Documentary News Letter (1947-1949)

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DOCUMENTAU\ NEWSLETTER Ml ($35 million) v\as the big seven's savings as a result of Congressional action which erased the Government excess profits tax at the outset of 1946. But costs of production in 1946 soared to $413 million for just over 400 pictures, a 25 per cent rise in a year. And to cap it all, US boxoffice receipts have skidded from what the Wall Street Journal calls the 'super colossal' to the 'mere colossal'. Typical estimates point to a slump of 12 to 20 per cent so far this year. Mr Eric Johnston and his Influence Hollywood films scooped S900 million gross from the foreign market last year, or 35 per cent of their gross total. Almost S400 million gross came from the UK. The advent of Johnston to the MPA showed the concern for this market. He was preceded by Will Hays, a political intimate of President Warren G. Harding. Hays' function was to protect Hollywood interests on the domestic front. (The code for moral suitability of films was administered by the famous Hays Office'.) Johnston, however, is a political theorist and businessman. As former President of the US Chamber of Commerce he has contacts all over the world. Last fall he adopted a 'get tough' policy with the MPEA urging them to export only select films and abandon such offensive practices as stereotyped portrayals — e.g. Englishmen who alway s wear monocles and look, and are, silly. He is highly aware of the competition US films face from British pictures in such territory as Latin America, and is convinced that Hollywood must help its country meet the threat of Soviet power. He has repeatedly told MPA members that US films must carry the message of free enterprise to the world. (Hollywood's reaction to this, so far, has been one of deep astonishment.) Meanwhile Johnston is working closely with his friends Will Clayton, Under-Secretary of State for Economic Affairs, and William Benton, Assistant Secretary of State, as well as with Secretary of State Marshall to advance the international exchange of films (A.O. No 4, p. 34). This, and the fact that he has been mentioned as a possible Republican VicePresidential partner with Governor Dewey in 1948, makes him one of Hollywood's prize personalities. British and American Films in Each Other's Country American films reaped approximately £16,750,000 net from the United Kingdom, while British products only nipped about 58,500,000 net from the US market. Even so, Hollywood's net income from the UK was only 17 per cent of its gross income in the UK. The rest remained in Britain for distribution, exhibition, taxes, etc. Therefore the 'majors' were busily buying shares in British and other foreign theatres and distribution chains. Profits from these investments will be clipped by the new cut in British film imports, but the new British ban on transfer of more than a quarter of US film profits into dollars will put an abrupt stop on 'direct' investments in the British film trade. The big Hollywood companies have profited directly by importing British films into the US since 95 per cent of the US film industry's capital of $2,600 million is in theatres. Here, too, arc i most of the profits. Despite eight years of the US Government's anti-trust action against them in the courts — for monopolistic practices — the eight 'majors' control 73 per cent of the theatres in 92 cities with a population of more than i 100,000 each. They also dominate 16 per cent of ! all US theatres, and hold shares in thousands more. British pictures may easily get from $12 million to S20 million from the US market in [947, but not in 1948. So with eves on the profits British films will make in US theatres, as well as on the benefits of trade, five major US theatre circuits last June handed to Mr J. Arthur Rank play-dates (engagements) totalling S12 million yearly. The agreement provided that only the best of British films be shown. This was the first real chance British films had to compete in America as a whole w ith the home product. Would British Films have Succeeded? 'Stix still nix Brit pix despite crix*: in Hollywood lingo this means British films will not have an easy time drawing American crowds. (Stix means sticks, backwoods, rural areas and small cities: nix means negative towards; Brit, British; pix, pictures; and crix, critics or newspaper columnists, who have generally been favourable to London products.) Variety, after an exhaustive coast-to-coast survey, stated on June 18th: Most sections of the country, in fact, virtually every section except the metropolitan centres along both coasts, are continuing to exhibit the same time-old allergy to foreign films which was evidenced before the war. The principal difference is that there are more exceptions . . . such as the British Henry V. Yet there is an undercurrent of apprehension in certain segments of the American film industry over the excellence of recent British films. This misgiving is magnified by the home box-office slump. The MPA claims it is an economic sign of the times. Admission prices arc an average of 47 cents, a 50 per cent increase in six years. But producers note that good films still get the biggest crowds. And the thirty-two million Americans who remain potential film-goers are still there. Many of Hollywood's grade-B pictures may therefore soon quit the screen. The Government's anti-trust suit against the 'majors' has reached the US Supreme Court. If the Government is upheld, producers will be enjoined, among other restrictions, from compelling theatres to buy a block of grade-B pictures with each gradeA film. Film Finance and Film Quality A writer or musican in Hollywood can earn 52,000 a week and then go unemployed for months. Most producers have made a million and have also lost one. Hollywood is not as jaunty as it seems. It is basically timid and shrewd. The fate of the 'independent studios' shows tin I I year one-third of all US films were 'shot' by independents. Many 'indies' were formed by directors and actors whose 'artistic freedom' boiled down to selling their company after it had made one picture, because that way they had only a 25 per cent capital gains tax instead of an income tax as high as 60 to 80 per cent! And independents are never free from the 'majors' anyway; for "majors' take over I tribution and exhibition of their films. Today, because of the general economic uncertainty, the are scampering back to (he 'majors' fold. But even the 'majors' have to have financing. The Guaranty Trust ol New No:k, one of Hollywood's biggest financiers, his practically withdrawn from the film business. I he Wall Street Journal reported on May 20th '\ \ev York banker who makes a lot of loans to Hollywood e\p! nned that his institution now insists on the best talent, and even then will loan onlj 50 to 60 per cent of production costs A year it would have loaned <>0 to 70 pel cent even though producers and actors weren't top-level.' Because of this, Hollywood has doubled its rts to cut costs. Ironically, it has for twenty years fostered public taste for fabulous settings. Now it looks with interest at the realism British films achieve with flimsy sets. Hollywood has also cut its personnel from 30,000 to 21, 000 in a year. The re-issuing of" old films has been another money -saver. Today all 'majors' withdraw popular pictures in time to protect their future profits on re-issuing them. More than ever, Hollywood seeks to protect its enormous investment by filming best-selling books and plays. (Only half of all screen stories are original; popular plots arc used over and over again with new titles.) Paramount financed the 'legitimate stage' production of Broadway's Pulitzer Prize play 'State of the Union' with 5300,000 just to obtain the film rights. Some producers are even trying to 'capture' popular books and songs by buying shares in publishing houses and gramophone record companies. The British Blow at Hollywood and the Future Now, at the British Government's penal emergency tax on its UK profits, Hollywood professes itself thunderstruck. It has thunderstruck back (through the MPEA) by banning exports ol new US films to Britain. The tax roused more resentment in Hollywood than an outright British ban on imports of US films; for, somewhat querulously and partially, Hollywood spokesmen complained that HM Government had given them no 'tip-off. and they had only expected, at worst, a new tax of 25 to 50 per cent not a full 75 per cent. Hollywood's hope is that British film fans and theatre owners, plus possible Slate Department pressure on the British authorities, will modify the tax. In this connection, Mr Eric Johnston's personal relations with the State Department should not be overlooked. The chief fear in Hollywood is that the British action will set an example to other dollar-short countries — who multiply daily. Reorganization of the whole US film business is now necessary because of the interdependence of domestic and foreign business. Hollywood is too confused at present to chart its course. One 'independent' producer said, 'I think it's the worst crisis in Hollywood's history .' Many producers, especially 'independents', claim that their earnings in the US cover only their film production ( even a fraction of their costs. \ll their profits, and possibly some coverage of costs, came from earnings abroad, above all in Britain. I 'majors' are better oil' because thej get profits from their own theatres even if their production costs arc not met. The chances are that I S retaliation will not stop the Rank play -dates because there are six months' supplies of untaxable US films now in Britain plu\ possible re-issues of old films. Thus 1947 profits may be untouched by the British action last week. But all the trends hitherto obvious resulting from i tnd slower box-office returns will be ii Hollywood is expected to redouble its effort open the I i American And South > markets. I his sudden British sharp* ii illywood's difficulties in finaiu with difficulties in cutting costs laboui un in Hollywood ate verv abroad is probable, especially soutl i rnia