Independent Exhibitors Film Bulletin (1956)

FINANCIAL BULLETIN NOVEMBER 2 4, 1954 By Philip R. Ward ISMAILIA TO BURBANK is 7,000 miles as the crow flies but they are sister cities in terms of the speed with which one may have imposed palpable economic consequences upon the other. In this age of global interdependence, the American film industry can no more escape the fiscal upshots of the Suez problem than can, say, the American oil industry. That filmdom will encounter unique fiscal experiences is assured. Uncertain only is the degree, and that remains uncertain only because the tide of world conditions remains uncertain. For the present, enough has already transpired to put the order of things into a sharply different focus than existed two months ago. Let's review some potential consequences : 1. The scope of the American film industry's foreign gross could be radically reduced. Unstable internal conditions within a majority of western European nations arising from the Middle East conflict is creating a severe dollar scarcity. Since many dollars were spent to support military operations and many more dollars must now be spent to purchase goods in short supply, such as oil from the U.S., the earmarking of additional dollars to remit to American producers seems quite unlikely. There are simply no more dollars to be had. 2. Dollar shortages, however, are nothing new to U.S. film sellers. In the past, domestic film companies have frequently squared the accounts by utilizing foreign facilities to such an extent that weak dollar nations virtually found themselves financing American productions with their own currency in order to wipe out the dollar debits. Now that the dollar squeeze has assumed strangulation proportions, one alternative may be a sharper upswing in European filming than ever before. In one respect this could be an enterprising move since Europe is a hot topical subject. On the other hand even this avenue of retrieving blocked credits could be challenged should the prevailing political climate on the Continent grow more explosive, chasing all Americans home. 3. Even under the status quo other factors militate against a continuation of a pre-Suez foreign gross. Powerful inflationary pressures are currently gripping Europe in the wake of severe shortages in critical goods. Black market activities reminiscent of World War II are running rampant. As the price of basic consumer goods spirals upward the European movie public is left with less and less to spend. Unlike America during the last war, there is no evidence of pump-priming in the form of higher wages. 4. Under these circumstances, the American film industry might well have to make some agonizing reappraisals with respect to its basic production policy. In recent months Hollywood has unveiled something of a new loo-j in "bigness". Producers have contrived a seemingly surefire formula in the movie that shows not only its money, but its class as well. So successful have been the early returns on these super-shows that Hollywood's drafting boards are busy sketching out a portfolio of ethers. Now comes the disturbance. If the industry's foreign gross, estimated by some to represent close to 50% of the total gross, appears ready to suffer a significant loss, is it any longer wise to gamble sums of $5 to $10 million on single productions? Might it not be wiser for the producers to pull in their horns, for a time at least, and last out the shaky time;; with films of more modest lines? Depending on future developments in Europe, such a course seems a very distinct possibility. O 0 EARNINGS CORNER. Paramount Pictures is another example of the woeful time major film companies are having trying to prove that conditions are not as bad as they seem. Though optimism is as rife at Paramount as elsewhere its earnings figures belie the cheer. Third quarter report shows net income down one-third from the corresponding term of the prior year: $1.74 million ('56) vs. $2.51 million ('55). The nine months aggregate seems a bit less bleak — $6.74 million vs. $7.68 million. Per share earnings do not look too bad: $3.37 ('56) vs. $3.51 ('55), but 1956 income is spread over 190,000 fewer shares than a year ago. However, $1.38 of its nine months per share earnings is listed as a non-recurring profit. Paramount continues to pay its $.50 quarterly dividend. 0 O DISNEY LOSING CONTROL? Reports that the Disney family may be gradually losing dominion over Walt Disney Productions to Atlas Corporation are accurate but not yet significant. It is true that the Disney family will not exercise its option on a stock rights offering of 186,526 shares and that Atlas Corp. has agreed to pick up any shares left unsubscribed by present holders of record. The Disney family now wields control over approximately 54% of the shares. This will drop to 46% if all the new shares find takers. Atlas bodes well to supplement its present 17% interest. Nonetheless, the Disney company functions under so personalized an operation that it is inconceivable to imagine it without head man Walt firmly in the driver's seat. It is doubtful whether Walt would continue to guide his company without his family and himself in control. And it is doubtful whether any outsider would want control without Walt conspicuously in command. Film BULLETIN November 24, 1954 Page 7