Harvard business reports (1930)

Record Details:

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WILLARD THEATER 593 $1,000 over and above the average receipts, and 65% of all receipts in excess of a figure equal to the average receipts plus $i,ooc. The second plan required the same guaranty as did the first plan and at least 50% of the receipts in excess of an amount which included overhead, guaranty, advertising, and a profit for the exhibitor. Purchasing on this basis required an accurate itemization of theater expense to accompany the contract application. Under the third plan the distributor requested 20% of all receipts up to a figure which covered all the operating costs. This agreement provided that the distributor be assured of a minimum of $250. All receipts above operating costs were to be divided on terms of not less than 50% nor more than 70% to the distributor and the balance to the exhibitor. The average weekly receipts at the Willard Theater approximated $6,000, against which a weekly average feature film rental of approximately $750 was incurred. The low ratio of film rental to receipts was due to the fact that the theater was under heavy expense for vaudeville entertainment. The manager of the Willard Theater acceded to the percentage system in purchasing the sound pictures. Difficulty in obtaining comparatively recent pictures for his theater was a large factor in his decision. He was also influenced by the fact that the new pictures were proving very popular and that he had no experience by which to judge their possibilities. The first plan was preferable, in his opinion, and the proportion offered by the saleman was accepted. The theater manager and the salesman agreed upon a guaranty fixed at the average film rental, or $750, upon an equal division of the first $1,000 of receipts in excess of $6,000, and upon a percentage split of 65% to the distributor on all receipts above $7,000. While the manager was willing to open his books to the distributor in substantiation of the stated amount of operating costs, the distributing company, because of its confidence in the honesty and fairness of the Willard Theater manager as reflected from past experience, did not require the substantiating facts. The contract as made between the manager and the salesman covered a group of pictures and was approved at the distributing office. A checker was maintained at the theater by Perry Pictures, Incorporated, during the run of the picture. The first picture was exhibited for an entire week and grossed approximately