Independent Exhibitors Film Bulletin (1956)

Value /ihe £uri)eit 56 ^m^fc^em^t MOVIE BUSINESS ON UPBEAT Recommendations Although the general level of the market seems too high, he motion picture stocks appear to offer many interesting opportunities. In reflection of the falling-off in theatre at:endance during the latter part of 1955, the prices of most notion picture stocks have retreated to their respective 1955-56 lows. As a result, current prices are capitalizing :he improving financial results we visualize for these comaanies in 1956 at ratios substantially more conservative :han those being accorded stocks as a whole at this stage jf the market. Many of the issues in this group provide :urrent dividend yields of 6% to 7%, far superior to the average 5.2% return afforded by all dividend-paying stocks jnder survey. Moreover, appreciation potentialities to the ^ears 1959-61 are also impressive, ranging from three to ive times the average projected for all stocks. Detracting somewhat from this favorable prospect, however, is the 'act that the amusement industry is a volatile one and the stocks in it have poor stability records. Most of them therefore, do not qualify for inclusion in investment-grade accounts. But to sophisticated investors, willing to accept .he inherent risks involved in exchange for generous current income and interesting capital growth prospects, these stocks offer special appeal at this time. 4 Disappointing 1955 Second Half After keeping pace with the booming general business xonomy during the initial half of 1955, the motion picture ndustry began to slip after mid-year and stumbled badly n the last quarter. Theatre attendance in the Fall season iropped far below the year-earlier level, resulting in substantially reduced revenues and earnings for theatre owners as well as picture producers. Loew's, for example, jarned only 5c a share in the November quarter, compared :o 30c in the corresponding three months of 1954. National Theatres is expected to report net profits of no more than 10c a share for the December period; the company earned 10c in the same quarter a year ago. Since these disappointg results were recorded at a time when disposable income as rising to new peaks, an old familiar question autoatically arises in investors' minds: is the television inustry again the villain? To that question, this Service believes the answer is no. True, the coming-of-age of the television industry was ughly .detrimental to Hollywood at the turn of this decide. Between 1948 and 1951, the rapid growth in television ;et ownership was accompanied by a corresponding decline n motion picture theatre attendance. As penetration of he TV set market approached the saturation point, the ate of decline in theatre attendance also abated. A causeind-effect relationship was clearly apparent in these years. The ability of the motion picture industry to flourish as The world of finance keeps an alert eye peeled on the course of events in the movie industry, and it appears to be taking a generally optimistic view of what the future holds for the business. In recent weeks several prominent and astute brokerage and investment analysts have issued brightly-hued reports about corrections that are being made in motion picture operations, which, they predict, will result in improved earnings for film and theatre companies alike. This upbeat tone is most explicitly expressed in the detailed analysis recently published by the highly-regarded Value Line Investment Survey, published by Arnold Bernhard & Company. The principal portions of the report are reprinted here, discussing how the industry generally and the specific companies are dealing with internal and competitive problems. — Editor's Note. a competing medium was demonstrated in 1954, however. In that year, while TV set ownership continued to rise, theatre attendance also increased. In fact, average weekly attendance expanded more than 7%, from 45.9 million persons to 49.2 million persons in 1954. This performance strongly suggested that as long as Hollywood can present good pictures, it can not only halt the exodus of audience from box office but can also lure former patrons back to the theatres. Actually, it appears that the motion picture industry has been gaining the upper hand in its battle with television for some time. By the end of 1954, about 75% of American homes already were equipped with television sets, indicating a much lower rate of increase in television set ownership from that point forward. Admittedly, many families have since begun to buy their second or even their third set and many others have been replacing their old models with improved or perhaps color units. But the novelty features of these additional or replacement sets, even of the color variety, are far less than those of the first sets for any given family. It seems reasonable to suspect that after the novelty of the first television set wears off, audiences may become more discriminatory in their selection (Continued on Page 14 J Film BULLETIN February 20, 1954 Page 13