Independent Exhibitors Film Bulletin (1960)

1959: POLLYANA'S YEAR. By simple arithmetic — but not much more — chalk up 1959 as an up-side year in the evershrinking world of motion picture stocks. The Film BULLETIN Cinema Aggregate, which records the stock market level of publicly traded securities in terms of the total industry, reports a net rise of 121/g points in the fortunes of major producing-distributing concerns. Progressing from a 1958 vear close to 188 in the Cinema Aggregate, film companies rose to 200l/8 by December 31, 1959, an increase of 6.3%. This may be contrasted with a l6rr increment in the Dow -Jones industrial average. Theatre companies fared better in the Cinema Aggregate, ascending some 30 points to a year-end reading of 6778 (only two points below the all-time benchmark set in July, 1959, a rise of 79rV . This vigorous performance must be considered in the light of the subordinate role exhibition income plays for such diversified firms as American Broadcasting-Paramount, Stanley Warner and National Theatres. Nonetheless, theatre boxoffices managed to stabilize earlier gains during 1959 and at year's end it appears that ticket sales are running 7t7c-8c7e ahead of 1958. Another healthy symptom arises from year-end holiday business which appears to be the most impressive in recent years. O UNREPENTANT INDUSTRY OPTIMISTS may take comfort in these statistics of gain, but all others w ill be hard put to read glad tidings into the disclosures. 1959 witnessed the further decimation of the traditional studio system — a fact which distorts anv objective evaluation of movies as a home-grown investment, or risk. The crux of the problem is this: The motion picture industry is growing less and less a motion picture industry. It is becoming more and more everybody's pet second business — the perfect trophy for the corporation that has everything, be it girdle maker, holding company or booking agency. Any serious consideration of the movies anymore — at least from an analytical standpoint — involves knifing through the smog of relative contributions of income from manifold non-theatrical sources. Add the imponderables arising from independent productions — that is, results which filter through the income statements of major companies indirectly, if at all — and the issue becomes a haze of uncertain ties and doubts. What, after all, constitutes the motion picture business? Whatever it is, it is today a mongrel thing, and our complaint — be it that — deals mostly with the corrosion of our once-pure entertainment business. On the strictly financial level, however, the outlook is not too bad. Surface symptoms are good for some marked achievements come December 31, 1960. O O RECOMMEND STANLEY WARNER. No other theatre operation has come in for as much rosy-hued analysis in the past year as Stanley Warner. Latest upbeat report stems from the highly regarded Francis L duPont & Co.: "Over the years, stock buyers have associated Stanley Warner Corporation with the motion picture industry. While this is correct, there has also been the lack of realization of the broad diversification which has taken place in this company over recent years. It is in these outside areas that we believe interesting values exist which could easily lead to a substantially higher earning power sometime in the future. FINANCIAL BULLETIN JANUARY 4, 1960 By Philip R. Ward "That the company is still a major factor in the motion picture industry is evidenced bv the fact that 240 theatres are owned or leased, of which 140 are owned in fee. Properties are located in 130 cities scattered throughout l7 states, and seating over 330,000 people. This theatre 'empire' is finally beginning to return to the profit column, according to management, which indicated recently that box office receipts on a comparable basis have show n an increase in 27 out of the last 32 weeks, the first time in years they have witnessed such a prolonged period of improvement. Earnings in the important theatre division were higher in the fiscal year ended August 31 than in the previous 12 months and are continuing the favorable trend on a year-toyear basis. Not only are the theatre properties an important source of income but more significantly they generate substantial cash through depreciation which for the last fiscal year amounted to S4.7 million or about $2.30 a share on the presently outstanding stock. Since there is no requirement for reinvestment of this money in these properties, the depreciation in a sense, is an important source of investible income. Furthermore, following the company policy of disposing of the less profitable theatre properties, tax losses are created which substantially lower the effective tax for the company. In fiscal 1959, for instance, losses from property disposition totaled about SI. 6 million which was charged to the earned surplus account. "Looking at some of the company's other properties outside the theatre division, the most important is the Playtex division, or International Latex which markets the highly advertised Playtex line of girdles, bras, baby pants, etc. Sales in this division have been impressive and even more important is the grow th of volume in foreign countries. It would appear that this division faces an excellent future and should be an increasingly important contributor to profits to the parent. "Other divisions of somewhat less current importance from a sales standpoint are the pharmaceutical division which markets such proprietary items as the Isodine antiseptics, ointments, gargles and Athletes Foot treatments. "The chemical division which is small nonetheless has been expanded beyond the pilot plant operation and production of synthetic latex from the new polymer plant are being marketed under the name of Tylac. "Lastly, and important for a company which is so dependent on a large advertising budget is the new VHF television station in Albany, New York on Channel 13 w hich commenced operations at the beginning of 1959. Although earnings from this newer operation are not likely to contribute much to overall profits in the near future, considerable promise seems inherent looking to the longer term. "The stock currently selling at around the 38 level is up very substantially from the low of 18 this year but in view of the rapid earnings gains already realized and in prospect seems to be evaluating both the profits and the large value in the theatre properties at a relatively modest ratio. We recommend purchase of Stanley Warner Corp. shares as an interesting specialty situation for long term holdings." Film BULLETIN January 4. 1940 Page 9