Motion Picture Herald (Nov-Dec 1939)

26 MOTION PICTURE HERALD December 30, 1939 STOCK VALUES DOWN 156 MILLIONS, AND VOLUME OFT RADINC DECREASES Started Slipping Early in 1 939 Due to War Scares; Dropped to Year's Lowest Levels as the Hostilities Commenced by THE ANALYST The outbreak of war in Europe caused a drop of $156,053,500 in the market value of motion picture shares during 1939. Reversing the trend of the preceding year, the total market valuation of the 20 film issues listed on the New York Stock Exchange fell to $628,356,625, compared with $784,410,125 at the end of 1938. War Scares Have Effect Film stock values started slipping in the first half of the year as the result of a series of war scares that threatened serious consequences to export trade and increasing uncertainties in domestic business, but it was not until after hostilities actually broke out that the majority of them touched their lowest prices of the year. The end of the year found most of the motion picture shares slightly above the extreme lows, but with a conflicting outlook. On the one hand, domestic business conditions made an excellent year-end showing. On the other was the prospect of a long-drawn-out conflict abroad. In their market action during the year the film stocks followed much the same pattern as the general list, with the exception of the socalled "war babies". These stocks, represented mostly in the aircraft, copper, armament and shipbuilding groups, were given speculative whirls after the war's outbreak and generally showed higher price levels as compared with the preceding year. Occasional Flurries Activity in the stock market continued at a low ebb during 1939 with the exception of occasional flurries in individual issues. Motion picture issues shared in the dullness and the turnover of every prominent stock in the group was lower than in 1938. As in the early stages of the World War, traders in stocks were wary of the ultimate benefits of war profits and the market's dull and irregularly lower price movements were a logical consequence. Demand for stocks turned more and more from a speculative to an investment character. Meanwhile, general business conditions improved in most lines and the outlook as the year ends is, at least for the near-term future, optimistic. The strange character of the current war did much to alleviate what would ordinarily have been a depressant on some lines and enabled most business to shake off the influence of the possibility that the conflict might turn from the present state of stalemate and uncertainty into a long and costly conflict. As an indication of the upswing in trade and industry during 1939, the New York Times index of steel ingot production, a pertinent general business barometer, on Dec. 16, 1939, stood at 137.4 (estimated normal — 100), compared with 98.6 on Dec. 17, 1938. Automobile production was 110.6, compared with 96.1 ; miscellaneous carloadings at 92.8, against 77.2 ; cottonmill activity at 145.1, against 126.6; lumber production at 92.5, against 75.9, and electric power production 104.4, against 97.9. Manufacturing employment in November, according to a report by the Department of Labor, PLANNING BOARD ISSUES REPORT The National Resources Planning Board has issued a report entitled "Consumer Expendittires". The report studies the average consumer disbursements in the relatively prosperous years of 193 5-36, using three numerically equal income groups: lower third, with $780 a year or less; middle third with $780 to $1,45 0; upper third, $1,45 0 or over. The report discloses that the lower "third of the nation" spends more than half of its income for food alone and goes into debt, with an average deficit of $92 a year as compared with a 19 per cent average of savings in the upper third after all outlays including gifts and taxes. Even the middle class loses money, with an average individual or family deficit of $19 a year. Exclusive of food, clothing and shelter expenditures, Americans in the lower third had an average of $31 per person per year — about 60 cents a week — for all other expenses of living, including medical care, dentistry, amusement, art, motion pictures, education, sport, literature, religion, etc. was the highest since October, 1937, and the Department's employment index for the month was the highest November average since 1929. Merchants throughout the country predicted sales gains ranging to 10 per cent for the first half of 1940. Sales of heavy electrical equipment and materials for 1939 were reported to be sharply higher than last year and it was estimated the total would come within 10 or 15 per cent of the 1937 sales, which exceeded all previous records. Electricity production for 1939, according to figures available so far, will break all records in the history of the power output industry. Extra dividends and increased salaries brought about a brisk improvement in 1939 Christmas sales, according to a United Press survey, which showed that from five to 15 per cent more was spent by Christmas shoppers in 1939 than in 1938 and that in some sections of the country the gain was as high as 20 per cent. While all these developments portended well for the film industry and general business in 1940, predictions for any reasonably long term were tempered by the uncertainties over the war. Consequently, film and other security prices were not in a position to reflect substantially the excellent current business indices. The motion picture industry contributed to bright spots in business, prominent among which was the report of the Internal Revenue Bureau showing admission taxes during November exceeded $2,000,000 to reach the highest total since December, 1937. Some Exceptions Some of the motion picture preferred stocks were noteworthy exceptions to the general trend, an indication of underlying confidence. Eastman Kodak preferred rallied substantially after touching a low of 155^4 for the year on Sept. 25 and as the year ended was selling around 175, a gain of 2 points over the 1938 close. Warner Brothers preferred, around 48, showed a gain of 8 points, while Keith-AlbeeOrpheum preferred, in a light turnover, was up about 11 points for the year to around 96. Although it closed with a loss of $46,593,750 in market value, Eastman Kodak common, selling near the end of the year at 166, was up sharply from the low of 138^, reached on April 26. Loew's depreciated $28,598,750 in market value during 1939, representing a loss of YlYi points. Twentieth-Century-Fox's total market value as of the end of 1939 at $21,315,000 compared with $45,675,000 at the end of 1938. Warner Brothers was down $9,500,000 in market value. Paramount, the only film stock whose total sales for the year crossed the million-share mark, ranged in price from a high of 14^5 to a low of 6Ys and finished at around 7% for a loss of 6 points, or $14,820,000 in market value. A five-year comparison of motion picture stock prices, and valuations, appears on the page opposite. Gains Reported U. S. Secretary of Commerce Harry L. Hopkins, in a year-end business statement, Tuesday, reported substantial gains in all areas of the national economy during 1939. He said : "During the year 1939, the trend of business was toward higher levels. In all sectors of the economy — industry, trade, and agriculture — 1939 was a better year than 1938. This improvement has produced a more favorable background in which to consider and to appraise common problems of government and business — and a calm appraisal is a necessary prerequisite to intelligently guided action. The outbreak of war in Europe has not been without repercussions in this country, but this unfortunate event must not blind us to the fact that the solution of our problems lies with us. We can not rely upon destruction abroad to create a demand for goods which, in the proper sense, can be fostered here with advantage to all. "In looking back at the year, it is possible to record a very substantial gain in all areas of the economy when measured against the relatively restricted volume of 1938. The year divides into two rather well-defined periods delimited by the date of the war outbreak in Europe. Prior to September, the recovery in business which featured the. latter half of 1938 proceeded at a slow pace, but upon a gradually broadened base, with prospects that this movement would be extended through the final months of the year." Warners' Sears Drive Underway The fourth annual Sears drive began this week under Gradwell L. Sears, Warner rothers general sales manager. The drive will run through April 13th. Initial release during the sales drive is "Four Wives." Other pictures to be released in the period include : "A Child Is Born." "Brother Rat and a Babv," "The Fighting 69th," "Invisible Stripes," "Years without Days," "Magic Bullets," "We Shall Meet Again" and "Virginia City." Awards totaling $25,000 will be distributed to the three districts and branches having the best showing during the period.