Independent Exhibitors Film Bulletin (1959)

FINANCIAL BULLETIN JANUARY 19, 1959 By Philip R. Ward XTIEN TURNABOUT IS FAIR PLAY. "Yes Sir," said the Joice on other end of the telephone. "I would call it a heroic ob, an olympian job ... if you will. No, we did not recomnend this security to our clientele. No particular reason . . . ust didn't get around to it ... I know some houses that did . . Your industry should nominate Joseph Vogel for man of he year." So went the roundup of investment sources the day the .oew's profits story broke. We might add no further liberties vere taken with President Vogel's name, not even from Wall Street partners, like the one cited above, whose interests one suspected ran more to metals than movies. The tenor of comnent ran very much like this: one of top management's more lotable achievements of 1958 for any industry. "Remarkable considering the harassments I understand they (Vogel and asso:iates) were subjected to," said one noted security analyst. If much-pained Joseph Vogel is not filmdom's man of 1958 fiis concern is the undisputed Lazarus of that or any other l/ear — risen from a moribund brink to extraordinary corporate ■ animation. The real story of Loew s resuscitation flows from study of the first 1959 fiscal quarter, a term during which the production-distribution facility began to move like a whippet in a tail |Wind. Contrasting the fiscal first quarter of 1958 with 1959, we perceive an overall pre-tax betterment of S6,565,000. Mr. Vogel managed to wipe out a $4,378,000 loss in the picture making-selling wing and replace it with a $2,187,000 profit. [Talk about Silky Sullivan coming from far, far back! Of more than casual significance is the relationship between 1st quarter production-distribution profits and those from other Loew's spheres. In total, profits amount to $2,625,000, meaning that $438,000 is attributable to all other operations. Nothing could more eloquently bear out Mr. Vogel's thesis, recorded during the divestiture wrangle of a few months back, that MGM, not Loew's Theatres and other activities, should be Iretained as the key enterprise of the new Loew's, Inc. It corroborates, too, Film BULLETIN'S repeated editorial position, to ;wit: on a profitable footing, MGM is perhaps the most precious asset in the industry. 0 For full fiscal 1958, Mr. Vogel reports an after-taxes profit of $774,000 or 15c per share, as contrasted with a net loss of $455,000 (9c per share loss) for fiscal 1957. A considerable loss resulting from film production and distribution occurred in fiscal 1958, notwithstanding drastic cost-cutting — a condition which no doubt precipitated the move by Messers Green and Newman to throw out the studios, though heaven knows they must have been informed of the incipient comeback in this phase of the business during the height of the hostility. One conjectures that the Green-Newman combine, though appraised of the improving climate, did not believe that this performance could sustain itself with regularity. Their sellout of some (but not all) of their Loew's holdings to foodman Nathan Cummings, along with insurgent generalissimo Joseph Tomlinson, would seem to confirm the suspicion, and the trio's ensuing retirement from the board makes it appear that they may soon depart the Loew's scene entirely. What happens now will prove whose estimate was more valid, Joe Vogel's or the rebels'. Mr. Vogel, in the words of one Wall Streeter, is now free to fall on his face — a not unkind analysis of existing conditions, meaning: anything other than a banner year, a year devoid of distractions and anything else standing in the way of positive, constructive reform, will be viewed with the gravest misgivings. Mr. Vogel's three handicap, as the golfers say, is no more. Going for MGM is the strongest product backlog in some years — and "Ben Hur." Overlaid on a mosaic of personnel changes, expense-pruning and a general lowering of overhead, any favorable showing in film income should produce more than customary profits. We look for the next two years to restore MGM to pre-eminence among film companies and drive Loew's, Inc. to some of the best years in its history. A rise in the stock price to 30 and beyond with 1959 seems attainable and reasonable based on a projection of 1st quarter income. We believe any additional shares dumped on the market will be eagerly picked up by scattered investors who see Loew's as a good thing for the future. This department heartily recommends it as such. o o THOSE DIZZY DISNEY PROFITS. Long before the Sputnik and the Atlas did Walt Disney master the concept of velocity escape. There is apparently no economic gravity capable of exerting its pull on this free flying corporate body. For the fiscal year ended September 27, 1958, film income is up almost 25%, TV income about 10%, Disneyland income more than doubled. In all, net profits rose from S3. 6 million to S3. 8 million, or from $2.44 per share to S2.51 per share. However, because of Disney's unique bookkeeping the best is yet to come. This will derive from income on fully amortized theatre films that are re-employed because of their timeless character. What happens is that there is little or no cash charge against such income. This so-called "cash-flow" condition has been the subject of much Wall Street discussion, one firm, T. L. Watson & Co., reckoning the cash flow at S"() per share for the first 6 months of 1958. Talking about amorization, the rate is ver) interesting at Disney. In 195", for example, this item ran $12.28 million, as against total film rental revenue of SI 5.5 million — roughly an 80% ratio. Film BULLETIN January I?, 1 959 Page 3