Weekly television digest (Jan-Dec 1960)

VOL. 16: No. 50 7 Film & Tape ) NEW TAX RULE IRKS TV FILMERS: A new Internal Revenue Service ruling, issued in order to clarify the controversial method of taxation on TV films (Vol. 16:49 plO), has met a variety of reactions in Hollywood, ranging from indignation to apathy. TV-film executives we checked want a cost-recovery method, whereby a producer is not taxed if he spends all of his budget on production and shows no profit. However, IRS has been allowing the producer to write off only 6090% of his production costs, depending on an estimated projected income of the series. The new IRS ruling bars cost-recovery and formally adopts the controversial method which it terms “income forecast.” An IRS spokesman in Hollywood explained the new ruling to us in this way: “We are now clarifying what has formerly been a clouded area — the application of Tax Code Section 167 with respect to TV films. We have gone on record as saying cost-recovery is not an acceptable method, and flow-of-revenue is a more acceptable method. Now the industry knows where we stand. We base our estimate on the producer’s judgment as to his potential income; we don’t substitute our judgment — unless the producer’s estimate is not in conformity with the facts.” But TV executives did not share this optimism. One top executive told us that in his opinion the new rule hadn’t changed a thing — it was just a continuation of IRS policy. A producer-owner of a series said : “It would seem to me to be an eminently unfair ruling & an arbitrary decision. Who can say what the potential worth of a series is?” k Ozzie Nelson, producer-owner-star of the Adventures of Ozzie and Harriet (on ABC-TV), who is currently appealing a tax claim of $1.1 million, told us he didn’t think the new ruling applied to his situation: “I think this ruling is not applicable to us. No matter what their rule states, it’s still a guess as to potential income of a series. The rule might apply to large organizations which have yardsticks to go by, but not to us. I don’t think we will ever syndicate our films. I think the ruling is grossly unfair & unjust. I don’t think the companies affected by it will hold still for it— but, of course, that’s up to them. It will not affect our appeal.” Producer Jack Chertok who, with Ann Sothern, is contesting a tax claim on their series. Private Secretary, told us he preferred to withhold comment until he’d had a chance to study the ruling thoroughly. IRS’s rule states that “after an extensive study & consideration of the matter, the Service has concluded that the so-called ‘income forecast’ method is readily adaptable in computing depreciation of the cost of TV films without producing any serious distortion of income ... If in subsequent years it is found that the income forecast was substantially overestimated or underestimated by reason of circumstances occurring in such subsequent years, an adjustment of the income forecast for such subsequent years may be made . . . The total forecast or estimated income to be derived from the films should be based on the conditions known to exist at the end of the period for which the return is made.” Rule applies to tape & film shows. William Talman is returning to his role as district attorney in CBS-TV’s Perry Mason, after having been dropped from the cast when he was arrested last April ip a vice raid. He was acquitted at the subsequent trial, ■' EXTRAS SIGN COMMERCIALS PACT: A contract covering extra players in TV commercials has been negotiated by the N.Y. Film Producers Assn., Screen Extras Guild and Screen Actors Guild. Extra players who demonstrate or illustrate products are for the first time given special rates as well as additional re-use payments. The deal establishes a new classification of extra player, known as “product extra player,” with a minimum of $55 a day retroactive to last Nov. 16 and rising to $70.83 on July 1, 1962. Original payment to the extra is for only 13 weeks’ use of the commercial, unless he is paid an additional 75% for unlimited use when first employed. Otherwise, for use after 13 weeks, the extra will be paid an additional 100% of his total original compensation. On & after July 1, 1962, all extra players working on TV commercials will come under the same plan of additional percentage payments for re-use after 13 weeks as the product extra player. Rates for these other extras will be identical with those in the contract signed in Hollywood between SEG, Assn, of Motion Picture Producers and the Alliance of TV Film Producers. The N.Y. extra players contract calls for a contribution by the N.Y. producers of an amount equal to 5% of all extra players’ earnings for pension, and health & welfare plans, beginning Nov. 16, 1960. The contract runs to June 30, 1964, with reopening rights on TV commercials in 1963. In addition to FPA, the networks and ad agencies participated in the negotiations. The Hollywood contract between SEG, AMPP, and the Alliance provides that the terms of the N.Y. extra players agreement covering rates & conditions for TV commercials shall be incorporated in the Hollywood agreement. SAG represents extra players in the N.Y. area, SEG represents them elsewhere. How to Save Money on Pilots: Hollywood’s device to avoid the heavy expenditure of pilot-making (average halfhour cost: $75,000) is the so-called “presentation film.” Revue Studios first devised the method 3 years ago in selling the Ray Milland Markham series, using a 10min. film. Now the studio has revived the idea with 20min. films for The Rangers (Jock Mahoney), a Mickey Rooney series, and To7n Sawyer (Maureen O’Sullivan & Chuck Herbert). Usually the films are made in a single day at a cost of about $8,000. Sawyer, however, required 3 days of filming & a budget of about $25,000. Executives contend that the presentation film has other advantages over pilots beside the obvious one of economy. A presentation can explain all angles of a series and therefore be a more comprehensive sampling than a pilot. In the film, the star of the series usually makes the sales pitch, and the footage sometimes includes a sequence or two of the contemplated series. In the Rooney film, clips froni a Wagon Train in which he guested were inserted to demonstrate his versatility. Several scripts are usually presented to potential buyers along with the film. ■ Writers Guild of America West TV branch has elected 3 board members to fill posts vacated by its recent recall election (Vol. 16:44 p8): Maurice Tombregel, Doris Gilbert and Martin Wark. WGAW sent a delegation to N.Y. to meet last weekend (Dec. 10-11) with WGA East for its national council session.