Year book of motion pictures (1925)

The Financial Development of the Film Industry in 1924 By Richard W. Saunders, Comptroller, Famous Players-Lasky Corp., and formerly Cashier National Bank of Commerce. New York The greatest progress, in my opinion, has been along the following lines: 1. The steady improvement in organization, accounting, auditing and business methods, bringing the corporations which compose the film industry into favorable comparison with other successful lines of industry. Of these, the adoption of the budget system, under which the income and expenditures of the corporation, are charted in advance and lived up to, is perhaps the most far reaching. 2. The strengthening of certain corporations by amalgamation and the elimination of certain weaker companies will in the end strengthen the industry. While there always will be and should be, independent companies, the stronger ones are able to better absorb the losses that from time to time must occur and are better able to sustain the steady output which is the life of any established industry. 3. The recognition by practically all motion picture directors of the limitations required for financial success and their willingness to cooperate. This does not mean any sacrifice of artistic values as they are suitably considered when the budget amount is fixed, tying in with the budget total for production. The great gain this year has been in the changed attitude of directors from regarding the financial limit as a restraint, to its recognition as a vital consideration in the making of the picture. 4. The greatly improved attitude of the banking and financial world towards the industry. The above improvements have contributed and a number of explanatory articles in financial organs have helped. One conservative bank has issued in its magazine an account of the "stabilization" of the industry. 5. The increased favor with which the public regards the industry and the support they now give it at the box office. True, the public has become more discriminating and insists upon the kind of picture it enjoys. During the year, as perhaps never before, the producers and the public have understood each other better. 6. Considerable progress has been made in the relations between producer and exhibitor and it looks in time as though they would settle down in the same manner as other wholesalers and retailers. Their interests are largely the same. What helps or hurts one, helps or hurts the other. The producer must ask prices that will enable him to go on mak ing pictures and pay dividends on his capital and the exhibitor must get the pictures at a price that will enable him to repay his investment with profit. The benefits of production on a reasonably large scale enabling the exhibitor to contract for a good part of his product at one time, are now recognized and the dangers minimized. For that reason, combines on the part of exhibitors for purchasing pictures, if. they transgress the reasonable price return to producers, are likely to do the industry a great deal of harm. 7. The number of new companies being organized as shown by the lists of state incorporations, for picture production, etc., would seem to be out of proportion. A great number are bound to fail and this brings about a reaction against the industry on the part of the financial backers. As the bankers now pretty well understand the safe methods of financing such projects, a large part of the funds come from individuals, lured into doing so by the prospect of large returns. Through the Hays office and its affiliations, a number of flagrant cases have been stopped. In this connection, several bankers have expressed during the year, their satisfaction with the outcome of their loans to motion picture companies. The loss to banks generally has been trifling. 8. The benefit of the organization headed by Mr. Will H. Hays has been of steady growth during the year. Its membership is steadily increasing and the various lines of effort, conducted with dignity and fairness, are attaining permanent and far reaching results for the good of the industry and all concerned. 9. The splendid grade of pictures produced during the year, has done more than all other factors, in bringing about financial stability. These are the backbone of the industry, the stock in trade; and that it is of such uniform excellence means prosperity and financial safety. 10. Among the numerous other benefits to the industry in 1924, might be mentioned the advertising, which has gained in beauty and drawing power; the improvement in trade papers, which are more calm and judicial in their treatment of pertinent subjects; and in general throughout all the branches of the industry, there has been an arrangement of the whole to the parts, an adjustment of each to suit the needs of another, that cannot but be of great permanent value. To sum up, the industry during 1924 Rained tremendously in STABILITY. 3