Independent Exhibitors Film Bulletin (1956)

1 £cuh4 CcchCfflieJ, tflcre Quality JilmJ Will Put <)n<{uAtrii ch Jiw RaA'tiValue I'm HOW MOVIES CAN COMPETE mm ter the next three to five years, there will be a sharp increase in the population of young people in their 'teens to early twenties — the very element that comprises the largest segment of moviegoers. How can the motion picture industry best gird itself to compete for their patronage? Value Line, the authoritative financial analysis sheet published by Arnold Bernhard & Co., in its current study dscusses the current status and future prospects of the movie business, and expresses the view that the industry is embarked on a program that will enable it to compete with other mediums of entertainment, especially, of course, TV. "While television is a keen competitor," says the Value Line survey, "it is by no means an insurmountable obstacle/' In the report reprinted below are recommended ( 1 ) sound economies in production and distribution; (2) liquidation of unproductive assets; and (3) "a demonstration of showmanship by supplying theatres throughout the world with an abundance of quality motion pictures". J Recommendation Given a powerful stimulus by the larger supply of excellent films from Hollywood, theatre attendance has finally taken a decisive upturn. Since the beginning of June, weekly theatre admissions have climbed persistently from about 35 million to the present 70 million level. Unfortunately, the upswing did not come early enough. Most of the motion picture companies reviewed herein have reported unfavorable earnings comparisons for the first half. Unless the current recovery should gather momentum throughout the remainder of the year, it appears than 1956 will be a poorer one for the motion picture industry than 1955. (A few companies will probably be able to report higher earnings on the strength of non-recurrent capital gains.) The market prices of many of the motion picture stocks seem to have discounted adequately the poorer financial results indicated for this year, however. A few of them are nov; available near their respective 1956 lows. As a result, their prices are capitalizing current earnings and dividends at ratios substantially more conservative than those being accorded stocks as a whole at this stage of the market. Many of the issues in this group provide current dividend yields of more than 6%, far superior to the average 5% return afforded by all dividend-paying stocks under survey. Moreover, based on the assumption that the motion picture companies' present efforts to increase the return on their assets will be successful, the 3 to 5-year appreciation notentialities of these motion picture stocks are also impressive. In contrast to the average 22% gain projected for all stocks, the 3 to 5-year appreciation potentiality of the amusement stocks as a group is 44%. Detracting somewhat from this favorable prospect, how ever, is the fact that the motion picture industry is a volatile one and the stocks in it have poor stability records. With the exception of Eastman Kodak, which is not directly connected with the production or exhibition of motion pictures, the quality ranks of the stocks in this group range from an average B down to a subaverage C. Most of them therefore do not qualify for inclusion in investment-grade portfolios. But to sophisticated investors, willing to accept the inherent risks involved in exchange for generous current income and interesting capital growth prospects, the following stocks currently classified in Group II (Underpriced) appear interesting: National Theatres, Paramount Pictures, Stanley Warner, Technicolor, Twentieth Century-Fox and Universal Pictures. Timely Help from Uncle Sam The Eighty-Fourth Congress has extended its benefactions to the motion picture industry. Just before they adjourned a week ago, both Houses of the Congress unanimously voted to approve a bill (H.R. 9875) exempting all theatre admissions under 90c from the 10% federal excise tax. Heretofore, only those admissions below 50c were exempt from the tax. This tax relief, which will become effective Sept. 1st, assuming Presidential approval, will give a much-needed shot in the arm to the depressed motion picture industry. Inasmuch as a great majority of the theatres operating in this country are charging admissions of 90c or less, and since most theatres are expected to retain the tax savings instead of passing them along to the movie going public, elimination of the 10% tax should result in a substantial increase in overall domestic revenues for the motion picture industry. This increase in reve ( Continued on Page 17) Paqt 12 Film BULLETIN Auqujt 20, 1956