Harrison's Reports (1945)

80 HARRISON'S REPORTS May 19, 1945 To cite one example of why you should exercise care now in your picture-buying, let me remind you of the depression in the early 1930's when the large circuits cut down their admission prices to increase their falling patronage. This move, of course, hurt the independent exhibitors, for when they signed their contracts they figured the prices they would pay for film in accordance with the admission prices that they and their competitors were charging. When their competitors reduced admission prices, the independents were compelled to carry a burden they had not foreseen. They found that, if they did not lower their prices, they lost patronage, and if they did lower the prices, the reduced box-office receipts were much too low in comparison with the prices they had paid for the film. This example points out but one of the possibilities you must now take into consideration. Lest some of you gain the impression that I am predicting another depression in the near future, let me hasten to assure you that such is not my intent. I firmly believe that prosperity will be with us for some time to come, but not at the level we are enjoying presently. That is why I am urging you to watch your film buying and to seek rental reductions proportionate with the future drop in box-office receipts. Buy your pictures carefully. Don't rush! Give yourself a few days to study the contract before you sign it. A little thought and patience now may save you, as already said, many headaches afterwards. THE OUTLOOK FOR THEATRE CONSTRUCTION According to a statement issued last week by the War Production Board's Office of Civilian Requirements, there is little prospect of new theatre construction in the immediate future. The OCR stated that "no available facilities exist for the manufacture of theatre seats and textile coverings, or motion picture equipment for commercial use." It added that "former manufacturers of chairs and seats are now occupied with war work, and although production of projection and sound equipment is at its highest peak since 1941, it is sufficient only to meet requirements of the Armed Forces. "With a partial replacement of civilian theatre equipment damaged or destroyed by fire, no reservoir of production or supply exists from which new civilian theatres can be equipped." It was explained also that critical shortages in certain building materials, and lack of manpower in many areas, were additional factors that now prevent the WPB from authorizing new theatre construction. The purpose of the statement was to stop the increasing number of applications for permission to build new theatres from persons who are under the impression that the relaxation of certain WPB controls makes it possible for them to put their building plans into operation at once. Although new theatre building may be barred for the immediate future, there is every reason to believe that it will not be for long. Perhaps a few months. The wheels are already in motion for a changeover from a war-time economy to a peacetime economy, and it should be expected that building materials now on the critical list will soon be available for civilian needs. The WPB has already relaxed restrictions on the use of steel, copper and aluminum, and the War Manpower Commission has announced that, beginning July 1, regulations covering workers who were "frozen" to their jobs will be lifted in many areas throughout the country, leaving them free to seek other employment. The relaxation of these war-time controls will, of course, hasten the theatre building program. As pointed out in an editorial that appeared in the November 11, 1944 issue of this paper, the time to control theatre building is now. The prosperity that people of this country have enjoyed during the last few years has enabled many of them to accumulate sizeable bank accounts and, now that the trend is back to normalcy, many individuals are shopping around for enterprises that will give them post-war security. The motion picture theatre, to those who are unacquainted with show business operations, seems to be a lucrative business. And one can hardly blame them for being impressed, because the fantastic salaries paid to picture people in Hollywood, and the tremendous dollar grosses that are publicized in both the daily and trade papers, are enough to make any one's head swim. If one could only convince these people of the pitfalls in our business, and of the monopolistic conditions under which independent exhibitors are compelled to operate, they might think twice before investing their money. But in most cases such an approach by an exhibitor to a prospective exhibitor would be looked upon with suspicion; he might feel that he was being talked out of a "good thing." Yet the fact remains that a surge of indiscriminate theatre building on the part of, not only newcomers, but also those in the business, without regard for a community's ability to support more than a given number of theatres, threatens to undermine the orderly conduct of the exhibition business. Competition can often be beneficial, but "over-seating" is usually disastrous to all concerned. Established exhibitors seeking some measure of protection can do something about this impending condition before it is too late. In the aforementioned November 1 1 issue, I reproduced an ordinance adopted by the City Council of Winchester, Kentucky, on February 19, 1937, regulating the operation of motion picture theatres and other similar places of public entertainment within the city limits. This ordinance was modeled after a proposed ordinance drafted by my attorney a number of years ago, prescribing the conditions under which new theatres might be built, and it is designed to protect the established exhibitor. It is an effective ordinance because, unlike others, which limit the number of theatres in accordance with the number of inhabitants, thus leaving their constitutionality doubtful, this one is predicated on the police powers of the local governing body, and would thus have a better chance of being upheld if challenged in the courts. Those who have copies of the November 11, 1944 issue of Harrison's Reports may extract that ordinance and present it to the city councils for action; those who have misplaced their copies may apply to this office for another copy. Now is the time for action, before the reckless surge of theatre building gets under way. You must not permit yourself to become complacent merely because building operations are still under strict control. The restrictions may be lifted momentarily. Then it will be too late for preventative measures. Remember that you cannot build a dam while the flood waters are rushing in.