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overview
This note considers the Loews group, which over the past
century has morphed from a cinema operator to a conglomerate
that embraces hotels, oil exploration, gas pipelines,
cigarettes and watches.
It covers -
introduction
Loews is an example of what has been characterised as
the 'entertainment-industrial complex', with financiers
wandering through a range of industry sectors on the basis
of opportunism, faith or fashion. That journey has included
control of MGM, CBS
and the Loews cinema chain - all of which have churned
on to different owners.
origins
Loews originated in 1904 when Marcus Loew (1870-1927)
established Loews Theatres to consolidate his interests
in nickelodeon arcades in the Eastern US. In the following
year he joined with Adolph Zukor to form the Loews Consolidated
theatre chain; Zukor went on to form what became Paramount.
In 1924 Marcus Loew acquired Metro Pictures (founded 1915
by Richard A. Rowland and Louis B Mayer), going on to
form Metro-Goldwyn-Mayer (MGM) through
acquisition of controlling stake in Goldwyn Pictures and
Louis B. Mayer Pictures. The result epitomised the 'studio
system', with the MGM-Loews group integrating film production,
distribution and exhibition.
In 1940 the major US studios responded to anti-trust concerns
by signing a federal consent decree that committed them
to distribute films in blocks of under six and to screen
films in advance for buyers. Four years later the government
reopened anti-trust litigation against the studios. That
saw an appeal by the Department of Justice after the Supreme
Court failed to order the studios to divest their exhibition
arms, resulting in the Court's 1948 'Paramount Decree'
that referred the divestiture decision to a US federal
district court. In 1949 Loews, 20th
Century Fox and Warner Brothers
were ordered to divest their cinema operations. Unbundling
took some time: the Loews cinema chain separated from
MGM in 1954.
The chain was acquired by the Tisch brothers in 1959,
apparently primarily for its real estate (much of which
was subsequently sold or redeveloped as hotels). Laurence
Tisch (1923-2003) and Robert Preston Tisch (1926-2005)
formed Tisch Hotels after the 1939-45 War, going on to
acquire the Loews chain for around %65 million and rename
their group as Loews Corporation. It acquired the Lorillard
tobacco company and CNA Financial - problematically mixing
cancer sticks and insurance - before taking control of
CBS.
CBS
and Sony
In 1986 Loews acqured a 25% stake in the ailing CBS.
What was variously described as a 'managerialist', asset
stripping and 'penny-pinching' approach failed to turn
the network into a goldmine and the Tisch interests exited
in 1995 when Westinghouse
Electric (competitor of NBC-owner
General Electric) bought CBS.
Douglas Gomery commented that
the
1995 Westinghouse deal moved Tisch from the status of
a multimillionaire to a multibillionaire. In television
history, however, Laurence Tisch would be remembered
for how he had decimated the once dominant television
network.
Westinghouse unloaded its traditional manufacturing operations,
changing its name to CBS. In 1999 Viacom
- which traced its origins to amusement parlour and cinema
operations, in turn acquired CBS for US$50 billion.
Amid criticism of low revenue growth - or merely disenchantment
with media conglomerates - Viacom spun off its radion
and television, themepark and book publishing interests
as CBS midway through the next decade.
the
cinemas
At its height Loews was a dominant US cinema chain, with
substantial interests in that nation and stakes in overseas
exhibitors (including the UK, Australlia and New Zealand).
Its dominance reflected the advantages of association
with a major film production and distribution partner
- in an era where block booking determined what was shown
- and the revenue that enabled investment in cinema development/maintenance.
After difficulties following the consent decree, reflected
in forecasts that cinema was 'old media' doomed by television
(a claim that foreshadowed contemporary fantasies about
internet-based death of traditional media) the chain enjoyed
respectable revenue. In 1985 Loews Corporation sold 350
screens to Tri-Star Pictures, which had been established
in 1982 by CBS television, HBO
(Home Box Office) and Coca-Cola's Columbia Pictures. Coke
bought out its partners in 1986, forming Columbia Pictures
Entertainment.
In that year MCA (subsequently
acquired for US$1.6 billion by Japan's Matsushita group,
a counterpart of GE and Westinghouse, and then by Seagram
as part of its takeover of Universal) invested US$75 million
in Cineplex Odeon. Cineplex had been founded in Canada
in 1979, absorbing Canadian exhibition interests initially
under the control of Rank. In 1989
Sony bought the
Loews cinema chain from Coca Cola as part of its US$3.4
billion Columbia Pictures Entertainment acquisition.
The resultant Sony/Loews chain merged with the ailing
Cineplex Odeon as Loews Cineplex Entertainment (some 2,900
screen) in 1998. Fierce competition and over-expansion
saw Loews Cineplex go into Chapter 11 in 2001. It was
then acquired by Onex and Oaktree
Capital Management. During the following year Onex acquired
58% of Mexico's Grupo Cinemex for US$190 million.
current
group
As of 2006 New York-based Loews Corporation serves as
a holding company for what it promotes as "one of
the largest diversified financial corporations in the
United States". It is a an arguably somewhat unwieldy
conglomerate that extends from cigarette manufacture through
hotels and watchmaking to insurance.
Principal subsidiaries are -
-
CNA Financial Corporation (91%) - one of the largest
property-casualty insurance organizations in the US
-
Lorillard, Inc (100%) - tobacco products
- Diamond
Offshore Drilling, Inc (54%) - one of the world's largest
offshore drilling companies
-
Loews Hotels (100%) - operates hotels and resorts in
the US and Canada
-
Boardwalk Pipeline Partners, LP - operates US interstate
natural gas pipeline systems (notably Texas Gas Transmission
and Gulf South Pipeline Company)
-
Bulova Corporation (100%) - distributor and marketer
of timepieces with brands such as Bulova and Accutron
studies
Perspectives on the Tisch era at CBS are highlighted in
the profile on CBS. They include Ken Auletta's Three
Blind Mice: How the TV Networks Lost Their Way (New
York: Random House 1991) and Peter McCabe's Bad News
at Black Rock: The Sell-out of CBS News (New York:
Arbor House 1987). There is an upbeat account in The
King of Cash: The Inside Story of Laurence Tisch
(New York: Wiley 1995) by Christopher Winans.
Works on MGM and the early days are highlighted in the
MGM profile. They include The Genius of the System:
Hollywood Filmmaking in the Studio Era (New York:
Pantheon 1988) by Thomas Schatz, Movies & Money:
Financing the American Film Industry (Norwood: Ablex
1982) by Janet Wasko, Grand Design: Hollywood as a
Modern Business Enterprise, 1930-1939 (Berkeley:
Uni of California Press 1995) by Tino Balio and Hollywood
East: Louis B. Mayer and the Origins of the Studio System
(New York: Birch Lane 1992) by Diana Altman.
 next
page (Loews chronology)
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