Independent Exhibitors Film Bulletin (1956)

FINANCIAL BULLETIN APRIL 16, 1956 By Philip R. Ward OVIE STOCK PROSPECTS — or WHO'S ON IRST? Used to be a time when all you had to do to irow a discussion into a frenetic tizzy was bring up poli:s, religion or the integration of the races. Nowadays du can achieve a comparable condition by arguing the te of motion pictures. Everyone, just about everyone, a pundit in this the most non-technical of industrial subcts. There are at least 300 barbers in the city of New ork who can tell you that nobody in his right mind goes ) the movies Saturday night while Perry Como holds ourt on NBC TV. Similar diversity of opinion holds .vay in more enlightened quarters. For instance, in the ast month — a) three Wall Street investment bulletins switched from a position of "buy" to "sell" on a particular film company ; b) another investment survey suddenly appraised this company as "grossly undervalued" and advised "moderate commitment for speculative accounts"; c) in an analysis of industry-wide conditions, one brokerage commentary exhorted "watchful caution" in the selection of movie shares, noting the inroads of TV in the past season as well as the doleful earnings figures reported in the 3rd and 4th quarters of 1955; d) notwithstanding, the United Press issued a wire service story date-lined Hollywood, April 1, which opened, "The motion picture industry is fatter than ever, not because of wide-screen tricks or television, but because movies actually are better than ever." The story continued: "Despite the fact that profits of two of the biggest studios — MGM and 20th CenturyFox — dropped last year, the film industry as a whole enjoyed an increase in business during 1955 . . . Stockholders got the biggest break. Cash dividends paid to them totaled $31,436.000— the highest since 1951 and 13% ahead of 1954. This year's prospects are even brighter, according to industry leaders"; e) of somewhat older vintage (February) is the study of a statistical investment agency dwelling on foreign revenues (comprising almost 50% of Hollywood's gross intake) as the buffer which can be counted on to absorb any shock resulting from dips in the domestic market ; f) at direct cross purposes with this view is another study warning of softness in certain key European markets as television begins its encroachment of the Continent, claiming that any precipitious lag in these revenues without corresponding gain in American grosses could be disasterous to cinema shares. And on it goes. As Samuel Langhorne Clements said, such antipodal opinions make horse races wagering affairs. <> OUTSIDE ANALYSTS might do well to take leave of their rigid professional measuring sticks in groping for an accurate projection of movie industry prospects. Film libraries, assets, price-to-earnings ratios are mere technical accoutrements beside the one, all-encompassing must upon which filmdom's fortune depends : the calibre of its product. Let the investment soothsayers look more to the qualitative standards of the industry's merchandise. Nothing counts for more than this. 0 In mass production industries where the units of production remain more or less constant, analysis of a company's financial documents is a fruitful enterprise. Not so in motion pictures. Jones & Laughlin's steel sheets are steel sheets, year in, year out. Every motion picture is a new and unique manufacturing endeavor standing on its own, demanding its individual pricing and merchandising. Yesterday's profit and loss statement cannot possibly reflect tomorrow's, because tomorrow's product is something entirely new. O What many Wall Streeters forget is that good films make money under any circumstances. Television never harmed the truly exceptional film. Let a film company market good product and it will make money, pay dividends and excite the financial marts. Let it fail in this respect and it must accept the consequences. This is the one overriding standard in an industry given to unrelated artistic creation several hundred times a year. Combine the attributes of a temperate film critic with those of an investment analyst and you get the keenest sort of movie industry judgment. O Proceeding on the theory outlined here. Financial Bulletin accordingly challenges any analyst to survey the product backlog soon to be pumped into the mass market and come up with anything other than a sanguine forecast of movie industry prospects. O O THE BOOM IN 20th-FOX SHARES last week was causing some eyebrow-raising. Activity was strong (over 64,000 shares traded) and the stock was up 23/4 from Friday, the 6th, thru Friday, the 13th. Coming on the heels of a depressed earnings statement, the move has occasioned some surprise. This corner has expressed the opinion several times in the past year, and repeats again, that 20th is worth in excess of its current market price. Film BULLETIN April 16. 1956 Page 7