Independent Exhibitors Film Bulletin (1956)

)ANGER IN LIQUIDATION er Bros.' cash position will probably improve over the lonths ahead. "Helen of Troy", one of the company's mlti-million-dollar productions, has been drawing subtantial revenues. With many other expensive and promisng pictures soon to go through the distribution mill, the ompany should be able to close the current fiscal year on August 31st with a considerably more liquid working capial. The current 30c a share quarterly dividend seems well issured. Over the next 3 to 5 years, film rentals are likely to coninue their steady uptrend. We project average annual evenues for Warner Brothers in the hypothesized 1959-61 ;conomy to $90 million, earnings to $2.60 a share and dividends to $1.80. Capitalized on a 6.9% dividend yield basis and at an earnings multiple of 10, consistent with industry wide norms adjusted for trend, such results would command an average price of 26, 24% above the current. ADVICE: Warner Bros, is currently classified in Group III (Fairly Priced). Although the stock has not been trading long enough for us to compute a Rating by multiple correlation analysis, reference to the stock's own brief experience suggests that it is fairly valued. Both the current yield basis and earnings multiple are consistent with the average capitalization ratios that have proved typical for the stock since it was issued in 1953. Warner Bros, offers a generous current yield of 6%, compared to the average 5.0% return provided by all dividend-paying stocks under survey (and about in line with the average for movie shares generally), and possesses an about average 3 to 5year appreciation potentiality of 24%. ABC PARAMOUNT BUSINESS: ABC-Paramount owns and operates largest stations). Labor costs absorb about 60% of revenues, motion picture theatre chain in U.S. lover 600 theatres, Dividends have averaged about 75% of operating principally in Midwest, South and Atlantic seaboard! earnings in the last 6 years. Directors own or control and third largest radio and TV network Inetwork owns about 9% of total common shares. Employs 20,000, has and operates 5 TV stations: has over 200 affiliated 24,700 common stockholders. President: L. H. Goiden son. Vice Presidents: R. E. Kintner, R. H. O'Brien, R. N. Weitman, R. H. Hinckley. Inc.: N. Y. Add.: 1501 Broadway, New York 36, N. Y. Stock traded: NYSE. REPORT: In the face of a $5.4 million decline in theatre recepits, ABC-Paramount managed to lift its 1955 revenues to $191.6 million from $186.3 million a year ago. This encouraging showing reflects the rapid expansion of revenues from the ABC Broadcasting Network. Determined to capture a larger share of the television market, ABC has taken great strides in upgrading its programs and expanding its facilities. As a reward for its militant efforts, many of its programs, notably "Famous Film Festival" and "Mickey Mouse Club", have won the highest ratings for their respective time periods, and have thus received excellent sponsor acceptance. The increase in radio and TV revenues last year, which amounted to $11 million, enabled the company's broadcasting division to operate at a profitable level for the first time since ABC merged with United Paramount Theatres in 1953. The expenses involved in operating and maintaining the network are largely represented by fixed costs. Now that ABC has reached its break-even point, therefore, further expansion in revenues will probably find quick reflection in earnings. Theatre business is also expected to improve this year. Although the company is still carrying on its divestment program, prescribed by a Consent Judgment, and will therefore have a fewer number of operating theatres this year than in 1955, the average earning power of each of the remaining theatres will probably be higher. ABCParamount has been following a policy of disposing of marginal theatres that do not have a desirable earning potential. Meantime, the release schedules of major picture studios suggest that there will be a steady flow of good features throughout the year. Inasmuch as the lack of quality pictures was generally believed to be responsible for the deterioration of earnings of motion picture exhibitors during the closing months of last year, alleviation of that situation should result in larger profits for the theatre circuits. Over the longer term, ABC's television revenues are likely to show an impressive rate of growth as the network assumes an increasingly important share in the broadcasting industry. Furthermore, by the end of this decade, the company's 35% interest in Disneyland Park (California) will probably begin to yield appreciable return. We project average annual revenues in the hypothesized 1959-61 economy to $275 million, earnings to $4 a share and dividends to $2.40. Capitalized at 10 times earnings to yield 6%, consistent with past norms adjusted to trend, such results would justify a price of 40, 29% above the current. ADVICE: ABC-Paramount is currently classified in Group III (Fairly Priced). The stock provides an estimated current yield of 4.5%, which is lower than the average 5.0% return provided by all dividend-paying stocks under survey. On the other hand, this issue possesses an interesting 3 to 5-year appreciation potentiality. To the years 195961, it has an appreciation potentiality of 29%, compared to the average 21% gain projected for all stocks. ABCParamount merits retention in risk-taking accounts willing to accept poorer-than-average current income in exchange for worthwhile capital growth prospects. NATIONAL THEATRES BUSINESS: National Theatres controls 336 operating Labor costs, 40% of revenues. Dividends have aver 7,000; stockholders: 16,100. President: E. C. Rhoden, theatres located mainly in the Pacific coast, Midwest, aged only about 38% of earnings during the 1953-55 Vice Pres.: F. H. Ricketson, Jr., J. B. Bertero, E. F. and Rocky Mountain area. Also owns Roxy Theatre in period. Directors own or control about 132,500 shares Zabel, A. May. Inc.: Delaware. Add.: 1837 S. Vermont New York. The chain is the second largest in the U.S. of stock (4.8% of total outstanding!. Employees: Ave., Los Angeles 6, Calif. Stock traded: NYSE. REPORT: As we expected National Theatres reported earn tendance during the closing months of 1955 dropped sharp ings of only 7c a share for the three months ended Decern ly from the year-earlier level, bringing about a consider ber 31st, the first quarter of the current fiscal year. Due able contraction in National Theatres' revenues. Fortu to an acute shortage of feature film releases, theatre at (Continued on Page 32) Film BULLETIN May 14, 1956 Page 31