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WELLINGTON THEATER 579
successive showing of a picture in the first-, second-, and thirdrun theaters of a particular city or zone. In estimating the price to be paid, therefore, the exhibitor considered first the lapse of time between the picture's release and its possible exhibition in his theater. This period was calculated by adding up the total days of protection granted to all theaters having prior runs in the city or zone. As this time span increased, the value of the picture in exhibition decreased rapidly. A second factor to be considered was the amount of protection which could be obtained against the next exhibitor of the picture. The value of such protection was based upon the theory that consumers would not postpone the satisfaction of their wants beyond certain limits, even though an economic saving was involved in such postponement. Therefore, if the period of protection was long enough, a certain class of customers would patronize a current production even though they might realize that in a few weeks they could see the same picture at half the initial admission fee in a subsequent-run house.
The length of run was also a variable in price when applied to special productions played on a percentage basis or when pictures were held over for extended runs. The split week run of four days and three days, however, was the usual arrangement for a majority of pictures and a constant factor in negotiating for price. Protection granted to the Wellington Theater was also well defined and unless otherwise stipulated became a standard factor. Prior to actual negotiation, therefore, the type and duration of the run and the extent of protection granted were definitely understood by the exhibitor and the salesman.
With these factors held constant, the determination of an equitable price rested upon two factors: the theater's cost of exhibition and the probable gross receipts which the picture could earn during its run. Theater overhead exclusive of film rentals was a fairly constant figure. It was evident that the margin between overhead and total gross receipts must cover film rentals and yield a profit to the theater. In order to determine how much could be expended on rentals, therefore, it was necessary to estimate the potential gross receipts.
To evaluate potential gross as accurately as possible the manager utilized both external and internal information. The external factors were of two types. Trade paper reports attempted to forecast the box office success of current productions.