughter. Continuing: 'And there's no envy on our side. On the contrary, we take satisfaction in the fact that a derelict company, by your efforts, has been restored to fortune, and the Government enabled to recover well over a million pounds. We are grateful to you.'
If Sir Nutcombe expected that expressions of gratitude accompanying such an ample greasing
of palms would quiet the fears of the directors in relation to the future of independence in the film industry, he was to be disappointed. The days of secrecy were over. The directors insisted that the purchase of their shareholding should be made public. In their view, it was vital that the public, Parliament and press should know just what• was going on. With the facts known, the watch-dogs alerted, the debate could take place. The days, let alone the years of the LiOn might be numbered; but its fate would have to be de- termined, not in the shadow of the backdoor, but in the sunlight of public knowledge and open discussion.