In most industries, the leading companies are supplied by hundreds of smaller ones that never become household names.
Not so in Hollywood, where credits roll at the end of every motion picture and television show. Panavision Inc., the dominant source of cameras and lenses for the film-making community, has become a commonly known name in just that way.
Operated as a subsidiary of New York-based Warner Communications Inc. for the past 17 years, Panavision is now being sold for $52.5 million to a consortium of investors led by Frederick Field, a Chicago newspaper and department store heir.
When the transaction is completed, the Tarzana-based company is expected to become the keystone for expansion or other acquisitions in Hollywood by Field's private company, Interscope Group.
The 31-year-old Panavision is considered a technological gem. The company got its start by making innovative projection lenses, then revolutionized film making in the 1970s with the introduction of a hand-held studio camera capable of recording sight and sound simultaneously. Most recently, the company has introduced a new 16-millimeter camera line for professionals.
Panavision equipment is being used for more than 80% of the prime-time television shows recorded on film and an estimated 75% of the "quality" motion pictures, according to Jack Barber, Panavision's executive vice president and director of operations.
Yet Panavision's image, like a screen actor's, looms slightly larger than life. Despite its wide name recognition, it generated pretax profits of just $3.4 million from operations in 1984 on revenue of about $35 million.
The numbers are modest by some industries' terms, but they put Panavision at the top of the film-imaging business.
"Panavision is the most prestigious company in the hardware end of the entertainment industry; that is why we bought it," says Peter Samuelson, one of Interscope's two executive vice presidents and the man who spotted the acquisition.
Panavision holds a special attraction for Samuelson because his father's company, Samuelson Group in London, is Panavision's British representative, with a business relationship dating back at least 25 years.
The purchasing consortium does not include Samuelson Group, however. Interscope, which is 100% owned by Field, will have a 51% stake in Panavision, while Boston Ventures Ltd. Partnership has agreed to buy the remaining 49%.
The Boston group is headed by William Thompson, former head of First National Bank of Boston's entertainment loan division, and includes Alan J. Hirschfield, former chairman and chief executive of 20th Century Fox Film Corp.
As part of the deal announced last Nov. 29, Warner will receive warrants giving it the right to acquire up to 15% of the company, in addition to a cash payment of $52.5 million.
The sale marks the third time that Panavision has changed hands since it was co-founded by film maker Richard Moore and Robert E. Gottschalk, the innovator who ran the company with an iron hand until his death in 1982.
Moore says that Gottschalk had no formal training in engineering but excelled in optics and underwater camera equipment. Panavision got its start by developing a projector lens for Fox's wide-screen format called Cinemascope, then began making camera lenses in the late 1950s, Moore says.
The founders sold Panavision to businessman and film producer Sy Weintraub for $3.6 million in 1965.
Sold to Kinney National
When interviewed shortly after the sale, Gottschalk explained that he had a choice of "going public with stock or selling to another company. I haven't time for the business management. . . . This way I can devote myself to my job."
Gottschalk continued at the helm even when Weintraub sold Panavision three years later for $10 million to Kinney National Service Inc., one of the predecessor companies of Warner Communications Inc.
But in 1972, top Warner officials questioned whether they should keep the small technological company. Jac Holzman, Warner's chief technologist at the time, was dispatched to California to assess the operation.
Gottschalk spent four hours educating Holzman on the technology at hand, then showed him his Panaflex project. Gottschalk's new camera weighed about 30 pounds and was quiet enough to record synchronized sound, unlike the traditional 115-pound studio cameras that required massive "blimps" to silence the sound of their own machinery.
"I was just knocked out. It was clear that this man and this company had built by far the most advanced filming system," Holzman says. "I called (Warner Chairman) Steve Ross the next day and told him that . . . he had to give them more money to finish the job."
With Warner's financial backing, Panavision revolutionized the industry in technology and business practices. Unlike its competitors, Panavision refused to sell its equipment, insisting that, by leasing the cameras and lenses, it could continually upgrade and maintain the equipment.