Boxoffice (Jan-Mar 1945)

HOLLYWOOD'S "MAGIC MOUNT" IS SCALED BY FORTUNE WRITER Costliest "Canned Goods" Are Made in Defiance Of Normal Customs By CHARLIE HOGAN To the never-ending amazement of business men in more prosaic industries, Hollywood today is sitting on a “magic mountain” of the highest earned income in history and there is little immediate possibility that anything this side of a national financial catastrophe will drag the industry down from that dizzying eminence. This, at least, is the conclusion reached by Fortune magazine, which in its February issue turns its clinical microscope loose on the California purveyors of “the world’s most expensive canned goods.” “The canned goods are made in and around Hollywood and they are, to be sure, a very expensive kind,” Fortune states. “Into the eight or nine reels of a feature picture, tightly curled in round tin boxes, have gone as much as several millions worth of labor, executive judgment, diplomacy, inefficiency, personality, talent and even genius.” The cost of producing this luxuriant line of canned merchandise has always baffled observers trained in ordinary business practices, according to the article. But while some factors might tend to send costs down, such as the present yen of actors, writers and directors to become independent producers, very tangible forces are working to push revenues down, according to Fortune. Plow Back the Profits The industry cannot expect any postwar boom because its products have already been sold during these war boom days. It is estimated that grosses have skyrocketed from $650,000,000 in 1939 to considerably above a billion dollars and “only a rash showman would count on anything like today’s gross in the postwar world.” “To Wall Street, motion picture manufacturing has never realized its potential earn DARRYL F. ZANUCK He spent the most on one picture. ing power because it has been forced to spend its profits as costs,” the writer says. “In profit per dollar of invested capital, indeed, the motion picture industry has trailed behind autos, chain variety stores, chemicals, office machinery and five other ^industries.” Because three-quarters of a picture’s production costs are accounted for by salaries and because the industry decided many years ago that in its extremely risky business of trying to please everybody the star was the best boxoffice insurance, studios began bidding for the services of talent possessed of an often mysterious power of pulling in the paying public. Pay Rolls Zoom Higher Thus it was relatively unimportant whether some file clerk in Omaha could really act or whether a play was “good” dramatically. The primary goal was to pull as many people into the theatres as possible; the star system did it and thus the salary merry-goround swung into motion. As stars’ salaries soared those of producers rose higher, on the broad general principal that the boss ought to get more than the fellow he hires. This bidding reached into all levels of picture production so that last year the total Hollywood pay roll climbed up to around $200,000,000, with the bulk of this enormous outlay going to fewer than 18,000 regular employes. Fortune points out that with the industry’s ingrained love for lavish spending stimulated by the wartime boom in wages and demands for entertainment organized labor is now insisting on a bigger share in this huge Hollywood “nut.” “The situation is one of the oddest in history,” the writer continues. “Practically everybody in the industry save executives and producers belongs to one of 42 different craft unions, mostly AFL, the rest independent.” All are tightly organized, most enjoy closed shops and now even office workers who have been paid standard wages are after more. Story costs are rising. “It looks as if all movie employes would get their places on the magic mountain as high above their counterparts in the nether world as executives and creative folk are above theirs.” With expensive talent as the chief raw material the making of a picture is bound to be expensive and even in the minor studios or the units in major studios where stereotyped quickies and westerns are ground out production cannot be put on a strictly factory basis, according to Fortune. There are scores of chances to run up expenses. Most of these, such as color, are considered as “insurance.” Once a production is set time becomes all-important because expenses go on whether shooting does or not. Big Five’s Extensive Holdings And as these costs whirl in what Fortune terms a “charmed and charming circle” the most important of many other uncertainties facing the producer derives from the fact that the industry is not clearly divided into production, distribution and exhibition. The so-called “Big Five” companies own or control 2,600 of the nation’s strategic theatres and, before the war, garnered twothirds of total film rentals. This “vertical trustification,” according to the magazine, has led to past abuses in allocating films, brought protests from independent exhibitors and is the basis for the present department of justice action to force Magazine Tells How Film Producers Plow Back Profits on Pictures complete divorce of production and distribution. “A divorce might well put the emphasis on reducing studio expenses because it would deprive the studio of a measure of security,” Fortune declares. “Darryl Zanuck spent more than $4,000,000 producing ‘Wilson’ and perhaps another million advertising it. It was the most expensive production of all time, yet was as great a gamble as a Betty Grable picture is surefire ... ‘If it had not been for our theatres,’ admits Zanuck, ‘I TMould have had a very difficult time. They gave us the chance to exploit the picture as no independent will.’ ” Divorce Might Not Work Fortune points out further that divorce might tend to eliminate double features which were originated by independent exhibitors who could not get all the first run pictures. “Like a symphony conductor a good director cannot make a bad creation good and he can make a good one sound rather mediocre; but he can do a lot to rescue a mediocre piece and make a good one sound very good,” the article states and points out that the direction of Leo McCarey was largely responsible for making “Going My Way” produce rentals of $12,000,000 on an expenditure of $1,000,000. “Yet when an industry elevates its pay far above that of the rest of the economy it encourages forces contributing to its decline,” the article concludes. “The fact still remains that the system of bidding up salaries with the bidders’ own salaries rising proportionately has resulted in a super-elevated concentration of income. “The critical question which nobody can yet answer is whether the greatest amusement business in the world’s history is subject to the same forces and trends that have shaped less glamorous enterprises.” LEO McCAREY He got the biggest return per dollar. 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