Harrison's Reports (1950)

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8 HARRISON'S REPORTS January 14, 1950 So that the exhibitors may better understand how to make proper use of this form, we repeat what Mr. Wollcott had to say in 1944: "When you have gone back through your records far enough to get a clear and accurate estimate of the various items and have entered and totaled them all on the form, divide the total cost by 10. Then charge two-tenths off for Saturday, three-tenths against Sunday, and one-tenth against each of the other five days. Add your feature film rental to the number of tenths due any given picture change and you have the total cost of the operation, which deducted from the gross, gives you the net profit, if any. As an example, we will say that the overhead from the form totals $300 per week, or $30 per tenth. You pay $40 for a picture which you run Sunday and Monday. Sunday and Monday takes up four-tenths or $120, plus $40 for the picture, which means you have to gross $160 to break even. Anything over is profit, anything less, of course is loss." Recently the writer asked Mr. Wollcott if he would care to add anything to his original remarks for the benefit of this paper's subscribers, and the following, in part, is his reply: "We, too, have many requests for this form, and, I may add, copies of it are standard equipment which are given our new members because we firmly believe no exhibitor should attempt to operate a theatre without knowing his overhead expenses. This knowledge, a pencil and simple arithmetic can, in a few weeks, demonstrate conclusively what can and what cannot be done in any given theatre situation. "The only suggestions I can offer at this moment, additional to the self-explaining overhead form are that, where a theatre has been in operation for some time to make this possible, the Federal Income Tax figures which are a mandatory part of the business today can be a help in arriving at the various items of expense on the form and, likewise, the form can be a help in determining the proper figures for income tax purposes. "And, one more thing — Bank Night, cash nights and other forms of giveaways should be treated like a second feature, thus becoming chargeable to that particular day or date, and not spread over the entire week's operation, unless used all week." Commenting on Theatre Cost Schedules, Mr. Wollcott states that it is a "tough proposition to set up a hard and fast schedule and make it stick because of the vast differences in theatres and their grosses, and a thousand and one factors." After pointing out that he made up a cost schedule some years back and came up with a figure of twelve per cent profit, Mr. Wollcott has this to say: "That 12% profit would probably look very big to the Interboro Circuit which operates 37 theatres in and around New York and recently published a breakdown of their box-office dollar, which came up with what they appeared to feel was a satisfactory profit of only 6%. "Perhaps a big operation which has huge grosses can find satisfaction in a 6% or a 10% remaining profit, the same as they can make money and pay 40% or 50% for features — if their grosses are big enough. "But the vast majority of the smaller theatres in the country — and that's the vast majority of the country's theatres-— have weekly grosses that range from $150, yes, I said $150! to $1,000. Thus it is no trick to figure that in today's 'consumer's index' the little fellow with the $150 gross has got to have at least 3 3 J/3% profit or he better start digging ditches or clerking in a grocery store. 6% of $150 equals exactly $9! The guy with the $1,000 gross might feel reasonably secure at 10% profit, but at that, his film branch manager beats his 'take-home' results, with no investment. "So it would seem that few breakdowns of the box-office dollar could fit all situations, unless, among those items usually designated as 'Salaries' or 'Administration' or 'Management and Booking' it could be found that the exhibitor is on the payroll and his salary compensates him for his time and effort, so that he can treat his theatre as an investment, in which case the 6%, 10% or 12% can probably be considered a good profit." Mr. Wollcott closes his letter by stating that his main purpose in discussing the breakdown of the box-office dollar is to show how important it is for the average exhibitor, and his family, if they work in his theatre, to be on the payroll for substantial salaries. Basically, an exhibitor is in business to make money, and, unless he conducts his operation in an orderly, well-organized and systematic manner, the chances of success are against him. Business prudence requires the exhibitor to operate his theatre on a set budget and to analyze his overhead expenses periodically to make sure that he is keeping his costs within the budget figures. The exhibitor who spends blindly and who is without any set budget plan is groping in the dark and looking for profits that just "ain't" there. NO TIME TO CUT ADMISSION PRICES In the January 4 issue of The Exhibitor, Jay Emanuel, publisher of that trade paper, points out that, during the pre-holiday slump in theatre attendance, which began much earlier than usual, exhibitors in many parts of the country "started to experiment with price cuts, feeling that in part the answer to a slumping gross was a lesser admission." "Cutting prices," said Mr. Emanuel, "is no one's monopoly. If a theatre slashes its tariff, it is quite simple for the other houses to follow. The difference now seems to be that no distributor is in a position to influence exhibitors because legal conditions make it impossible for a distributor to use his weight on a theatreman to stick to a certain scale. It is because of this change that price-cutting becomes serious at this time. There are many in this industry who feel that charging a low admission will bring back increased business to theatres. However, along with other lines of industry, the motion picture industry is burdened by higher overhead and bigger costs. It has become virtually impossible for theatre owners to assume this bigger overhead without passing it on to their customers. Any price cutting does not bring with it a lesser overhead. . . ." Harrison's Reports is in full agreement with what Mr. Emanuel had to say, and would like to add a further word of caution. The industry is presently in the midst of an all-out drive for repeal or reduction of the twenty per cent Federal admission tax, and it is generally felt that, if the campaign is prosecuted forcefully, there is a good chance that Congress will either repeal the tax or cut it down in the near future. If this should come to pass, it is assumed that most theatres will reflect the elimination or reduction of the tax by a corresponding cut in their admission prices. Consequently, the exhibitor who lowers prices at this time may find himself in the position of having to lower them a second time, when and if the admission tax is either repealed or reduced. Harrison's Reports suggests that the exhibitors hold in abeyance any ideas they may have about cutting admission prices until after Congress acts on the admission tax. BROTHERHOOD WEEK Once again the motion picture industry is being called upon to participate in and help dramatize Brotherhood Week, which has been set for the week of February 19-26, under the sponsorship of the National Conference of Christians and Jews. This year the industry's campaign will be conducted under the national chairmanship of Ted R. Gamble and, as in the previous campaigns, he will have the assistance of some twenty-seven national vice-chairmen representing all branches of the industry. Six objectives have been set for this year's drive, including: (1) Ten memberships per theatre in the NCCJ at one dollar per membership; (2) special brotherhood observances in theatres; (3) wide promotion of this cause through special display material; (4) greatest use of special newsreel clips; (5) Brotherhood "chapters" formed with theatres the focal point; and (6) "Brotherhood Week" to be made a community event in the finest sense. Every theatre in the country will be serviced with a campaign kit to be distributed by National Screen Service. The central purpose of the NCCJ, which is a voluntary, civic organization of religiously motivated people, is to promote the idea of brotherhood and to make respect for the individual a part of the normal, natural day-to-day activities of the American people. It fights bigotry, discrimination and intolerance as a disease that seriously threatens the health of the nation, menaces its democratic institutions, and weighs oppressively upon large sections of the population. The organization has done wonderful work for many years in fostering goodwill among men, and its continuing efforts to affirm the principles of racial and religious equality are deserving of the fullest support of every exhibitor.