Independent Exhibitors Film Bulletin (1956)

Value t'me £urteif WatM JaAt '£pin-0$p ' o$ Jiltn AueU Will Se Ctetlt) in Struggle Against TV DANGER IN LIQUIDATION While it sees the motion picture industry "benefiting from a favorable economic climate over the next few years", The Value Line Investment Survey, published by Arnold Bernhard & Co., warns in its current study that ominous clouds hover over the business. One of the real dangers, Value Line reports, lies in the possibility that outside interests in quest of quick profits might grasp control of certain important film companies and rapidly dispose of their film libraries and other assets. Such "spin-offs ', VL says, would deal I the entire movie industry a "devastating blow", setting off a chain reaction that would jeopardize the future of the business. However, the survey reassures, this is yet only a threat, one which the movie people can ward off by effort and cooperation. Principal portions of the survey are reprinted here. Recommendation Most of the amusement industry stocks supervised by this service have advanced in price during the past three months, partly reflecting the prospect of higher earnings and safer or larger dividends in 1956. Despite the recent price advances, however, many of the issues in this group continue to appear reasonably priced. The stocks in this group fall in either the Group II (Underpriced) or Group III (Fairly Priced) category. On balance, they provide generous current dividend yields and possess superior 3 to 5-year appreciation potentialities. After being badly hurt by the coming of age of television in the late Forties and early Fifties, the highly volatile amusement industry is now making incipient efforts at recovery. The future fortunes of most of these motion picture companies, however, still depend to a great extent on numerous exogenous factors, the effects of which can not be readily ascertained at this time. While the general economic climate we hypothesize for the 1959-61 period seems favorable to the motion picture industry, the long-term prospects of this group are by no means clearly defined. We make our 3 to 5-year earnings projections for these companies, and for the theatre circuits in particular, on the assumption that the current recovery in profits will gather momentum over the years ahead. Because of the uncertainties attendant upon the realization of these objectives, however, the motion picture stocks do not qualify for inclusion in investment grade accounts. Nevertheless, investors willing to accept the considerable risks inherent in these situations in exchange for generous current income and extraordinary capital growth prospects may find these issues worthwhile investment media at this time. Good Films Expected to Boost 1956 Earnings Motion picture companies, as a group, are expected to enjoy higher earnings this year. Reason: Hollywood producers are sending a steady stream of excellent films to the theatres. Convinced by their experiences in the last two years that the motion picture industry can compete successfully with television as long as it presents the public with a large number of quality pictures, most of the major film producers have stepped up their production program and have scheduled the release of a whole string of spectaculars throughout 1956. Twentieth Century-Fox, for example, will distribute 34 pictures this year, the largest number in almost a decade. During 1955, the company distributed only 29 pictures. Included in the current year's agenda are such already well known titles as "The King and I" and "The Man in the Gray Flannel Suit", the latter currently being released. Warner Brothers' plans for this year call for 28 pictures, including the long-awaited "Moby Dick", compared to only 23 last year. Moreover, RKO and Republic Pictures, whose studios were practically inactive in 1955, have both announced ambitious schedules for 1956 production. Perhaps the only major studio that does not plan to increase its schedule is Paramount Pictures. However, of the 18 features it has scheduled for release this year, at least two — "War and Peace" and "The Ten Commandments"— are extremely expensive productions, which will cost, in the aggregate, almost $20 million. The company's inventory of current and future releases now totals more than $50 million, a record high level in its history. All told, the movie industry is ready to present a substantially larger number of promising extravaganzas to its audience this year. The first quarter reports of many companies in this group will probably continue to show unfavorable earnings comparisons, however. For one thing, not many of the "big" pictures were shown during the March period (although those that were released have done remarkably well). Furthermore, after theatre attendance had shown an encouraging uptrend during the first few weeks of the year, in response to the larger supply of pictures, poor weeather conditions throughout the greater part of the (Continued on Page 18) Film BULLETIN May 14, 1956 Page 5