Motion Picture Daily (Oct-Dec 1960)

M day, December 5, Motion Picture Daily Television Today Who's Where icholas C. Gilles, formerly NBC ,} ctor of business affairs, operations i engineering, has been named 4 ctor°of business affair, NBC-TV ^ work. □ lalph Petti, operations manager at I 3Y, Sacramento, Calif., has taken I r additional duties as assistant to I [ Randal, president of T. R. Pro< tions, of San Francisco and i ttle. ' □ I ack Winters, formerly of the pub] ty department at WTVJ-TV, MiI i, owned by Wometco Enterprises, I eaving that post to join WCKTin the same city. □ (enneth C. Marthey, formerly a jvision producer and group head Benton & Bowles and McCannckson, has joined the staff of On ms, Inc., Princeton, N. J., as a pro;er-director. \GM-TV Signs tor ho Series with NBC J HMGM-TV has completed arrangef 1;nts with the National Broadcasting ' Mnpany for tlie co-production of 0 series of programs, each one ur in length, planned for the Fall, 61 season. The announcement was ide bv John B. Burns, general sales inager for MGM-TV and David vy, vice-president in charge of prolms for NBC-TV. The first. "Cain's 100," conceived d created by Paul Monash, centers "ound a government law enforce;nt agent battling syndicate crime ,e other, "Woman in the Case" is anthology series with a woman as 3 motivating force in each crime or ■50 wenture. It was developed by Mon*Jh, based upon the book by Edgar I istgarten. ■4 Monash will be executive producer ;|r both series. MGM-TV currently has "National dvet" as a Sunday night feature on ;BC and has "The Islanders" as an >ur-long feature on ABC-T\ , alsc 1 Sunday nights. PC Acquires Interest a Vancouver Station IRS Permits Producers of TV Films To Use the Income-Forecast Method By E. H. KAHN WASHINGTON, Dec. 4. -The Internal Revenue Service has ruled that producers of television films may use the income-forecast method for depreciating rental films. It denies them the right to use the cost-recovery method. IRS also rules that television films Special to THE DAILY TORONTO. Dec. 4. Associated elevision Ltd. and Famous Players anadian Corp., Ltd., have purchased block of stock in Vantel Broadcast ig Co., Ltd., owner of Vancouver s *5W tv station, CHAN-TV. The block is less than 25 per cent ] authorized capital, with the actual nount of stock involved and number : shares will be sold to each buyer at disclosed. This will be the fourth tv station i which Famous Players is interested, le others being Kitchener, and two i Quebec City, an English-language nd French language stations. shall not be depreciated below a reasonable salvage value. The IRS ruling notes that customary depreciation mediods "are in most cases inadequate when applied to television films, resulting in a distortion of income" on tax returns. The distortion is attributed to "a strikingly uneven flow of income earned by groups of programs witiiin the series, resulting from contract restrictions, methods of distribution and audience appeal.." It notes that reruns of successful programs may provide additional income over a period of years, whereas unsuccessful film series may produce little or no income after the first exhibition. Stresses 'Flow of Income' The business usefulness of assets like a television film series, IRS says, "is measureable over the income it produces and cannot be adequately measured by the passage of time alone. Therefore, in order to avoid distortion, depreciation must follow the 'flow of income'." IRS observes that some producers of television films have used the socalled "cost recover)'" method in reporting their income. Under this method, no taxable income is reported until the income from films exceeds their cost. "Such 'cost recover}'' method is not acceptable for federal income tax purposes," IRS asserts. Called 'Readily Adaptable' After "an extensive study and consideration of the matter," IRS has decided that die "income forecast" method is "readily adaptable in computing depreciation of the cost of television films without producing any serious distortion of income." The federal tax experts give the following summary of diis method: it requires "the application of a fraction, die numerator of which is the income from die films for the taxable vear, and the denominator of which is the forecasted or estimated total income to be derived from the films during dieir useful life, including estimated income from foreign exhibition or other exploitation of such films. Adjustment Permitted "The term 'income' for purposes of computing this fraction means income from die films less the expense of distributing the films, not including depreciation. This fraction is multiplied by die cost of films which produces income during the taxable year, after appropriate adjustment for estimated salvage value." IRS adds that if the estimated income from the television films should be less than dieir cost, resulting in a loss, the use of the income-forecast method for computing depreciation "will reflect such loss in the proper taxable year based on the amount of income from the films derived in each taxable year." Adjustments can be made, IRS states, if in subsequent years it is found that the income forecast was substantially different from reality. In this case, an adjustment can be made in forecasting income for subsequent years. In diese circumstances, "the formula for computing depreciation would be as follows: income for die taxable year divided by the revised estimated income (the current year's income and estimated future income), multiplied by die unrecovered depreciable film cost remaining as of die beginning of the taxable year." IRS observes that "the total forecast of estimated income to be derived from the films should be based on the conditions known to exist at the end of the period for which the return is made." This estimate can be revised upward or downward as conditions change. Warning on Depreciation The tax authorities warn that television films may not be depreciated below a reasonable salvage value, "such value being the amount which it is estimated will be realizable upon sale or other disposition of such films when they are no longer useful in the taxpayer's trade or business or in the production of his income. "The time when such films are no longer useful in the taxpayer^ business, etc., may vary according to his policv with respect to the use thereof. If the taxpayer's policy is to dispose of the films after the initial showing, the salvage value may represent a relatively large proportion of the original cost of such films. "However, if the taxpayer customarily uses the films after the initial showing for re-runs, syndication, foreign exhibition, or odier exploitation thereof, the salvage value may represent a relatively small proportion of the original cost." IRS points out that the principle of income forecast as set forth in Revenue Ruling 60-358 "is limited in its application to television films, taped shows for reproduction and other property of a similar charac Performers, Nets In Agreement An agreement in principle "in all substantive areas" has been reached for a new contract between the Screen Actors Guild and American Federation of Television and Radio Artists and the network producers and advertising agencies. A joint statement to that effect was issued by the groups at the weekend. Guild and Federation negotiators will take the proposed agreements, details of which were not disclosed, before their respective national boards for approval and subsequent membership ratification. Further Talks to Be Held Subject to these approvals, the announcement said, further meetings between the parties will be held in New York and in Hollywood to draft agreements embodying all the new terms and conditions. The performers' contract with die networks expired Nov. 15 without an agreement on terms of a new one having been reached. In the meantime, regional boards and members of the performers' unions had authorized a strike call if and when union officials had. deemed one necessarv. ter. FCC Says Church Unit Must Note Sponsorship From THE DAILY Bureau WASHINGTON, Dec. 4. The Federal Communications Commission has denied a request by the Broadcasting and Film Commission of the National Council of Churches of Christ to omit the normally required sponsorship announcement on films and tapes that it distributes. Velotta Replaces Daly For ABC on NAB Unit From THE DAILY Bureau WASHINGTON, Dec. 4. The National Association of Broadcasters has appointed Thomas Velotta, vicepresident, American Broadcasting Co., as a member of the NAB Freedom of Information Committee, representing ABC. Velotta, ABC vice-president in charge of special projects, replaces John Charles Daly on the committee. Daly recentiy resigned as ABC vicepresident for news, special events and public affairs. The 17-member NAB Freedom of Information Committee represents radio and television broadcasters in seeking free access to the news and its dissemination without restriction or discrimination. TelePronipTeTCTV Is Set for Hawaii Special to THE DAILY HONOLULU, Dec. 4. TelePrompTer Corp. and industrialist Henry J. Kaiser have announced plans for a jointly-owned corporation to provide a community antenna tv system making possible educational programming and improved television reception in the State of Hawaii. Kaiser and TelePrompTer chairman and president Irving B. Kahn said the new company will install and operate community antenna facilities in the Islands, beginning with the Kaiser organization's development of the new resort city of Hawaii Kai for 75.000 people at' Honolulu.