It was the organizers of that Technicolor film festival who were threatened with having their print confiscated and destroyed. The article says that they were threatened after trying to clear the screening through Fox, but it doesn't make clear whether it was actually Fox who made the subsequent threat, or whether it was Lucasfilm. If it was Fox, I'd assume they were acting under orders from LFL.
I am assuming that the print that the LoC had but returned came from a private collector, not from LFL. Since that print was "returned to the owner," I am pretty sure that means that it was given back to said collector.
I hope this story gets traction, because this is inexcusable. To talk out of one side of your mouth about preserving our film heritage, then to not let your own film be preserved because of your petty, childish attitude toward the original films which made you the billionaire mogul you are. As someone once said, "A wizard should know better..."
Disney won't release Song of the South, but at least they've taken the effort to keep the film properly preserved. And this isn't something like The Alamo, where MGM literally hasn't been able to afford properly restoring the original version due to their financial problems. I am pro-business, pro-copyright, pro-property rights, but this is just beyond the pale.
Even if copyright extension is kept in place, there should be a clause for films, that if you're not properly preserving a work, even if you do not intend to publicly release it in the foreseeable future, you lose it. I'm all for copyright, as long as you take the responsibilities that come with it; film is not a permanent medium like print is, it needs special care. It feels more and more like Lucas' attitude towards the OOT is "let them rot," and I'd call that reckless endangerment of film.
Epic fail, Mr. Lucas. Epic fail.