Boxoffice-March.06.1948

: March
.*
THE COMPROMI^b
American companies will be allowed remittances of
$17,000,000 a year, and retain profits on British films shown in this country. A plan is
being prepared to determine how receipts remaining in Great Britain may be spent.
Export of new U.S. films to England begins April 1. Remittances to U.S. begin June 14.
BRITISH SITUATION SETTLED
AND BOTH SIDES ARE PLEASED
NEW YORK—American film exports to
Great Britain will be resumed April 1.
The British 75 per cent tax will be rescinded.
For the next two years American companies
will be allowed to remit $17,000,000
per year to this country and will be permitted
to retain the profits on British films
shown here.
The agreement is for four years and it
will be reviewed at the end of two years for
adjustment to any changes that may have
taken place in the condition of British
finances.
U.S. TO GET ABOUT $22,000,000
Depending upon how much profit is turned
in by British films here, the American industry
may be able to collect something less than
half of its estimated total of $48,000,000 from
the
British market.
All money over the $17,000,000 taken in in
England will be held there.
Last year earnings of British films in this
country were about $4,000,000. An optimistic
estimate for the year starting in June is $5,-
000,000. If this pans out, total income from
British market—the $17,000,000 remitted plus
the income from British films here—would
reach about $22,000,000.
Under the terms of the agreement the
money blocked in Great Britain can be used
in various ways. Distribution charges for
American pictures over there average about
25 per cent, so this would use up about $12,-
000,000 of the estimated blocked income. A
clause in the agreement will permit American
distributors to pay British talent hired over
there for American production out of such
funds. These funds also can be used for purchase
of scripts, production in England and
investment in film companies and theatres.
COMPANIES PLAN EXPANSION
Use of some funds may be allowed for investments
not directly coimected with the
film industry.
Details of these arrangements are still to
be worked out. Technical advisers will handle
these negotiations.
The agreement was formally signed Friday
morning.
A new quota law is now under consideration
by the house of lords and is nearing
enactment.
The British tax Is expected to go off April
1 and the arrangement for remittances will
start June 14, Exports of film will begin
from this country as soon as the tax goes
off.
The plan was agreed upon Wednesday
afternoon, March 10, at a conference of
'Democratic' Deal
"This is by no means a Johnston
agreement or a British agreement,
but a democratic
compromise,"
Eric
Johnston,
president of
the Motion
Picture Ass'n
of America,
declared in a
statement released
shortly
after the settlement
was
Eric Johnston
announced.
"Once again there will be a free
flow of films between the United
Stales and Great Britain and we
avoid the consequences of a dangerous
precedent."
Johnston also added that the
agreement will avoid any adverse
effects on British economy and
would keep Hollywood a flourishing
and going concern.
Discussing the compromise w^ith
BOXOFFICE over transatlantic
telephone, the MPAA president
said he was pleased to learn the
immediate reaction in the United
States was favorable.
American representatives headed by Eric
Johnston, MPAA president, and Harold Wilson,
president of the British Board of Ti-ade.
It was presented to the house of commons
by Wilson Thursday afternoon at 3 o'clock.
Parliamentary action was required in order
to rescind the tax.
^
In the meantime, the details were telephoned
to this country with instructions that
they should be kept secret until Wilson had
had time to present them to the house of
commons.
Francis Harmon, vice-president of the
MPAA, called a meeting of company heads
and foreign department executives at the
MPAA offices and the word spread like a
prairie fire. During the meeting calls were
made to executives in Florida and Hollywood
in order to test sentiment. It was generally
agreed that the settlement was a good compromise.
Newspaper men arrived at the MPAA offices
while the meeting was convening and
saw executives entering. Harmon blandly
denied any meeting was in progress and
ordered the heavily loaded coat racks in the
reception room taken into the board of
directors room.
From that time on Harmon could not be
reached. Even the Washington headquarters
of the MPAA received his orders for silence.
TO STIMULATE DISTRIBUTION
One effect of the agreement, it was agreed,
would be the stimulation of efforts to secure
distribution of British pictures here. With
only about a third of the total British revenue
reaching this country, the American distributors
will still be pinched, even though
the books show British deposits. The situation
is greatly eased, however, and all executives
agree that this settlement will have a
tendency to halt some of the restrictions in
other countries that began pihng up.
Barney Balaban, Paramount president, on
vacation in Florida said he was "delighted"
with the settlement, because the American
industry had suffered a 4.9 per cent decrease
in foreign revenue which had wiped out
profits. Further economies in production and
distribution costs will be made between now
and June 14 when the agreement goes into
effect, he said.
Arthur Loew, president of Loews International,
sounded the only critical note in the
chorus of satisfaction. He said there could
have been a more equitable remittance arrangement.
On the coast Floyd B. Odium, head of
Atlas Corp., said he was not going to express
any enthusiasm until he found out more
about the details. Sam Goldwyn said he
could not decide how satisfactory the deal
was until he fomid out more about it.
STRONG MARKET REACTION
The stock market reacted strongly to the
Thursday morning news flash from London.
Film stocks were strong. Eighteen thousand
shares of Paramount were sold and they went
up a point to 20':, Warner Bros, advanced
one-half point on sales of 10,900 shares, 20th-
Fox was up three-eighths to 21's, Loews up
Vi to n^i and RKO up 'i to 8''a.
At a press interview in London Friday
morning, Wilson said that American production
in Great Britain would increase and
Johnston optimistically indicated he hoped
American companies eventually would be able
to get most of their money out in some form.
A representative for MGM said his company
would start building new studios as soon as
possible and a Warner Bros, representative
said his company would extend its studio facilities
in England and rent space to others.
BOXOFFICE
:
13, 1948