Independent Exhibitors Film Bulletin (1960)

FINANCIAL BULLETIN NOVEMBER 28. I960 By Philip 11. Ward MANUFACTURERS WITHOUT A MARKET. Four-wall theatre construction is at a virtual standstill in the United States and apparently will remain that way until those who supply the venture capital for such undertakings feel that the incentives are rather more promising than at present. One — but by no means the only — illustration of this sentiment can be found in the position of Loew's Theatres management on the question of expansion. In addressing a Harvard Business School Club luncheon recently. Board Chairman Laurence A. Tisch may have served as spokesman for theatre interests generally in asserting that Loew s would prefer to determine for itself if theatre business is profitable before embarking on any broad program of new theatre openings. While Loew's, like other circuits, has disposed of unprofitable locations, and will continue this practice, it brandishes an exacting yardstick to ascertain whether existing profits warrant breaking ground for replacement theatres. In taking the guarded position, Mr. Tisch renders lucid confirmation of a well-worn industry truth: present-day policies of film makers and distributors are gradually eroding, perhaps eradicating, their primary market, the domestic exhibition industry By making fewer and fewer films, by elevating the roadshow to unaccustomed status, by exacting higher and higher terms from theatres, they seem to be progressively sapping the marrow of their market — both the theatre and the public market. Higher terms for pictures have reduced exhibition's profit potentials, and, it must be admitted, forced quite a few indoor theatres out of business. These policies, at the same time, have forced the remaining theatres to charge higher admission prices, which, in turn, further constricts the moviegoing audience. Artificial limitation of supply has a checkered, uncertain history. In other industries it has worked only when some public good could be gained, or for reasons dealing with deep-rooted economic necessity arising from the control of a natural resource. These reasons have no application to filmdom. Shortterm profit expediency is at the seat of this tampering with the volume of manufactured output. Since short term planning characterizes filmdom, there doubtless is small hope for change. In such an atmosphere, ancient economic forces must inevitably come into play — as, even now, they are. According to an authoritative real estate manual less than two percent of all Class A and Class B shopping centers (those offering the v.idcst diversity of stores) erected since 1956 have included theatres. 0 Television competition is only part of the cause for stifling theatre construction capital. A not inconsiderable number of businessmen, bankers, stock dealers, realtors and others outside movie business hold the sanguine view concerning the future of the theatre audience. This is matched by the optimism of theatre executives such as Mr. Tisch, who are confident that an expanding leisure-time economy and good over-all conditions could encourage movie ticket sales. Confident are they, but not quite to the extent of risking dollars without a mutual show of resolution on the part of suppliers. It would seem logical that film sellers meet theatre operators half way on this fundamental issue. Otherwise, the seemingly private, intramural argument between the industry's normally complementary branches threatens to spill over onto broader surfaces, affecting not only the immediate earning capacities of the theatre branch, but the whole future of the industry as presently constituted. This danger is bound to have its impact on money market opinion. If theatres continue to fail. h<>\\ good an investment will be any unit of movie business.' Is it not enough for Mr. Tisch to aver that because of product scarcity Loew's is paying as much for poor films as good ones, to declare that each theatre is being examined to learn if its earnings are compatible with its real estate value? These are assertions which do not augur well for the commitment of capital funds which a broad construction program calls for. Mr. Tisch and others in comparable positions of control find themselves beset with doubts that must, in the end, influence management planning. If relief will not be forthcoming from within the industry, then surely other channels of investment will be sought and found. It seems that the film sellers must make the choice between milking the market for immediate profits and letting it run dry, or adopting policies that w ill permit theatres to earn their keep. Clearly, there are those who would plow back fair profits into the exhibition industry under more favorable conditions. It is reasonable to assume that the leading, publicly-traded theatre circuits would respond with alacrity to a show of faith on the part of the film companies. And others in private enterprise would fill the gaps and vacuums in the nation's shopping centers and elsewhere with bright, uniquely comfortable theatres catering to an expanding suburban population. The present atmosphere, however, is hardly conducive to such expansion. Where are the hardnosed movie businessmen? They can't all be in the theatre wing of the industry. At stake is the probable preservation of the primary market for films, a market which commercial TV cannot approach in revenue power, and which toll-TV is not ready to replace— if ever it will be. Film BULLETIN November 28. I960 fofla 9