Harrison's Reports (1949)

60 April 9, 1949 efforts to train our sales organization so that it will accommodate itself to any such policy and methods as are approved by us." According to a statement issued by Lichtman, his job is "to bring about a better understanding and relationship between exhibitor and distributor," and he claims to have undertaken the work "at a great personal sacrifice and jeopardy of my health." The turmoil he has created can hardly be called an aid to better exhibitor-distributor relations. He can, of course, train the Fox sales organization to "accommodate" itself to a new sales policy, but he will find out that it is quite another matter to train the exhibitors to accept it. As one exhibitor said to me recently: "There is no tougher job in the industry today than that of a Fox salesman." Although considerable damage has been done, it is not too late for Mr. Skouras to pension Al Lichtman off for the remaining term of his employment contract and let Andy Smith carry on as he had been doing since he became the company's distribution head. By taking this action, Mr. Skouras would not only help to preserve Al Lichtman's health, but he would also bring to a halt exhibitor resentment that will eventually cost his company in dollars much more than it can ever hope to gain through higher rentals. ALLIED BLASTS 20TH CENTURY-FOX CAMPAIGN FOR HIGHER RENTALS The following statement, in part, was issued on March 31 by Mr. Abram F. Myers, general counsel and Chairman of the board of National Allied : "If the implication of what they are saying were not so serious, if they did not presume to speak for all film companies, we could enjoy the humorous aspects of the SmithLichtman troupe, now on tour. In the face of the known facts, and in the light of the experience of every independent exhibitor, the plea that the film companies are not getting a fair share of the boxoffice dollar is a rib tickler. That Fox should add to its diamond-studded payroll another executive to put over this idea, instead of cutting expenses to fit its alleged reduced income, is grimmer than it is funny. The old Coxey's Army marched on Washington to obtain relief for the unemployed; the new one is descending upon the exhibitors to insure that film executives will continue to live in the manner to which they have become accustomed. "Having talked to men who attended the Boston, New Haven and Philadelphia meetings, we are convinced that the plan is bogging down. . . . The figures cited by Fox's troupers are being systematically and relentlessly torn to shreds by the various exhibitor organizations and leaders. The exhibitors know that with increased operating costs and sagging attendance they cannot possibly shoulder the burden of Fox's reduced foreign income. We believe that someone in the Fox organization will see the futility of the plan and detect the absurdity of these meetings and 'operation tin cup' will be quietly abandoned. "Based on the language attributed to Lichtman by the trade papers, this campaign is being conducted not merely in the interest of Fox but in behalf of all film companies. Conditions being as they are, a demand by Fox for higher film rentals would be serious; but if Fox product becomes too much of a luxury, some exhibitors at least can buy elsewhere. If on the other hand there should be a concerted move by all the film companies to raise prices, the situation would be most menacing. . . . Lichtman's utterances . . . imply that there is more to this movement than meets the eye. . . . Unless the other distributors see fit to disclaim any connection with this campaign, we will have to assume that all are implicated and that it constitutes a joint effort to increase prices. "The troupers admit that they have no magic formula for achieving their purpose, although they outline three possible methods which may be the subject of a later bulletin— if the campaign continues. We too doubt if the campaign has any immediate objective beyond stimulating the sales organizations to drive harder bargains. The long range obective appears to be to condition the exhibitors' minds to the idea that the producer-distributors should have a still larger slice of the receipts. This in our opinion is as wrong as it is unjustified and the time to resist evil is in the beginning, not after the injury has been done. It is, therefore, right and proper that the independent exhibitor organizations should adopt counter measures and acquaint their members with the full implications of the movement and with the facts. "The propagandists apparently started out with the declaration that Fox is seeking a 25% increase in its profits, but that figure now is being soft-pedaled. But the Fox spokesmen are both adult and experienced and we are bound to assume that they know what they are saying. A 25% in' crease in profits would require more than a 25% increase in film rentals. Therefore, exhibitors in weighing this development must consider not only what such an increase would mean in the case of Fox but also the devastating effect of like increases by the other companies. Of course, that would spell ruin to every exhibitor in the United States; yet that is the full import of what these men are saying and it should be brought home to every exhibitor." Mr. Myers points out that the company reported tentative earnings for 1948 as $12,500,000 as against net earnings of $14,033,640 for the same period of 1947 — a drop of $1,503,640. He states that the income includes both film and theatre profits and that he has no basis for separating them, nor has he any information as to whether the shrinkage was due "to the foreign situation, the failure to enforce economy at the studios and reduce swollen salaries, general inefficiency, or the failure to produce the usual quota of boxoffice pictures." "We suspect," he adds, "that, to a considerable extent, it was due to a falling off in theatre attendance— and that hurts the exhibitor as much as the distributor." Mr. Myers then points out that, while Fox's net was declining, the net earnings of Loews, Inc., increased over the preceding year, even though that company, too, must have experienced the general box-office decline. "The above quoted figures for Fox," continues Mr. Myers, "relate to the calendar year 1948 but they were released just as the Smith-Lichtman tour was getting under way, when, presumably, they would have the most effect. But somewhere in the Fox organization the wires must have been crossed because, about the same time, some highly optimistic information was being released concerning prospects for the current year. Variety for March 25 carries a story to the effect that Fox's sales for the first 10 weeks of 1949 are 25% more than those for the like period in 1948. So Fox already is well on the way to its goal without further ado. And in view of Fox's yowl about the division of the boxoffice dollar, this is really revealing: The story goes on to say that theatre receipts and foreign rentals are not keeping pace with domestic film rentals, although they are up from last year too. We can't wait for a detailed statement of the company's earnings for the first quarter of 1949, during which period the great plan for increasing film rentals was hatched. "These optimists were not above a little bragging. 'Snake Pit' they predicted would gross $5,000,000 in the United States and Canada. It was made before production economies were put into effect at a total cost of $3,000,000. Even so, the percentage of profit is not bad — 66%%. 'Letter to Three Wives,' made after the studio had cut down on expenses cost $2,000,000 and is expected to gross $4,000,000 which should cause great glee in the outfit. 'Yellow Sky,' an outdoor picture with few sets and made a.e. (after economy) is expected to do a little under $4,000,000 and should also turn in a 100% profit." Mr. Myers goes on to point out that inflation has run its course and that a drive to increase film rentals in the face of steadily declining prices is decidedly out of order. "Calling it a more equitable division of the boxoffice dollar," he states, "is mere quibble. If film rentals rise, admission prices will have to be increased; and thus the motion picture industry will be handicapped in its race with competing amusements and will be going counter to the economic trend." (Continued on inside page)