Independent Exhibitors Film Bulletin (1960)

Talent Strike Seen Aid To Studios by Value Line With the exception of Universal Pictures (a subsidiary of Decca Records), major Hollywood studios have halted their production of feature motion pictures. On March 7th the Screen Actors Guild, an AFL-CIO union, called a strike against the major producers. (The action followed an earlier walkout voted by the Writers Guild of America. Universal settled with both guilds in February.) The primary issue: the actors want to participate in the profits derived from future release to television of movies made since 1948; the producers refuse to pay the artists "twice for doing one job". Like most Hollywood productions, this strike contains many unusual features. For example, while the two sides are haggling over the eventual television income from the post-1948 pictures, neither party really expects the films to be sold to TV in the foreseeable future. Both the union and the studios realize that release of these libraries for broadcasting could very adversely affect the theatrical movie business. Other unique characteristics of the strike: (1) There are no picket lines in front of the studios. Last week, in fact, the actors and the producers worked amicably together in presenting the Oscar Award telecast. (2) Among the striking actors are millionaires, such as Bing Crosby and Marilyn Monroe. (The union stresses, however, that about 70% of its membership earns less than $4,000 a year from film acting.) (3) Many stars are actually striking against themselves since they also produce pictures. In some other cases, the name stars have large equities in the net profits (including TV earnings) of the pictures in which they acted. At presstime, rumors were flying that the strike would soon be settled. Even if the dispute should not be settled within the next few days, we doubt if it will persist for many more weeks. •Wording to press reports, the SAG has alread\ backed down somewhat from its original stand and has made a compromise offer. The next effort Hollywood Payroll When the film actors went out on strike, it was reported that the walkout was welcomed by some film executives. The Value Line Investment Survey, published by Arnold Bernhard & Co., in its current analysis of the motion picture industry (issued just before the strike ended), takes the view that the studios might seize the opportunity to cut down their huge payrolls. towards compromise will probably be made by the producers. The union is not likely to make any further retreat. Many of the actors who voted for the strike were unemployed and are likely to remain so even after film production is resumed. They have little to lose by pressing their demands. It is therefore just a matter of when the producers are willing to yield their position. While the principle for which the studios are fighting may be sound, they may well decide that whatever money is granted to the artists could probably be recouped from the ultimate TV buyers. Accordingly, we are inclined to believe that cameras will be rolling again in Hollywood by the middle of May, at the latest. Probable Effects Strangely, the current strike may prove to be a highly favorable development for the industry in the long run. It has enabled the studios to review their employment situation. In our opinion, Hollywood has been chronically burdened by an impractical ly large payroll. In the Los Angeles area alone it employed no less than 25,000 people during the month of February, I960. According to a study recently prepared by the Security First National Bank of Los Angeles, total payroll in the motion picture production and dis tribution industry in Greater Los Angeles amounted to approximately $300 million in 1959. This compares with $280 million back in 1946, when Hollywood was riding the crest of a major boom. Against the fact that the 1959 revenues of the 6 major studios (M-G-M, Twentieth Century-Fox, Decca's Universal, Paramount, Warner Bros, and Columbia Pictures) totaled less than $650 million, the $300 million figure must be considered exceptionally, and perhaps uneconomically, high. Since the strike started, the major studios have laid off, we estimate, perhaps as many as 8,000 employees. Quite conceivably, no more than half of those discharged will be recalled after film production activities resume. Hollywood has long wanted to reduce its payroll and this is just as good a time as any. The resultant in-pocket savings could amount to as much as $25 million annually. Based on the $650 million total annual volume of the majors, this would represent an increase in the average pre-tax profit margin of 3 to 4 percentage points. Put another way, movies produced in the future will, as a group, have a considerably reduced break-even point. Temporary Shortage Although the strike cloud has a silver lining, it has nevertheless darkened near-term industry prospects. Even if both the actors and the writers should return to work within the next few days, most studios would not be able to resume full-scale production immediately. It will probably require several weeks for the writers to turn out a large number of screenplays. Although there are several pictures currently being filmed abroad, a shortage of new feature movies is likely to develop, especially by the latter part ol the year. Nevertheless, the effects of this development may not be quite so ser ous as it may appear. To alleviate the situation, film distributors will probably re-issue an increasing number of recent (Continued on Page 27) Paqi 14 Film BULLETIN April II, mo