Firm Sees Bright Future With Motion Picture Gear

Several years ago Edward Phillips leaned out a window at a New York City hotel and put his life and his company’s future on the line. Phillips’ Burbank company, Matthews Studio Equipment, was trying to sign up one of its first customers for an innovative camera gadget, called a Cam-Remote, which allows a person to operate a film or TV camera by remote control so that it can swing around 360 degrees.

An NBC sports executive was scheduled to visit Phillips’ hotel room. To win NBC’s business, Phillips hung a Cam-Remote and video camera out the window, pointed it toward the street and set up a monitor inside his hotel room.

When the executive got a look at how the camera worked from its precarious perch just outside the window, according to Phillips, the NBC man told him: “This is great. I want it for the Orange Bowl.”

Said Phillips: “We negotiated a price. But we also negotiated that we got screen credits.”

Since then Matthews Studio Equipment’s Cam-Remote has become a fixture at sporting events, and was high above ringside Monday night for HBO at the Leonard-Hearns boxing match in Las Vegas. And its high-tech Cam-Remotes have been used in movies from “Poltergeist II” to “Down and Out in Beverly Hills.” The market for Cam-Remote, according to Phillips, “is still only in its infancy, but it’s growing at a faster rate than we have.”

Won Award

Phillips and his partner, Carlos DeMattos, Matthews’ chief executive, along with Bob Nettmann, were jointly awarded an Academy of Motion Picture Arts and Sciences Scientific and Engineering Award in 1985 for the Cam-Remote. DeMattos said leasing out Matthews’ 30 Cam-Remotes will bring in about $1 million of the company’s likely $12 million in sales for its fiscal year that will end Sept. 30.

The success of the camera system has Phillips and DeMattos convinced that their modest company is ready to grow in a hurry. DeMattos and Phillips have an ambitious plan to triple their sales through a public stock offering, perhaps late this year, and the acquisition of other peripheral film-related companies.

The camera device uses electronic circuitry to duplicate delicate hand motions that allow the operator to pan, tilt, zoom and focus any film or video camera. Controlling the camera at a distance allows directors to give viewers the effective vantage point of positions that would be difficult or dangerous for a cameraman.

The Cam-Remote is used with both Panavision and Arriflex 35-millimeter film cameras, the leading cameras used in the entertainment industry. Although there are foreign rivals, the Cam-Remote dominates the United States market for remote camera systems, according to Grant Loucks, president of Alan Gordon Enterprises, a leading distributor of film production equipment. “There are competitors around, but not serious ones,” Loucks said. “Matthews has that market sewed up.”

In February, Matthews went public by merging with a so-called “shell company,” a dormant but publicly traded corporation. The maneuver allows privately held companies to go public but avoid the costs of an initial public offering. After the deal, DeMattos and Phillips hold about three-quarters of the stock outstanding for newly public Matthews Studio Equipment.

Wide-Ranging Business

As high-tech as the Cam-Remote is, most of Matthews’ business lies in more mundane camera devices and other equipment that the company sells to film and television studios and equipment renters, such as light and camera stands, dollies and cranes. Milt Keslow, a vice president for General Camera, a large supplier of Panavision cameras in New York, said he’s been using Matthews gear for years. “The standard for General Camera is Matthews equipment.” Matthews is also known for various stretched-cloth panels that filter, diffuse or block light on the set.

In Matthews’ last fiscal year that ended Sept. 30, the company posted net income of $223,000 on sales of $8.3 million.

Although Matthews has done well in the remote-control camera business, the company’s main hurdle will be fighting off competitors in the more traditional end of the business. In addition to the long-established Mole-Richardson Co., a leading producer of lights and grip equipment, Matthews will face a challenge from Arriflex Corp., which just entered the grip equipment field.

Another hurdle for Matthews is coming up with more cash--one reason why the company wants a public sale of stock. As Phillips admits, continued improvements on the Cam-Remote could cost more than Matthews can afford.

Thirteen years ago, when Phillips and DeMattos took control of Matthews, the company’s sales were less than $500,000, but for all of Matthews’ impressive growth, it remains an obscure public company.

Lightly Traded

Matthews’ stock is traded on the over-the-counter market via the so-called “pink sheets,” which include infrequently traded stocks. Indeed, Matthews stock hasn’t traded since March 31, according the National Quotation Service, when it sold at $2.125 per share. At that price, Phillips’ and De Mattos’ 74% share in Matthews would be worth about $9 million.

DeMattos, an emigrant from Portugal, got his start in the entertainment business in 1971 when he answered a Matthews ad for a part-time accountant. Phillips, who had worked for a company that supplied trucks to film companies, was already working for Matthews. At the time, Matthews was a modest camera-parts company run by its founder, Roy Isaia, out of a garage in North Hollywood and doing about $200,000 a year in sales.

Although Matthews was small, DeMattos found the firm attractive. “Basically, like most immigrants, when you come to this country, you expect to run into the land of opportunity,” he said.

The major studios had traditionally made much of their own equipment or bought it exclusively from large, established manufacturers. But major studios were then on the decline, and Matthews saw younger, smaller studios as potential customers. Matthews also chose a little-noticed corner of the film equipment business, producing not lights or cameras, but the more-mundane support equipment for them.

Stressed Ancillary Devices

“The Matthews people, Roy Isaia included, were very instrumental in bringing attention to . . . the fact that they needed good reflectors and silks and apple boxes,” Loucks said, referring to the cloths used on sets to filter light and the simple wooden boxes that actors stand on to appear taller.

There was enough promise in the business that in 1976, DeMattos and Phillips decided to team up and borrowed $210,000 to buy Isaiah’s 70% of Matthews. From then on, DeMattos handled the finances while Phillips handled the manufacturing and development of Matthews products.

In 1982, at a motion picture equipment trade show, Phillips was watching a remote-controlled beacon meant to draw attention to a neighboring booth when he got the idea for a remote-controlled camera. He hired Bob Nettmann and his firm, E. F. Nettmann & Associates, to do the technical work and, over the next two years, Matthews sank $300,000 into the project, a sizable sum for such a small company.

One of the first uses of Cam-Remote was for the 1983 heavyweight championship fight between Larry Holmes and Marvis Frazier. In Holmes’ one-round knockout of Frazier, the replay from the Cam-Remote showed how the force of a Holmes punch propelled Frazier back six feet while he fell to the canvas. A traditional angle on the same blow merely showed Frazier staggering back, then off camera.

That punch helped Matthews build up its momentum. But to lure new investors, Phillips’ and DeMattos’ task is to keep that momentum going.