Harvard business reports (1930)

6oo HARVARD BUSINESS REPORTS Although the Rainier Theater was not affiliated with the Allied States Association,2 the manager was impressed with its administration and in the event of a contract with Tiffany Productions, Incorporated, planned to become a member of the local unit of the association. In the consideration of the problem at hand, however, since joining the Allied States Association was not an essential part of the agreement, emphasis was placed on the two factors of direct importance: an analysis of Tiffany Productions, Incorporated, and an examination of the franchise agreement. Tiffany Productions, Incorporated, although a comparatively new organization, had achieved a noteworthy position in the motion picture industry. As originally organized, it was known as Tiffany-Stahl Productions, Incorporated, the firm name having been changed upon acquisition of the company by a wealthy investor whose interests prior to that time had been in a quite different type of industry. Tiffany Productions, Incorporated, operated only one theater, the Gaiety, which was used primarily for exploitation purposes in New York City. The company apparently did not intend to develop a large theater chain. Its distributive organization comprised about 34 exchanges, one of which was located a short distance from the Rainier Theater. The manager of the Rainier Theater believed that Tiffany Productions, Incorporated, had assented to become a party to the Allied States Franchise Agreement in order to expand the existing market for Tiffany pictures. He was of the opinion that, in 1929, the medium-size producer-distributor was in an uncertain economic position. Mergers and working agreements had consolidated a large part of the first-run and second-run theaters throughout the country under the control of four large producing companies. The aggregate box office returns from producercontrolled theaters were estimated to be in excess of twothirds of the total box office revenue of the United States. This situation naturally limited the remaining open market to independent exhibitors whose theaters in general were second-, third-, and subsequent-run houses. Tiffany pictures had never been shown in the Rainier Theater. The manager, however, from a knowledge of their material contents and exhibition elsewhere judged their quality to be com 2 See Allied States Association of Motion Picture Exhibitors, page 659.