Harrison's Reports (1950)

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A REVIEWING SERVICE FREE FROM THE INFLUENCE OF FILM ADVERTISING Vol. XXXII SATURDAY, JULY 8, 1950 No. 27 ALLIED STEPS UP DRIVE AGAINST "MUST" PERCENTAGE DEMANDS All the regional units of Allied States Association of Motion Picture Exhibitors, in an effort to acquaint the exhibitors in their territories with the promises and commitments made by the sales managers of the eight major distributing companies in regard to the elimination of "must" percentage selling to the smaller grossing theatres throughout the country, have mailed to both members and non-members in their areas a report made by the Allied "Must" Percentage Committee, which was created in the fall of 1948 for the purpose of contacting each of the eight sales managers to discuss with and obtain from them, if possible, a lessening of the pressure for percentage terms in the aforementioned theatres. In a foreword to the report, the Committee points out that it visited New York twice during the winter of 1948-49 and again in April of this year. All the major sales managers were contacted on the first visit, and all except United Artists on the second. The foreword adds that the "flat selling yardstick" shown in the reports of the different distributors' sales policies is not rigid, and the figures stated are not necessarily maximum and have in many instances been exceeded by enterprising exhibitors. The different regional bulletins point out that, before printing, the text of the report on each company was approved by the sales manager of the company involved as accurately expressing his statements to Allied's Percentage Committee. Because the information contained in the Committee's reports is of great interest to all exhibitors, particularly those who are located in non-Allied territories and have not received a copy, Harrison's Reports is herewith reproducing the complete text of the reports on each company: "Columbia — On the first visit, Mr. Abe Montague, General Sales Manager, stated that in every case where the exhibitor so desired and where the average gross on their A pictures was $300 or less, Columbia would sell flat with the possible exclusion of a picture or pictures from outside producers. "Upon our second visit the Committee thanked Mr. Montague for living up to and expanding his commitment on flat rentals. So far as we know the only exceptions in the past year and a half were the Jolson pictures. "Mr. Montague, upon question of the Committee, stated that for more than a year Columbia has offered their entire product, excluding outside produced pictures, on a yearly contract with a 20% cancellation. This particular deal is set up for exhibitors paying up to $75 for top pictures and in some territories as high as $100. He further stated that in selling this contract, no specified number of pictures had to be purchased. This year's contract included all the product except 'Jolson Sings Again.' " "20th Century-Fox — On our visit Andy Smith, General Sales Manager, would m;ike no positive commitment on what theatres would be sold flat, but stated that their policy would be to increase flat rental picture deals as rapidly as possible in the smaller grossing situations. "On our second visit (1950) Andy Smith still would make no definite commitments on what theatres would be sold flat, but the Committee has found in actual practice that Fox is very generally selling on an all flat basis to theatres grossing as high as $200 or even $250 on their A product: in some territories this goes even as high as theatres grossing as much as $600. Mr. Smith indicated that in all such situations being sold flat, sooner or later it would be necessary to get some kind of measuring rod. The Committee feels, however, that this does not necessarily entail a high percentage on such trial basis. Mr. Smith added that in such smaller situations he would prefer selling flat rental since economically this was the sounder business practice." "Metro — On our first visit with Mr. William F. Rodgers, General Sales Manager, he advised the Committee that Metro would sell all flat in such situations where their film rental on their best productions ran $200 or less. He stated, however, that once in a great while Metro might issue a picture of such class that they would feel percentage was necessary in every situation. He stated that there would be no obligation for the exhibitor to accept such percentage terms but that the picture could be passed without penalty in future dealing. During the past eighteen months there has only been one such picture: 'Battleground.' " "Paramount — Mr. Charles M. Reagan was General Sales Manager on our first visit to New York. Mr. Reagan stated that at the present time (1949) his company is selling any exhibitor regardless of size on a flat rental basis, if desired. During the discussions, Mr. Reagan stated that the subterfuge of pricing the flat rental pictures so high as to force percentage was dishonest. "At a later interview the same year, Mr. A. W. Schwalberg, who succeeded Mr. Reagan as General Sales Manager, said: 'What Charlie Reagan promised, I will deliver.' "On our succeeding visit in 1950 Mr. Schwalberg modified that commitment with the statement that Paramount would sell all pictures to the smaller theatres flat rental with the reservation that there might be a picture on which they will demand must percentage. Mr. Schwalberg further stated that the formula for the conversion of accounts which had been formerly paying percentage, to flat rental, would be the average percentage earnings on the last four top pictures. Wherever any such top earning picture proved to be a sensational grosser (as, for example, 'Paleface'), and is disproportionate of the other top grossing pictures, such picture was to be excluded. The second bracket pictures would be figured approximately 70 to 75% of the flat rental price of the first bracket. Named as typical of such second bracket pictures now in release were the Alan Ladd pictures. "Mr. Schwalberg further stated that he had put into effect last May (1949) a plan under which the smaller exhibitors of the country — those paying up to $75 and occasionally up to $100 for top pictures — could buy all Paramount pictures scheduled for release up to and including January 1, 1950. Such deal meant that the exhibitor was afforded an opportunity to acquire an inventory of Paramount pictures for the eight months period involved. All pictures not already trade shown carried a 20% cancellation privilege, such to be included in all contracts. He stated further that the field force was instructed to sell all of these accounts on a flat rental basis and to convert such accounts (Continued on last page)