The Exhibitor (1955)

14 MOTION PICTURE EXHIBITOR World War II with Government forms and red tape, and the pecadilloes of “do” and “don’t” through which Government methods drive businessmen crazy. And from what we hear from hundreds of equally independent theatremen across the coimtry we don’t believe they want Government “regulation” either. In fact, we’d be willing to lay 2-to-l that a poll of exhibitor opinion on the subject, given any other choice, would bury Government “regulation” imder a landslide. We’re afraid that we agree with the Distributors that you can’t arbitrate film prices either. Whether horses or battle¬ ships, if the fellow who owns them says they are worth $10, how can you arbitrate your belief that they are only forth $5, because you can only resell them for $6. Maybe someone else can sell ’em for $20! It is all ‘if” and the seller has just as much God-given right to believe his value as the buyer has to believe his. How are you going to arbitrate that? And, particularly in picture business, where a picture can die in one theatre and set a new house record in another theatre not too far away, how can arbitration set up a fair picture price. Then again, who are those Solomons who will be able to find the time to care¬ fully consider and to weigh all factors concerning 365 days of film in 18,000 the¬ atres, some roofed and some drive-in? Having done a bit of “arbitrating” our¬ selves we happen to know the time and study required, and we don’t think there are enough competent men, with useable industry experience, in the world today, to serve as arbitrators on that much volume. There is a third alternative that we like better and that we belive will prove better for producers, distributors and for exhi¬ bitors. It presupposes than producers and distributors will accept the fact that vir¬ tually no new roofed theatres are being Q What is ALLOWABLE OVERHEAD . . . Any LIVE-AND-LET-LIVE FILM PRICING FORMULA must be based on a percentage of what is left after the operating overhead has been recouped. It is elementary that the theatre must re¬ coup its operating overhead (and this has nothing to do with return of invested capital or of profit), for any percentage deal is nothing more or less than a short¬ term partnership into which the theatre owner invests his right in a pretty high priced piece of specialized real estate on the main stem, and into which the pro¬ ducer-distributor invests his right in a pretty high priced piece of specialized film entertainment. The theatreman can’t sell tickets without the film and the producer distributor can’t sell tickets without the theatre. Operating overhead is a sum of money that is mutual to their partnership, and a tool of the whole partnership, just as advertising should also be. The administration of operating over¬ head rests in the lap of the theatre, only because the latter is stationary and fixed to the particular locale. Whether the “partnership” is for one day, one week, or one month, it is possible for the theatre to hire and to buy on a weekly, monthly or annual basis, thereby procuring the best local prices on everything, and to split all individual costs into the propor¬ tionate share represented by the “partner¬ ship” days. built; and that the existing ones are get¬ ting older and more obsolete with each passing day, and without any possibility of exhibitors reinvesting in modernization when they can barely, or are just failing to, make ends meet. It presupposes that producers and distributors will accept the fact that in spite of 4,400 new drive-in theatres (many seasonal) constructed in the past seven years, and a constantly growing population, their theatre sales possibilities have actually shrunken. It presupposes that exhibitors want only a fair live-and-let-live share of the admis¬ sions dollar and as partners with produc¬ tion and distribution are willing to give them an honest court in every way, backed by positive audits. And it pre¬ supposes that exhibitors, with respect for themselves as businessmen, will go a long way to avoid the need for “hat-in-hand” adjustments, and will adopt with open arms any method or formula that is fair. There is also one final, and most im¬ portant, point! It presupposes that pro¬ ducers, distributors and exhibitors, are sincere men-of-good-will who only want dollars that belong to them and to which they are fairly, honestly and morally en¬ titled. All of this is a waste of time, and there is no need to proceed further, if our business has degenerated into the rule of fang and claw. Under that event¬ uality, and dealing with thieves and shysters, the only alternative is a baseball bat or scatter gun. But we don’t believe the latter to be the case! We are proud of our business and of the friendships we have made in it. We have yet to meet the man with whom we couldn’t negotiate fairly when face to face. We believe that a fair to all UVEAND -LET-LIVE FILM PRICING FORMULA, applicable to the¬ atres of known admission scales, sizes, types and average grosses, is possible to arbitrate and establish for the eternal well being of all in this business. and why an AUDIT? As a partnership obligation, however, operating overhead must be an exact, agreed-on, ALLOWABLE OVERHEAD, resulting from an exact and acceptable AUDIT by a recognized Certified Public Accountant. It shouldn’t be necessary for such an audit to be made more than once each year, and it shouldn’t be necessary for it to go beyond a summary of operat¬ ing overhead only. It could be based on, but should in no way conflict with, the regular annual profit-and-loss audit of the particular theatre, for it can confine itself to the “acounts payable” side alone. Just as a suggestion, we certainly believe it would be possible for arrangements to be made with a big, prominent, name auditor like Price-Waterhouse to do such audits on a rotating annual fee basis that would be well within the price range of any the¬ atre. It might even be based on a “per seat” basis like organization dues. Bolstering this thought still further, we wish to point out that MOTION PICTURE EXHIBITOR, THE SATURDAY EVE¬ NING POST, LIFE, TIME, THE NEW YORK TIMES, and any other reputable publication that solicits advertising from advertising agencies and natonal adver¬ tisers, submit their circulation orders and income to the skilled auditors of the Audit Bureau of Crculations, Inc. for r thorough aimual check, without disclosing the private data from which their profit and loss statements are drawn. Such specialized audits are possible. And prac¬ tical! Now! What is ALLOWABLE OVER¬ HEAD? We suppose the best quick description would be the operating expenses of the particular theatre, both average and specific, for the term of the partnership, i.e. the particular playdates. More specifically, OPERATING OVER¬ HEAD, for purposes of such a partnership, can be broken down under the following heads: 1. Rent 2. Advertising 3. Payroll and Payroll Taxes 4. Insurance 5. Light, Power, Air Conditioning and Heat 6. Maintenance, Repairs, and Supplies 7. Messenger Service 8. Telephone, Telegraph, Stationery, Traveling, etc. 9. Petty Cash and Miscellaneous 10. Cost of all Shorts or Added Attrac¬ tions. A further explanation of what should be included under such general heads is as follows: RENT. This would normally be the sum paid to the owner of the theatre building, either as a fixed sum per month or per year, or as a percentage of the gross re¬ ceipts. All “extras,” such as excess water use, increased taxes, etc., covered by the lease should be included. If the property is owned by the theatreman, “rent” would be considered as all interest on a funded debt or mortgage, normal Goverment al¬ lowed depreciation on the building and its equipment, and all real estate taxes and water rents. Any rental income received by the theatre from stores or offices should be subtracted from the above. A weekly average for the preceding 52 weeks should be established. A hybrid of both of these would be the operator who leases a building which he has equipped. His rent would therefor be not only what he pays the landlord, but the depreciation on his equipment as well. ADVERTISING. This should refer to all advertising purchased by the theatreman to benefit the particular playdate. Newspaper space, posters, trailers, and any special sign work other than the normal changeable letter marquee signs, should be included. On a big picture where the producer-distributor wishes to spend more than the usual theatre budget, this can either come “off the top” (added to the operating overhead), or can be shared by each on the eventual per¬ centage payoff, subject to a prior agree¬ ment. Postage or messenger service neces¬ sary to the distribution of heralds, window cards, etc., should be included. PAYROLL AND PAYROLL TAXES. Under this heading would be the salaries of employes working in the theatre or occupied in some facet of its management, with the exception of those who tend the confection stand, or service stores, apart¬ ments, or offices that are not a part of the theatrical unit. Basically the manager, assistant manager, projectionists, ushers, cleaners, doorman, cashiers, and main¬ tenance engineers are considered house staff; but to this should be added the booking fees paid to a buying and book¬ ing agency or to a buying and booking executive. In the case of large circuit operation, a fee of 5Vt or 6''/ of the over¬ head is included in the payroll for home office expense. A similar fee should be