Motion Picture Herald (Apr-Jun 1933)

1^ MOTION PICTURE HERALD June 10, 1933 DIGEST OF HITLER FILM CONTROL PLAN Rcorganizaticn Distribution. -Section A of the plan deals with the creation oi Distribution Trust Company. Fifty-one per cent of its shares is to be placed in the hands of the A. D. F. (German Distributors' Organization) and the , remaining shares are to be distributed among the distributor members of the A. D. F. Each distributor who is or becomes a member of the A. D. F. is to be allotted a 100-mar!< share for each film distributed during the past season. The Distribution Trust Company will be financed as follows ; The A. D. F. will conclude a contract with the trust, according to which the former undertakes to place at the disposal of the Distribution Trust Company the capital required. The fulfillment of this obligation is to be guaranteed by a preliminary contract. The necessary monies will be supplied to the A. D. F. by the Spio. The statutes of the Distribution Trust Company specify that the purpose of the enterprise is the establishing of a definite program for film distribution and the control of the execution of this program. Every member of the organization is expected to adhere to this program. The company is entitled at any time and at the expense of the respective distributor member to control the state of his business. Penalties can be decided upon by general meeting of members. In case of breach of contract, the company is authorized to claim damages. The company conducts its business in its own name but for the account and in the interests of its members. It is supposed to protect their interests without any prejudice t the other branches of the film industry. No profits are expected. The internal organization of the company provide for the institution of an arbitrage for the settlement of conflicts. The chief purpose of the provisions is to bind distributor members to solidarity and loyalty in observing contracts. Section B deals with the relationship between distributors and exhibitors. It provides, among other things, for the boycott of all distributor members or exhibitors that do not fulfill obligations or that commit a breach of rental contract. The Distribution Trust Company will handle the control of minimum admission prices, as agreed upon, and also the control of a regular settlement of rentals. The film booking conditions as outlined in the plan provide for the institution of an arbitrage court also for the settlement of conflicts between e-xhibitors and distributors. The activities of this abritrage court are specifically outlined in the plan. Financing of Production. — Section C contains the statutes of the so-called Film Financing Bank. Those companies will be considered as its founders and shareholders that assume the guaranty against the non-payment of bills accepted by the bank. These will be the raw film m,anufacturers, studio owners, laboratories, and other suppliers of the film industry. The film financing bank is to be instituted in the form of a joint stock company with a capital of 200,000 marks. The shares are provided with dividend coupons. The shareholders get four per cent of the profits, with the remainder being applied to various purposes, among other things to cover the losses resulting from guaranties assumed by its members. Section D outlines the business methods to be applied by the film financing bank. They are as follows: The film manufacturer who requires a certain credit for a planned film production will sign bills for the amount required, plus a 15 per cent margin covering eventual overhead expenses, and deliver them to the film financing: bank. The latter, after providing the bills in question with its acceptance, will have them discounted at a discount bank. The proceeds of the operation are to be applied to the production of the film and the manufacturing of the number of positive copies required for domestic distribution. The discount is effected according to the financial needs of the production involved. The companies that supply the raw material, studio space, etc. (raw film manufacturers, studio owners, and laboratories) for the respective film productions assume the guaranty vis-avis the discounting bank against the non-payment of the bills accepted by the film financing bank. The guaranty against non-p.ayment is to be furnished to the discounting bank in a single amount; however, each of the warrantors assumes a certain share of the guaranty proportionately to the supplies he has furnised for the film production involved. Further provisions specify the following: When granting a credit it should be considered whether the production program to be financed contains a sufficient number of good "super" and average quality pictures. It should also be taken into consideration before turning out a certain category of films (adventures, detective stories, etc.) whether there are not already too many of such subjects on the market to make production of further films of the same nature a worthwhile proposition, especially taking into account foreign films imported. Film production programs should as much as possible be established along the lines determined by the Spio before March 31 of each year for the coming release season, in accordance with market requirements. When financing film production, attention should be paid to a reasonable reduction of high salaries paid to stars, directors, cameramen, and other film workers. Financing of films, for the production of which the above conditions are not complied v/ith, should be declined. . Financing Corditicns of the Ban't. — Film production Cullman Due to Hold Roxy Post Because of the improvement shown in the operation of the original Roxy theatre, New York, during the past six months, it is expected that creditors will favor a continuance of the receivership under the guidance of Howard S. Cullman. There will be a hearing June 13 before Federal Judge Francis Caffey. From December 15, when Mr. Cullman became receiver, up to and including May 4, the net operating loss was $4,489 before deducting rent, taxes, insurance and interest on receiver's certificates amounting to $59,182. Since the original equity receivership was changed to a foreclosure receivership July 1, 1932, down to May 4, 1933, gross receipts have been $1,051,192. Operating expenses have been $1,147,515 and there is a total deficit of $274,959. Total assets are given as $9,597,773, and current liabilities are $539,032. may only be financed if the producer complies with the following conditions : (1) At least 30 per cent of the production costs and the cost of copies for Geman distrilmtion must be paid in cash; this 30 per cent may include those amounts that were paid fo.' acquiring the sub;ect of the scenario, the music, etc. (2) The scenario ready for "shooting," together with a detailed estimate of production costs, must be submitted to the bank. (3) The producer must furnish irrefutable proof that he legally acquired the authors' rights both for music and picture to be used for his film. If these rights were previously disposed of, either for mechanical music reproduction or to musical editors, this should be specified. (4) The producer must submit to the bank the contract concluded with the distributor for domestic distribution. Tliis distributor must be a member of the Distribution Trust Company. (5) The producer must undertake to produce in the studios of and have the copies made in laboratory on raw film-. The studio owners, laboratories and raw film manufacturers in question must be chosen among those that are considered as reliable warrantors by the discounting banks. The bank is to get from the producer as many prorogation bills as are necessary to pemit three extensions of the bills in question, including the 15 per cent margin mentioned above. For "super" type films or for such films the release of which is delayed for some reason or other the extension possibility must be secured by issuing further prorogation bills. Instructions to the Bank Management. — The amount of credit is not to be paid to the producer, but the bank will pay directly the bills and payment advices covering salaries and other services rendered in connection with the production involved, also for the film copies necessary for domestic distribution. Further details concerning the credits to be granted are left to the discretion of the management. In compensation for the handling of credits and various operations connected therewith, as well as the control of credit contracts, the bank charges a minimum commission of 4 per cent if the credit amounts to 140,000 marks or less, and three per cent if the credit exceeds 140,000 marks. In addition to this commission, the producer must pay all the discount fees. The bank is further entitled to charge up to an additional one-half per cent as its commission for the acceptance of bills. Credit Guarantees. — The guarantees agaiiist nonpayment of the bills accepted by the bank are secured as follows: The management concludes agreements with the individual warrantors according to a determined contract form. No digression from that form is allowed without special approval of the board of directors. As soon as the producer has advised of and proved in what studio his film is to be produced, what laboratory will handle the copying, and what raw film is to be used, the bank will get in touch with the warrantors involved in order to ascertain whether they are willing to assume the guaranty or part of the guaranty against non-payment of accepted bills in connection with (he film or the production program in question. The willingness of the warrantors to assume the guaranty must be ascertained at once in order to protect the producer fropi eventual losses. The management of the bank will then get in touch with those leading banKs that are to discount the bills and secure assurances that the bills accepted by ths bank and guaranteed by the warrantors above mentioned will be discounted. The triple prorogation possibility must be mentioned in the assurance and the question be cleared as to which warrantors are agreeable to the discounting bank. If and when the bank is unable to fulfill its obligations with regard to an accepted bill, i. e., when it has to recur to the warrantors, the board of directors must be immediately advised as well as the warrantors themselves. The Spio plan also includes a form of financing contract between the bank and the film producer. This contract is very comprehensive and foresees various eventualities. The following paragraphs are of interest : The producer is to pay to the bank all his returns from the exploitation of a film financed by the bank. Similar pi'ovisions are made in so far as distributors are concerned. A representative of the bank is to attend the film production operations. Foreign distribution licenses can only be given with the approval of the bank. The negative of the film to be produced is handed to the bank as its property. The distributor can obtain the copies required from the bank direct. The bank furnishes various guarantees covering eventual risks during the production or the exploitation of a film. The institution of an arbitrage court is provided for. The above regulations have in view the insuring of a regular film production and distribution whenever possible without using the bank obligations. The Film Producing Bank reserves all rights and powers with a view fo taking any measures and assuming any control it thinks fit to insure regular and rational production and distribution activities. Scenario, Cast. — The scenario and music of films must be , based on German spiritual work. All films, even if they are destined for foreign distribution, must be penetrated with German spirit and culture. Text and music should therefore be German and German artists must be employed. Motion picture theatres should be places of entertainment and pleasure, but at the same time they should not neglect their task of cultural influence. Any efforts toward new artistic forms in film production will be actively furthered. Star salaries will probably be limitecl to 25,000 marks per picture. Sound.— The NSK Tobis (National Socialist Tobis Commission) has endeavored to insure that all future alleviations for sales conditions and prices be made retroactive as of April 1, 1933, and these endeavors have met with success. A more or less free choice of studios is provided for. A lowering of the Tobis royalties for the sound patents will be enforced to help reduce production costs. Music Royalties. — The outstanding points will be satisfactorily settled by ,an amicable understanding removing possible hardship. No court actions will be started without previous warning against any German filrn enterprises, so long as there be any possibility of reaching an understanding by means of negotiations. Studios. — Studios in Berlin and Munich are equipped and ready for renewed film production. The technical staff of these studios, in cooperation with the NSK Spio and the BSBO, will do their utmost to maintain and improve the high standard of German film production and nothing is to hinder production activities, such production to take place along more economical lines. No shifting of producers to foreign studios is permitted. There is the possibility in such cases that the producers will find it difficult to market in (Germany their product made abroad.* Film Production.' — The German film producers are said to be willing to start work with the utmost energy under the protection of the national government and to produce films along the lines mentioned by Dr. Goebbels in his program speech. Existing production plans which could not for special reasons come Xo life in the past will now materialize. The uncertainty as to whether or not a scenario was fit for exhibition under present conditions, what persons could be employed in the cast or as scenario writers and composers are removed. Distribution and Theatres. — Distributors, the most important link between producers and consumers (theatres), will concentrate their efforts on the marketing of good films at cheapest prices. Distribution expenses are to be reduced as much as possible and it is planned to concentrate distribution in the hands of a small number of distributing units. Sales and renting conditions will undergo a considerable change, and it is expected that exhibitors on their own initiative will take measures to remove the excess of seatage which is handicapping the existence of exhibitors. *This, incidentally, is intended to discourage German directors and casts from working abroad; in other words, foreign-made films with either German producers, directors, or artists will find local censorship difficult. In France, this idea will, if it prevails, work counter to German-made films employing French producers, directors or casts.