Exhibitors Herald and Moving Picture World (Oct-Dec 1928)

October 27. 1928 EXHIBITORS HERALD and MOVING PICTURE WORLD J 1 What the Bank Does With Theatres The Chicago Title & Trust Company took over 45 motion picture theatres as receivers. If hat uas the matter with these houses? W hat was done for them? This article, based on an intervieic with — CHESTER R. DAVIS Trust officer in charge of the theatres, describes what a banking institution does when it turns banker t | < HE question in each case was simply this: I What caused the theatre to fail? But the answer was not so simple. W ho has not gone to a doctor, feeling, though well enough to struggle through one's work, that the body was not functioning properly? Headaches, perhaps, and a tired feeling. Yet the appetite good and no pains to strike a definite signal. Not so serious as pneumonia for the patient, but a much tougher problem for the physician. Something wrong, obviously. But where? Often it turns out that there's a little bit wrong almost everywhere. * * * It will occasion no surprise that theatres, like other businesses — like people — get into the very same condition. Many houses are not making all the money they might, while some which are favorably located, well appointed and at least fairly well patronized, yet find themselves unable to make both ends meet. If the situation is one in which competition must be met with a more resourceful theatre in an overseated community, the case is simply one of a deadly disease. No need for a thorough clinical investigation then. It is the theatre that should be in good health, yet is experiencing "that tired feeling" in the box office, those chronic aches in the accounting department, which cries for the business-doctor — and which causes the most wrinkles on his professional brow. In Chicago, the courts have practically created a clinic for insolvent motion picture theatres. It has 45 patients. Several circuits, seemingly affluent, have been turned over by the courts to the Chicago Tile & Trust Company, for diagnosis and treatment under receivership. One hears theatrical wags refer to the "C. T. & T. circuit." Such light fellows, it seems, see humor in the position of this banking institution as a chain operator in the show business, and we all must admit that there are showmen who think that the theatre is to some extent exempt from following the usual business methods. But not only they may bring about a weak or broken-down condition in a theatre. There are many factors, from making theatreoperation a stock promotion scheme to blindly accepting trade conditions which business-like investigation would show to be injurious to the health of the theatre. * * * Well, what is to be done about it? An answer covering the question completely would have to be far longer than that which can be given here. Every theatre, moreover, presents certain conditions peculiar to itself. But there is certainly much of deep significance and wide application in what the Chicago Title & Trust Company found among the 45 motion picture theatres which have come under its management. They are large and By GEORGE SCHUTZ small, presentation and all-screen houses, located in important business districts and in quiet residential sections. All were insolvent? Why? Let us first see how this banker went about finding out. One circuit is one comprising 14 theatres, one of which is a big house which presented besides leading pictures, presentation acts and 3 featured stage orchestra, with the master of ceremonies usual to such policies. The trust company got notice from the court that it had been appointed receiver for the chain, at 4 o'clock in the afternoon. At about 8 o'clock the most popular performances of the day would begin. Chester R. Davis jumped into, the role of exhibitor. It was not a new part for him, yet this circuit was of unusual size and importance— and time was short. But Davis, being assistant trust officer in charge of receiverships (and a lot of different kinds of businesses go blooey!), is used to quickchanges. He called in his staff and assigned each one to a theatre. They were placed in complete charge of their respective theatres, responsible only to Davis. The drama of it — the fact that within two hours the entire circuit was under new management without a hitch in performances — is net for us to dwell on. Each of Davis' assistants immediately prepared an inventory of all the assets of his theatre, the number of employes, their duties, salaries, all expenses, etc. Davis asked his assistants to tell him such things as what kind of a ventilating plant was installed, what was the insurance, how extra help was paid and what for, what was the method used in keeping track of petty cash disbursements, what relations with the union were, and what has been the experience of the manager. Much more, of course, Davis wanted to know. But those items show the trend of his curiosity — his business curiosity, it should be emphasized. He was curious about details. You have to be — in business. The work of finding out just how much money was invested in each theatre, exactly how it was operated, what had been the income and how much business the house could be expected to do, took some time, but it resulted in a complete picture of the situation in each case. W"hat was wrong in this picture? Davis looked hard and long at each one to find out. And he found leaks, waste, too many employes, salaries not commensurate with the ability and duties of those receiving them, contracts with unions entered into wholesale that dpmanded too many musicians or other employes, film prices higher than the traffic would bear, stage productions of a lavishness that either did not draw enough in the particular community concerned to warrant their cost or that could be dispensed with entirely. These things were found — and others. Changes were made, and today, ten months after these theatres were taken over, the circuit is solvent. "Not only in the case of this group of theatres," Davis told me, "'but with respect to the others, we found almost right away that we could save quite a lot of money in salaries. In one case we reduced the weekly payroll for executives from SI, 500 to $350. That was a healthy start. Then too, some of the houses had too much help. Maybe it was thought they needed that much. We thought they didn't. And now it appears we were right. * * * "Of course we could save considerably by setting up a central film booking arrangement, putting the pictures in the different houses under our management. But not all the savings came from this booking method. Some were the result of simply not paying more for pictures than the theatres in which they were to be shown could afford to pay. It certainly doesn't take me to point out that you can't sell goods for less than you pay for them. "We cut our cloth fine. Not too fine. Just saved wherever we could — in all the little places where leaks occur in the general operating and administrative functions. And I'll say this much, that this procedure hasn't hurt our shows a bit. To the contrary, we have been able to give the people better programs than they saw in these houses before, and the theatres themselves are on a higher plane. That is not only visible in the theatres. It is shown absolutely in the increase in patronage and receipts. "In one of the theatres having stage shows, we cut them out. The district was such that this policy did not pay. We naturally expected, of course, that receipts would fall off, with only the picture to attract people in. But we expected to save enough by wiping out the overhead on stage productions and salaries to overcome that. "Well, as a matter of fact, patronage did not fall off. It increased. We're not paying as much for the pictures we show in this theatre as was paid before we took it over, either. And the house is a good paying business right now. * * * "Another thing. When it came time last September to sign a new contract for our theatres with the musicians' union, we settled with the union directly, instead of (Continued on page 123)