Motion Picture Herald (Oct-Dec 1956)

BRITISH THEATRES HEALTHY BUT TICKET TAX DAMAGING by PETER BURNUP LONDON : Gross takings at Britain’s 4,324 theatres now operating, and with a seating capacity of slightly in excess of 4 million, currently run at an annual average of £100.7 million, with a net, after the deduction of the heavy entertainment tax prevailing, of £ 68.9 million. Despite a cut-back of £2.3 million in the annual gross recorded a year ago, the country’s theatres continue to offer a happy and probably unsurpassed mart for the offerings of the world’s film-makers; and notably Hollywood. The established trading figures reflect also, in outward seeming, a stubborn robustness in the industry’s fiscal operations. It requires to be recorded, nevertheless, that beneath the flattering facade so displayed a variety of inimical circumstances are to be discerned. Period of Contraction They are indeed apparent to all informed observers and the whole industry here passes through a period of what some euphemistically characterize as “rationalization,” but which is more realistically accepted as severe and inevitable contraction. The president of the Board of Trade lately informed the House of Commons that in the 10 months to October 31, 1956, 142 theatres had closed. The number of closures will rise rapidly in the course of the next six months and not all the houses concerned are the property of socalled small exhibitors. The powerful J. Arthur Rank Organization announces, for example, that up to 79 of its 546 theatres will shortly go dark. Associated British Cinemas — Mr. Rank’s principal competitor — plans shutting down between 25 and 30 of its 420 houses. The industry’s trades-union leader, Sir Tom O’Brien, prophesies that the holocaust may well involve more than 1,000 theatres within the next two years, unless some substantial entertainment tax relief is forthcoming. Dramatic emphasis apart, even cautious Mr. Rank admits that the toll of victims will run into hundreds unless tax remission is accorded the industry. Taxation Is Unfair Admittedly, the vicious and crippling burden of the tax is the greatest single threat to the industry’s existence. Its incidence— taking as it does up to 31.6 per cent of a theatre’s gross receipts — is not only onerous but unfairly discriminatory. For stage play theatres, circuses and the like bear a tax at much lower rates. Moreover the tax, imposed on admission tickets, has no relation to a theatre’s real income. That circumstance bears with peculiar severity on smaller houses, operating in any event on narrow margins; but cases are recorded of theatres losing as much as £4,500 a year and being called upon to pay tax at the same time to the order of £7,500. The emphasis laid by industry leaders on the tax quandary is readily understandable; for they are united, at the moment, in a Petition of Right to the Government— reinforced with an impressive set of accountancy arguments — demanding relief. The Chancellor of the Exchequer, six months ago, expressed sympathy with the petitioners’ claims and his officers in the Customs and Excise Department are currently engaged in a precise examination into the whole pattern of entertainment tax incidence. But it is difficult to see in Britain’s present parlous economic position how the Chancellor, however much he may sympathize with the industry’s difficulties, can afford anything more than a token palliative for its disorders. Moreover, the tax is not the only debilitating factor. The rising costs with which theatre men have to cope and the impact of commercial television are others. Costs Up Sharply Following a worldwide economic pattern but intensified here, so it is claimed, by special circumstances attaching to the so-called Welfare State, theatre running costs have increased in cataclysmic fashion. By the beginning of 1946 wages were costing twice the figure for 1939: but in the last few months they have increased by a further 75 per cent. The full impact of the commercial TV system remains to be precisely assessed, but it is generally conceded that the commercial network has developed into a thriving enterprise in a matter of months. Its potential audience is estimated to grow at the rate of 640,000 a month. The average nightly TV peak-hour audience is set at 4.5 million for the BBC and 1.5 million for the commercial service. No less an authority than J. Arthur Rank, commenting on the cutback in attendance at his cinemas, remarked on “the lack of availability of sufficient box office films from Hollywood.” Mr. Rank went on to say: “These have tended to be fewer since the change in pattern of the American cinema industry, following the legal separation of exhibition and film production interests insisted upon by the U. S. Government some years ago.” That may well make for a global problem, but it makes also for a challenge to film-makers other than in Hollywood. It is also one of the concomitants in a situation which leads to the aforementioned “rationalization” process now in progress. Authorities like Sir Philip Warter — shrewd and prudent chairman of the Associated British Picture Corporation — agree that sections of the industry hitherto have been living on pipe-dreams of the abnormal conditions prevailing in the lush days of World War II and immediately thereafter. And that the day of reckoning has now come. Potential Stretched The production potential of the country’s film-makers is currently stretched to the ultimate. But the truth of the axiom postulated by stern economists in Queen Victoria’s expansive days — namely, “Export or Perish” — becomes more than ever clear in the case of British filmmakers. They are required to compete — at home — with Hollywood’s best. Without the gloss which attends the latter, Britain’s producers may just as well pack up their studio props and leave the job to others. But urbane gloss costs more money than is to be garnered in the domestic market. That is the reason for a variety of Governmental and often self-destructive devices such as the Quota Act, the establishment of the official Film Bank known as the National Film Finance Corporation and the British Film Production Fund more familiarly known as the Eady Levy. Without the last-mentioned device, which the Government proposes making a statutory impost on all theatre box offices whether the house in question is making a profit or not, few producers here would survive. By a loophole of technicalities in the definition of what or what does not constitute a “British” film, astute Americans have lately made a considerable beachhead breach in the privileged production field. At the disbursement of socalled “Eady” money at the end of July last no less a sum than £427,747 was handed out to American-controlled “British” production companies. Caused Controversy The propriety or otherwise of the transaction has been the occasion of bitter controversy here and may well lead to a statutory realignment of Quota and other matters. But at least — as Sir Michael Balcon, whose pictures now pass through MGM, has aptly pointed out — American capital has contributed considerably to the sustenance of British studios and their work people; and, by inference, sustained the good name of British workmanship abroad. All that despite, the Rank Organization (Continued on page 20) WORLD MARKET 17