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WILLARD THEATER 595
the third plan, the risks of operation are borne jointly by the exhibitor and the distributor. The returns to the distributor, therefore, would naturally be higher than under any other plan. They would also be somewhat higher because of the necessity of obtaining contributions toward his film costs, which are included in the guaranty figure under the first and second plans but which are not included in any figure given in the third plan. Just what this plan would mean in terms of dollars can be roughly determined. The theater normally had been securing $6,000 per week in box office receipts. If one assumes that this included a 5% profit, and if one assumes that the average film rental was $750, then the cost of operation of the theater, exclusive of profit and film cost, would amount to $4,950. The distributor proposed an 80% and 20% split of box office receipts up to a figure which covered costs to the theater operator. This would mean that the theater would have to obtain $6,187.50 in total box office receipts in order for the exhibitor's share to equal his operating costs. On the particular picture in question, the theater received gross receipts of $8,500, leaving a net profit of $2,312.50 to be divided. If one assumes the split of this figure on the basis of 60% and 40%, the theater would obtain $925 in net profit from the exhibition of this picture. The distributor would obtain 20% of $6,187.50 plus 60% of $2,312.50, or $2,625. Though this figure seems large, it would not appear to be exorbitant in consideration of the facts as noted above. It may be noted, however, that this was an exceptional picture. The average receipts of the house amounted to about $6,000. On that basis a division of the receipts would mean a net loss to the exhibitor.
On the other hand, by accepting the proposal which was finally agreed upon between exhibitor and distributor, the exhibitor made a profit of $1,325. The distributor obtained $2,225. This latter figure is his gross receipts and not his net return.
These figures would make it apparent that the decision of the manager was quite sound.
There is a suggestion in the case that the exhibitor might arrange with the distributor to make final settlement for an entire group of pictures instead of on a basis of particular pictures. As a general policy, this would probably not be acceptable to the distributor. There would be no assurance that the exhibitor would still have the money to pay for the films when the time for settlement arrived. With dishonest exhibitors it is possible that box office receipts might be readjusted from time to time so as to deprive the distributor of some of his just return. March, 1930 H. T. L.