The Todd-AO Corporation

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The Todd-AO Corporation

900 North Seward Street
Hollywood, California 90038
U.S.A.
Telephone: (323) 962-5305
Fax: (323) 9466-2327
Web site: http://www.todd-ao.com

Public Company
Incorporated: 1952
Employees: 920
Sales: $118.5 million (1999)
Stock Exchanges: NASDAQ
Ticker Symbol: TODDA
NAIC: 512191 Teleproduction and Other Post-Production Services; 512240 Sound Recording Stereos

The Todd-AO Corporation is famous for providing a wide range of post production services to the motion picture, television, and commercial advertising industries. Renowned for sound engineering, the company’s services include editing, narration, rerecording, digital sweetening, sound and picture synchronization, music scoring, Automated Dialogue Replacement, Foley sound effects, content transfer, and vaulting/storage. Moreover, the company’s video services include editing, graphics in 2D or 3D, visual effects, color correction, film-to-video transfer (telecine), and vaulting/storage. Finally, its distribution and studio services for home video, pay television, cable, and domestic and international television companies include foreign language dubbing, subtitling, restoration, satellite downlink, Digital TV, Digital Versatile Disc (DVD) services, transmission of television channels, and format conversions. The company’s employees have won more than 40 Academy and Emmy Awards; the talent and comprehensive services of Todd-AO and its subsidiaries attract such acclaimed producer/director clients as Steven Spielberg, Ron Howard, Woody Allen, and Robert Altman. The Walt Disney Company and its affiliates account for more than 15 percent of Todd-AO’s revenues. Todd-AO maintains facilities worldwide, in Los Angeles, New York City, Atlanta, London, and Barcelona.

Wide Screen Motion Pictures in the 1950s

Though the Todd-AO Corporation would one day make its greatest mark in the area of sound engineering, the company originated with the creation of the Todd-AO filmmaking process for a wide screen. Renowned Broadway producer Michael Todd provided the imaginative stimulus for a wide-angle, single-lens process; the American Optical Company (AOC) provided the practical knowledge to develop it. Ever the showman, Todd addressed AOC’s concerns over receiving proper recognition in development of the process by attaching the first two initials of that company’s name to his last name, to form Todd-AO, knowing that curious people would ask what “AO” represented.

Todd’s sense of the spectacular made him a natural enthusiast for a wide screen film-making process called Cinerama created by Fred Waller around 1950. While normal movie screens at that time tended to be a flat 20 feet by 16 feet, Cinerama involved a 51-foot wide by 25-foot high, deeply curved screen designed to engulf the human field of vision. The impact on the viewer and sense of viewer participation amazed Todd. Waller also incorporated the first use of stereo sound which approximated the visual source of the sound on the screen.

With Lowell Thomas, noted for his filmed expedition to Lhasa, Tibet, in 1949, Todd obtained a license to make the first Cinerama feature-length film, This is Cinerama. The color production consisted of travelogue clips, such as Niagara Falls from a helicopter and scenes from Aida at the opera house in Milan, Italy. Todd wanted to open the film with something to enthrall the audience, so he took a film crew to the Far Rockaway amusement park and had the cameras attached to the first seat of a roller coaster to give the viewer the impression of being on a roller coaster ride. Todd’s exuberance proved to be too much for the board of Thomas-Todd Productions, however, and the company completed the film without him.

Cinerama had several limitations which frustrated Todd and motivated the development of the Todd-AO movie-making process. The Cinerama process required three cameras which together approximated a 145 degree view. This proved troublesome as the alignment of the cameras had to create a complete picture. Shown on a wide screen with three projectors, the two “seams” where the three pictures met were often fuzzy, and the color often differed among the three projections. Also, the wide-angle lenses of the three cameras created distortions in the picture. As the seams and distortions precluded close-up shots, Cinerama proved inadequate for the production of narrative films.

Todd believed that a wide screen process could be invented which filmed from a single lens in a single camera, and he sought the best mind in optics to create such a camera. That turned out to be Dr. Brian O’Brien, head of the Institute of Optics at the University of Rochester. Having been contemplating a move to head research at AOC, O’Brien introduced the president of that company to Todd. While AOC considered Todd’s proposal, Todd approached Richard Rogers and Oscar Hammerstein II about obtaining the film rights to their successful Broadway musical Oklahoma!

In anticipation of an agreement with AOC, Todd formed Magna Theater with Hollywood friends and acquaintances to produce, distribute, and show motion pictures filmed with the yet-to-be-developed cameras. The board of directors included Chairman Joe Schenck, executive head of production at Twentieth-Century Fox, and George Skouras, president of United Artist Theater Circuit, who put up a majority of funds. Preliminary filming with a 70mm camera owned by Fox (previously used in 1929 but overshadowed by the new “talkies”) convinced Rodgers and Hammerstein to grant Magna the film rights to Oklahoma! They, along with producer Arthur Horn-blow, Jr., whom they wanted for Oklahoma! joined the board of Magna as well. The Todd-AO Corporation formed at the end of 1952, with Magna Theater as its primary shareholder.

The first president of Todd-AO was Henry Woodbridge, vice-president of AOC, with O’Brien as head of the research team. Todd-AO hired Mitchell Camera Company to design a high speed camera, Phillips of Holland to design the projection equipment, Eastman Kodak to produce the larger size, 65mm negative, and Ampex to develop a six-track stereo sound recording system. Todd-AO crafted four lenses, a 37 degree, a 48 degree, a 64 degree as well a 128 degree lens, nicknamed the “bugeye,” which came closest to the combined wide angle of the three Cinerama lenses. The “bugeye” created distortions in filming, but O’Brien assured Todd that an optical printer would be developed to fix the distortions. Todd took a camera to Far Rockaway to film the roller coaster ride with the Todd-AO process, providing an apt comparison to Cinerama. The process also tested well for close-up shots and proved better than Cinerama in terms of mobility, for pan and dolly shots, as the Cinerama camera had to be stationary.

Todd-AO Starts Making Movies: The 1950s-60s

Filming of Oklahoma! began late in 1954. While Rodgers and Hammerstein had total artistic control, Todd insisted that the opening scene show actor Gordon McRae riding through a field of corn, “as high as an elephant’s eye,” according the opening song, ’ ’Oh, What a Beautiful Mornin’.” Production of the movie involved all four of the new lenses, in contrast to the 35mm film process which used different focal lengths to create optical variety. Shot on 65mm film, Oklahoma! was printed on 70mm film for projection, allowing 5mm for a six-track magnetic stereo soundtrack. Todd-AO had opened a mixing, editing, and sound recording studio for Todd-AO as well as standard film processes. Todd edited a 25-minute trailer of movie clips from Oklahoma! to show Hollywood filmmakers in June 1955. The enthusiastic response of this critical audience stimulated active trading of Todd-AO stock which rose from about $7.00 a share to $22.50 per share. Many buyers held the stock in the expectation of increased stock value after the premier of Oklahoma!

Oklahoma! premiered at the Rivoli Theater in New York City on October 10, 1955. Projection of Todd-AO movies required a 52-foot wide by 26-foot high screen with a 13-foot deep curve, and conversion to such wide screen projection cost theaters $40,000. In this new type of theater, the six-track sound played through five speakers behind the screen, while one track played through speakers around the theater; the “surround” track simulated the real location of sound effects on the screen. Under Michael Todd’s influence, the movie was promoted like a Broadway show to accentuate the uniqueness of the wide screen process. At a time when adult admission to a movie cost $.75, reserved seats for Oklahoma! ranged from $1.75 to $3.50 with a five percent royalty from admission going to Todd-AO and Magna. Like a Broadway production, no popcorn could be served in a Todd-AO theater.

While the movie itself received great acclaim, the film process did not have the impact Todd and others expected. Reasons included a scratch on the film, which the audience attributed to the filming process, and distortions in the picture as a corrective optical printer had not come to fruition. The movie did win an Academy Award for Best Sound in 1955, however, and the first run at theaters lasted over a year. A film short, The Miracle of Todd-AO, produced in 1956, accompanied Oklahoma! during the later period of its first run. The film included test footage which emphasized the more spectacular aspects of the wide screen effects, such as the roller coaster ride. Magna’s partnership with United Theater Circuit assured a market for Todd-AO productions, but nationwide only 60 theaters had converted for Todd-AO by 1957.

Company Perspectives:

As the markets for entertainment products expands globally, the industry is faced with the challenge of providing uniform quality services in an increasingly complex mix of product formats, broadcast standards, geographic locations, languages and cultures. Equipped with the latest technologies and staffed with talented professionals and artists, Todd-AO is positioned to meet these demands and offers filmmakers, producers, directors and studios effective solutions to their creative needs. Through strategic acquisitions, alliances, building new businesses and internal growth, Todd-AO’s goal is to be globally positioned as the leading worldwide independent provider of sound and video post production services.

Todd sold some of his shares in Todd-AO and Magna to fund his production of Around the World in 80 Days, a project he started expressly for creative autonomy in showing off the spectacular effects of the Todd-AO system. Filmed in various locations around the world, Todd used the 128 degree “bugeye’ ’ lens for such scenes as a Spanish bullfight and bicycling through the narrow streets of London in high traffic. By the time of that movie’s premier on October 17, 1956, an optical printer had been developed to eliminate distortions created by the lenses in filming. The success of 80 Days was evidenced by the fact that it won five Academy Awards, including Best Picture and Best Color Photography. In 1957 Todd-AO received the first of several Academy Awards for Scientific/Technical Achievement.

The third movie production in Todd-AO, South Pacific, another Rodgers and Hammerstein musical, involved a slower film speed in order to show the film on a conventional flat screen. This allowed the movie to be shown at any movie theater but retained the high quality image and stereophonic sound of the Todd-AO process. South Pacific won the 1958 Academy Award for Best Sound.

In 1958 Twentieth Century-Fox Film Corporation invested $600,000 in Todd-AO through acquisition of four percent of preferred stock from Magna Theater. Magna then owned 63 percent of Todd-AO, while AOC held the balance. Fox also acquired the rights to film at least one picture a year in Todd-AO over the seven and one-half years. Several wide screen processes had emerged in the late 1950s; as the novelty of CinemaScope faded, Fox invested in Todd-AO as a better process.

Films produced by Fox using the Todd-AO system in the 1960s included Can-Can; Cleopatra; The Sound of Music, The Agony and the Ecstasy, and Doctor Dolittle. Other films shot with Todd-AO camera and sound technology included The Alamo by United Artists and Airport by Universal Pictures in 1970.

A Sound Engineering Company in the 1960s-70s

While filmmaking shifted to Todd-AO inspired processes, the primary direction of Todd-AO shifted to sound recording and mixing services for the motion picture and television industries. Todd-AO’s sound system for the wide screen had proven high quality, and the company excelled in post-production sound mixing and editing. By the mid-1950s new sound technology had changed the approach movie directors took to post-production sound editing, allowing sound engineers to stop their machine, reverse the recording to make changes in problem areas, improve the quality of the sound mix, rehearse and redo. Moreover, by the early 1960s “punch-in recording” allowed a director to stop, reverse, and rerecord.

While movie studios maintained their own post production facilities, Todd-AO handled studio overload, and producers and directors sought the services of Todd-AO’s talented staff. Todd-AO or its employees received Academy Awards for Best Sound for The Alamo; West Side Story; The Sound of Music; Cabaret; The Exorcist, E.T. —The Extra-Terrestrial; and Out of Africa, and had many other nominations. Fred Hynes, a sound engineer who joined Todd-AO with the making of Oklahoma!, would receive the Academy’s Gordon E. Sawyer Lifetime Achievement Award in 1987.

Multidirectional Expansion in the 1980s-90s

By the time Todd-AO became a public company on the Nasdaq stock exchange in 1987, United Artists Communications, Inc. (UACI) ownership in Todd-AO had reached 85 percent. Robert and Marshall Naify obtained a 52 percent majority ownership in Todd-AO stock through the public offering and subsequently sold their majority interest in UACI. (The brothers had served in executive positions at Todd-AO and, as co-chairmen of the board, oversaw the public offering of stock.) Todd-AO then undertook a series of acquisitions to expand the growth and profit potential of the company in a time of expanding opportunities in the cable, satellite, and home video markets.

In 1986 Todd-AO began to expand its capacity for sound services with the acquisition of Glen Glenn Sound for $8.9 million. Glen Glenn credits included sound production for 7 Love Lucy, Bonanza, Mission: Impossible, My Three Sons, and other popular television shows. The company has received Emmy Awards for Hill Street Blues, Cheers, and Cagney and Lacey. Renamed Todd-AO/Glen Glenn Studios, the company made an agreement with CBS/MTM Company to license certain facilities for recording sound for movies and television. The agreement involved the upgrade and refurbishment of four sound stages with state-of-the-art equipment including a six-track stereo studio, a combination film/video studio for stereo television, a video sweetening studio, and a studio for Foley live sound effects recording, and Automatic Dialogue Replacement. Todd-AO also upgraded its own studios with new consoles and the latest technology.

In September 1987, Todd-AO acquired the Trans/Audio sound studio in New York City, which it renamed Todd-AO Studios East. The acquisition made Todd-AO the largest independent post production sound facility in the world as well as the only sound studio with operations on both the east and west coasts. The company remodeled and renovated the east coast facilities, upgrading the studio to state-of-the-art equipment and bringing the total number of dubbing studios to 19.

Key Dates:

1955:: Premier of Oklahoma! in Todd-AO wide screen process.
1958:: Twentieth Century-Fox invests in Todd-AO.
1965:: Academy Award for Best Sound in The Sound of Music.
1973:: Academy Award for Best Sound in The Exorcist.
1986:: Expansion program begins with acquisition of Glen Glenn Sound.
1999:: Proposed merger with Liberty Media, an AT&T subsidiary.

Todd-AO’s growth and acquisition strategy sought to offer its clients complete audio and video services within one company as well as to offset the cyclical and seasonal nature of motion picture production. In 1994 Todd-AO Video Services acquired Film Video Masters, and in February 1995 acquired from George Lucas the Sky walker Sound South studio in San Francisco. Todd-AO purchased Chrysalis Television Facilities and its satellite transmission and post production television and movie facilities from the Chrysalis Group in May 1995. In April 1996 the acquisition of Pacific Title and Art brought specialization in the production of film, title, and optical special effects as well as digital services for motion pictures into the Todd-AO fold. The acquisition of Editworks, which specialized in commercial advertising in Atlanta, expanded Todd-AO’s geographic connections.

Under CEO and president, Salah M. Hassanein, who had been a director since 1962 and held several high level positions with Todd-AO and UACI, the company continued its growth strategy through acquisition into the late 1990s. A public offering of 1.5 million shares of stock at $10.50 per share in late 1996 funded further acquisitions and technology and equipment upgrades. In January 1997 Todd-AO acquired the stock of International Video Conversions in Burbank. That company’s video tape services included duplication, telecine, and format conversions including High Definition Television (HDTV).

The June acquisition of Hollywood Digital Company for $26.1 million added cutting edge technology such as the “virtual network” which provided digital pre- and post-production services in the studio or on location. In addition to a talented staff, the comprehensive list of post production services included on-line digital editing, telecine, color correction, graphics, special effects, audio editing, tape duplication, music prelay, sound mixing, and video sweetening. Hollywood Digital tended to provide these services to long-format products, including feature films, preview trailers, sitcoms, episodic television shows, and mini-series. Though the advantages of this acquisition were slow to take hold due to the upgrade of much of that company’s technology and equipment, the location of a new facility near advertising agencies in Santa Monica in spring 1998 aided Hollywood Digital’s development.

Growth from acquisitions and increased demand for production services led to a 25.5 percent increase in revenues in 1997 over 1996 to $79 million. A rising number of independent filmmakers and television show producers, and a surge in the number of broadcast channels, served to heighten demand for production services. The increased revenue included the third year of annual growth at over ten percent at Todd-AO Video Services and record revenues at Todd-AO Studios and Todd-AO Studios West. Todd-AO Studios won two Emmy Awards during this time, for sound mixing for Titanic and sound editorial for The Shining, both for television productions.

Amidst diversification and internal and geographic growth, Todd-AO continued to reach high achievements in sound engineering. In 1997 the company received its sixth Academy Award for Scientific/Technical Achievement. Academy Awards for Best Sound were given to Todd-AO employees for Last of the Mohicans, Apollo 13, and Saving Private Ryan, its 20th Academy Award to date.

Growth Potential in the 21st Century

Through two 1998 acquisitions, Todd-AO anticipated significant growth in its post production services. In May Todd-AO purchased Pascal Video to address the potential market in Digital Versatile Disk (DVD) technology. Todd-AO Video Services DVD, Inc. was created for the conversion of film and video content to DVD format in anticipation of future demand for television shows and thousands of movies on DVD. The company hired Richard Ayock, an expert on DVD, as president and chief operating officer. Todd-AO also expected global distribution and satellite channel expansion, prompting the addition of Tele-Cine Cell Group (TCCG) of the United Kingdom. Todd-AO expanded operations at TCCG, particularly the satellite transmission division with two 2.4 meter satellite dishes on the roof of the main building and a 3.7 meter dish at an adjacent facility.

Acquisitions involved geographic considerations as well as service capabilities. In June 1999 Todd-AO purchased the stock of the SoundOne Corporation in New York City. The acquisition broadened Todd-AO’s post production facilities on the East Coast (where production of motion pictures had increased in recent years) and added a strategic entry into Europe. Sound-One’s credits included the motion pictures Fargo, You’ve Got Mail, and Men in Black. A September 1999 agreement with 103 Estudio in Barcelona, involved the acquisition of 50 percent of that company’s stock and a plan to upgrade the facility with state-of-the art digital equipment to dub foreign language movies and television programs. In 2000 the company expected to open a foreign language dubbing and audio post production facility in Munich, Germany, in a joint venture with Disney Character Voices International, Inc. Todd-AO hoped to establish similar ventures in France, Italy, and Asia.

During 1999, however, the company’s stock dipped to $8 per share, down from $13 in 1998. Analysts attributed the decline in investor enthusiasm to the fact that competition in the industry had heightened and that film studios were becoming more budget-minded, noting that competitor Four Media Co. had also seen a drop in its stock value over the past couple of years. Hassanein, the company’s president and CEO, stated his belief that “the current market valuation does not reflect Todd-AO’s unique position and growing global reach,” and announced that Todd-AO would look into the possibility of merging with, or forming a joint venture with, another company. In December 1999, Todd-AO announced that it had agreed to be acquired by Liberty Media Corporation. Under the agreement, Liberty Media would obtain 60 percent ownership in Todd-AO and 94 percent voting power. At the time Todd-AO expressed its expectations that the merger with Liberty Media (the cable television programming division of AT&T that oversaw Discovery Channel, E! Entertainment, and Black Entertainment Television), would be a merger of talent and technology as well as ownership.

Principal Divisions

Todd-AO Studios; Todd-AO Studios West; Todd-AO Scoring; Todd-AO Sitcom; Todd-AO Video Group; Todd-AO Interactive; Sound One/Todd-AO Studios East; Todd-AO Atlanta; Todd-AO London; 103 Todd-AO Estudios (Spain).