Independent Exhibitors Film Bulletin (1956)

VALUE LINE ANALYSIS TV "Itfi No Means Insurmountable Obstacle" (Continued from Page 12) nues is particularly significant in that it will not be accompanied by any corresponding expansion in operating expenses ; most, if not all of the gain can therefore be carried to the pre-tax income of both exhibitors and producers. To many marginal theatres, this gain in earnings will spell the difference between deficit and profitable operation. Actually, the benefit of the new tax relief bill also extends to those theatres that have been charging admissions of 50c or less, even though they are already exempt from excise tax under the existing law. Most of the picture houses in this group have been charging the top tax-free ticket prices of 50c. Although their operating costs have been mounting persistently, they have been reluctant to up their admission prices since any increase would put them in the taxable bracket and would automatically mean an increase of more than 10% to their customers. Now, they are better situated to offset their mountaing costs with moderate increases in admissions. A hike of 5c in ticket prices from 50c to 55c, for example, would provide a 10% enlargement in box office receipts. Assuming other things remain the same, then, we can readily see an appreciable increase in earnings beginning Sept. 1st for the motion picture industry, particularly the theatre circuits which derive the bulk of their revenues from domestic exhibitions. Self-Help Is Essential Too Although the coming tax relief is helpful and indeed revitalizing to the motion picture industry, it does not solve Hollywood's basic problem — the long-term downtrend in theatre attendance. Only a little over two years ago, the federal excise tax on theatre admissions was halved from 20% to 10% and tickets selling below 50c were exempted from the tax entirely. Although that tax relief generated higher earnings for Hollywood for a while, its benefits proved ephemeral. During the second half of 1955 and the first few months of this year, the motion picture industry tumbled back into its hole. It is thus apparent that, even given Uncle Sam's help, Hollywood still has to gather all its strength and resources to fight its own battle for survival and to build its own groundwork for future prosperity. It is easy for motion picture people to blame Hollywood's misfortune on the advent of television. We believe, however, that while television is a keen competitor, it is by no means an insurmountable obstacle. A case in point is the recent upsurge in theatre attendance. After averaging below 40 million during the early months of this year, weekly attendance has climbed determinedly since the beginning of June. It now stands at about 70 million. Why has this significant recovery come about? The principal reasons for the upsurge appear to be two: (1) many of the big television shows are being substituted for by less attractive programs during the summer; and (2) there are a large number of excellent movies playing in the neighborhood theatres currently. Pictures such as "The King and I", "Moby Dick", "Trapeze", and "The Eddy Duchin Story" have been and still are doing remarkably well. These two factors strongly suggest that even in the face of continuing competition from television, Hollywood can still draw Americans from their living rooms to their favorite theatre, as long as it turns out products superior in quality and attractiveness to the programs offered by the home television screen. What is needed in the motion picture industry, then, is not rationalization nor pessimism, but rather a demonstration of showmanship by supplying theatres throughout the world with an abundance of quality motion pictures. Production Limited by Cash Resources Unfortunately, it is not a simple task for Hollywood producers to send a heavy stream of excellent films to the theatres continuously. The number of pictures that can be produced in a given time is necessarily limited by the amount of cash resources available. Filming a picture today requires an investment many times the amount needed in the pre-war era. Actors, actresses, writers and directors alike are all seeking much higher salaries; many of them are also demanding rights to participate in the profits of their pictures. Moreover, Hollywood producers can no longer turn out a string of run-of-the-mill films such as were commonplace 10 or 15 years ago, and remain competitive with television. In view of the fact that the cost of an average picture produced by a major studio today has risen above the $2 million level, whereas not too long ago it was no more than $500,000, it is already amazing that the number of features released by major studios this year will total as many as 230, a drop of only 35% from the 1940 level. Investors might well ask at this point: Is it not true that "Marty", the 1955 Academy Award winner, cost no more than $300,000 to produce? The picture was successful because it depicted a down-to-earth story about an average American. Why, then, do major Hollywood studios not produce more of these films, instead of spending millions of dollars on spectacular fictions? Indeed, Hollywood likes nothing better than to be able to make many such low cost pictures and to know that they will gross well. The fact, however, is that only a small percentage of such low-budget films have become nearly as profitable as "Marty"; the bulk of them have turned out to be "flops". Furthermore, Hollywood studios derived almost half of their revenues from foreign countries, where audiences may not be moved by dramas depicting life and customs peculiar to this country. In addition, Hollywood shies away from producing the kind of film that can be readily duplicated on TV. Hence, it is understandable why major producers prefer to stake their investments in multimillion dollar extravaganzas. Attacking Problems on Two Fronts All this does not mean that Hollywood cannot increase its output of big pictures. By expanding working funds on the one hand and cutting production costs on the other, producers are planning to release about 10% more films this year and still more in 1957. (Continued on Page 18) Film BULLETIN August 20, 1956 Page 17