Harrison's Reports (1932)

Entered aa second-class matter January 4, 1921, at the post office at New York, New York, under the act of March 3, 1879. Harrison’S Reports Yearly Subscription Rates: United States $15.00 U. S. Insular Possessions. . 16.00 Canada, Alaska 16.00 Mexico, Spain, Cuba 16.00 Great Britain, New Zealand 16.00 Other Foreign Countries.. 17.50 35c a Copy 1440 BROADWAY New York, N. Y. A Motion Picture Reviewing Service by a Former Exhibitor Devoted Exclusively to the Interests of Exhibitors Its Editorial Policy: No Problem Too Big for Its Editorial Columns, if It is to Benefit the Exhibitor. Published Weekly by P. S. HARRISON Editor and Publisher Established July 1, 1913 PEnnsylvania 6-6379 Cable Address : Harreports (Bentley Code) A REVIEWING SERVICE FREE FROM THE INFLUENCE OF FILM ADVERTISING Vol. XIV SATURDAY. MARCH 19. 1932 No. 12 BRUTAL SALES TACTICS One can understand the desire of the Metro-GoldwjTiMayer organization to get more money from the exhibitors ; the pictures cost them so unreasonably much that unless they squeeze you they will hardly be able to get by. But I would never have dreamed that its forces would become so “brutal.” Just read the telegram that follows ; it was sent by an MGM executive to his salesman, who tried to get a contract from Mr. J. E. Ryan, of the Electro Theatre, at Brigham, Utah: “Salt Lake City', Utah, I :i4 P.M., Dec. 14. 1931 “Walter K. Miller Howard Hotel Brigham, Utah “Get out of Brigham City. Saffle explained deal exhibitor gave us. We haven't got to the point where we are begging or depending upon Brigham City for our existence. We are not interested in any deal that you have secured to date. I want you to leave that town immediately and never solicit it again as long as you are with this company. We don’t want to sell Brigham City and if we ever do sell it the prices will be that secured the last time we were in that town and double on the specials. It is an insult to this company the prices offered us in that town. If we keep on soliciting here it will cost us as much as the contract is worth. I am disgusted with you for going into that town and let this be the last time. Send a telephone book of that town to my office in Los Angeles. “George A. Hickey.” It is manifest that the salesman did send Hickey a telephone book, for shortly afterwards MGM circulars were received by the people of Brigham City; they carried the Los Angeles letterhead of that organization. Part of the circular reads as follows : "Unfortunately, Metro-Goldwyn-Mayer Pictures are not shown in Brigham City. You may see them, however, at the Paramount and Orpheum Theatres, Ogden; Capitol and Lyric Theatres, Logan ; and the Liberty Theatre, T remonton. From time to time, we shall advise you of the big Metro-Goldwyn-Mayer picture events.” Mr. Ryan has written me as follows: “In December, I gave their salesman an application, which I thought was fair ; they rejected it. He came back later and I gave him a substantial raise, which made their application considerably more than any other producer had accepted, making it top money for the town. This they also rejected and sent their salesman the enclosed wire. "Did you ever read am-thing more brutal ? Imagine them demanding the same prices as last time they were in town, which was two years ago, as I did not buy them last year. At that time, I was charging 25c and 50c. The depression was yet to come. Now, two years later, the bulk of my patronage is on the 15c admission. And we are losing plenty of money. .\nd not only do they want the same as two years ago, but double that on specials.” -•\long with this letter, Mr. Ryan sent me copies of letters written by prominent members of his community to George Hickey, condemning him for sending such a letter, the effect of which is to take money out of Brigham City to some other cities. They told him of the resentment they felt towards his act and the ill feeling they now have for Metro-Goldwyn-Mayer pictures because of such highhanded tactics. He sent me also a clipping of an editorial that appeared in The Daily Jcyurnal, condemning the circular. I informed Mr. Ryan that I shall be glad to frame an answer to the circular, which he may send to the people of his town, giving them good reasons whv he is not showing MGM pictures. The reasons for such brutal sales tactics are clear; because of extravagance and waste at the studio, and of the big bonuses paid to some executives in addition to the high salaries paid to all executives, the pictures cost MGM almost twice as much as they cost other producers. I have been informed that there is a $200,000 overhead expense added to each picture before its production starts. This brings the average cost of the regular MGM pictures around $600,000. And the average receipts of pictures are now less than $400,000. The MGM salesforces tried to bring such average much higher by insisting upon high percentage terms and high minimum guarantees. Though in many cases they succeeded, in a large number of cases they forced the exhibitors to give up playing MGM product. In the Xew York Citj zone alone there are more than 104 independent circuit theatres that have refrained from contracting for MGM pictures this season ; and there must be many indiHdual theatres that have found it necessary to do the same thing. So whatever MGM has gained by the brutal sales terms it has imposed upon many exhibitors it has almost lost by having forced many theatres to get along without MGM pictures. Just to give you an idea how much money it may lose from the theatres that have refused to contract MG^iI pictures in this zone, allow me to say that, according to a rough estimate that I have made, the loss from the 104 independent circuit theatres will be about eight hundred thousand dollars. Since this is a ten per cent territory, the loss from the entire country will be at least five million dollars, even if we were to make allowances for fewer losses in some of the territories. A year ago I said to some friends that, unless MGM cut down the cost of production by reducing salaries, eliminating bonuses, abandoning extra\-agance, and preventing waste, it will be in no different position than that which the other big companies are now in. The fact that its salesforces have adopted brutal sales tactics makes me feel as if I have guessed right. ORGANIZATION IN ACTION Two weeks ago I was an eye-witness to a most inspiring sight as regards the effectiveness of the action of an organization. Within twelve hours, the forces of Theatre Owners Chamber of Commerce, which are led by Charles L. O’Reilly, president of that organization, were organized and within another twelve hours defeated the Xew York State Tax Bill, which proposed to tax theatre receipts ten per cent. At noon one day a call went out for a meeting at the Astor Theatre at midnight. In the afternoon, printed matter was prepared for the exhibitors to use, giving the names of legislators with whom they should communicate, either personally or by means of letters or telegrams, sent by them and by prominent members of their communities. I helped in the preparation of the printed matter. The Astor Theatre was filled to overflowing. Almost ever}' manager, circuit or independent, was present. Each man was told that his job depended on whether the tax bill was defeated or passed. It was made plain to them that no theatre could keep its doors open at this time with a tax of ten per cent on its gross receipts and they were asked to do what they would do if the theatres they were managing belonged to them. Within three days, thirty-five thousand telegrams were sent to Governor Roosevelt, to Lieutenant Governor Lehman, and to legislative leaders of both parties. Seven thousand of these went to the Governor. Party leaders from Xew York and other cities were made to telephone to legislative leaders advising them to work against the passage of this bill, which was so discriminatory against one industry. Lawj-ers, doctors, school principals, and even the (Continued on last page)