Boxoffice-March.06.1948

: March
BACKGROUND
TO SETTLEMENT
THE
tax was imposed suddenly Aug. 7,
of the blow w-hen it fell.
Under the terms of the Britisli edict ;in
estimate of profits on each film was to be
made as the film arrived in port and thi.'^
money was to be paid in advance, with a
refund if the film failed to come up to estimates.
American distributors quickly estimated
that this would tie up about $25,000,-
000 without interest and that the reniaining
25 per cent of profits would be completely
eaten up by the costs of distribution.
It was the first time any such drastic attack
on an American export had been made
outside the Russian sphere of influence. Some
speculated that it was a deliberate attempt
to bar all American films from the British
market.
Apparently it was as much of a surprise to
J. Ai-thur Rank as it was to film men in the
U.S. He inmiediately promised a sharp increase
in British production to make up for
the prospective famine of films, but as of
Febniai-y 28 he had succeeded in adding only
two pictures to his proposed schedule of 38
and all the British studios controlled by
Americans were idle.
Also on that date there were 17 American
pictm-es left for release in England. All these
had been imported before the ban went into
effect. Ten of them were not top grade
product.
n CTUAL cash losses of American firms from
August 8 to the first week in March were
not large. Remittances were continued on
films which reached England prior to the
tax date and the total of payments for November.
December and January ran up to
about $12,000,000. a normal sum for a threemonth
period. This money came out of the
$3,000,000,000 U.S. loan upon which Great
Britain was drawing.
The exhaustion of this loan and the prospective
start of the Marshall plan seemed
to be coincidental.
Indirect effects of the tax were widespread.
Several other European countries took theiicue
from the British action and began to devise
restrictions of their owm, all based on
the explanation that they lacked dollar exchange.
The impression gained ground in
this country that this was part of a general
worldwide move to hurry the Marshall plan
into operation.
In England theatre business fell off as new
films failed to arrive. Production slipped.
Even J. Arthur Rank found it difficult to
get loans for production that obviously was
not going to get a warm reception over here
so long as the British exclusion continued.
He began reorganizing his complicated holdings
and induced the Odeon circiut to buy
his Cinema Finance Corp., a holding company.
In this comitry major producers went into
a panic much like the one which swept the
industry at the outbreak of World War II
Rank Is Here: He Believes
Settlement to Benefit All
1947. and shipment of American films
to Europe was stopped by the Motion
Picture Export Ass'n the following day.
For some weeks before the tax was imposed NEW YORK— J. Arthur Rank predicts
had been campaign
stated, was to secure more playing time for
there a in the British
press against American films, and the slogan
that the settlement of the British tax problem
and resumption of
British pictures here. He said there had been
a substantial Increase in bookings of British
of "food or films" was presented to the
film exports from this pictures and the number of imports had increased
British people by Sir Stafford Crrpps. but
country will benefit
from five in 1945 to 11 in 1946 and
this did not prepare either the British or
the industries of both
the American industry for the drastic nature
20 in 1947.
countries.
The increase was steady, he said, and he
"I felt from the beginning,"
intended to "have patience."
he s a i d,
Rank discussed the financial position of
BOXOFFICE :
13, 1948
"that if
the leaders of
the American industry
would go to London
and sit down around
a table that something
satisfactory could be
worked out. I am a
J. Arthur Rank great believer in this
method of doing business,"
Rank's comments were made at a press
interview Thursday morning (11) in the
Sherry-Netherland hotel. He reached New
York the evening before on the Queen Elizabeth.
A daily newspaper correspondent read a
flash bulletin from London to him announcing
that an agreement had been reached.
He professed surprise, although it was known
at the time that a meeting of foreign department
heads and company presidents had
been held the previous night at the MPAA
for discussion of the terms of settlement, and
that the details had been telephoned to company
presidents in Florida and Hollywood
who were unable to be present.
Rank said frankly that there had not been
"a spectacular increase in production in
Great Britain in anticipation of a film
shortage." He had increased his own production
from 38 to 40 and some other producers
had expansion plans, he said.
There had been no actual shortage of
American films, he said, up to the time of
settlement, and the public had not shown
much interest in the problem.
Like the American companies, Rank said,
British producers had cut production costs
about 15 per cent in anticipation of revenue
One of the objects of his current trip, he
when everybody feared the complete loss of
the foreign market.
Wholesale economies were instituted in both
production and distribution departments.
The number of employes let out ran into
the thousands. Eric Johnston has said that
it was at first decided to impose top budgets
of $500,000 on pictures, but that later the
producers raised this to $1,000,000, so that
product would not obviously deteriorate.
Some of the major companies have indicated
in their amiual reports that they had
cut overhead to the point where they expected
to be able to get along without the
his companies in Great Britain. He said the
growth had been too .speedy and that his corporate
structure was now being simplified.
None of the individual companies have lost
money he said, and one of the purposes of
his current visit is to discuss with Spyros P.
Skouras, 20th Century Pox president, the
simplification of the 20th-Fox share of
Gaumont British Theatres. Twentieth-Fox
owns 47 per cent of Gaumont British through
a
holding company. Metropolis and Bradford
Ti-ust.
At present American newsreels are in a
state of agitation over the fact that Rank
has received exclu.sive rights to photograph
the Olympic games in England next summer.
He said that he would discuss this with the
American newsreel companies and try to work
out a satisfactory arrangement. He, like
others, had been offered the exclusive rights
at a price. He accepted the offer, he said, because
one of his companies intends to make
a feature next fall Including Olympic footage.
Whatever footage is included in the feature
he wants exclusively.
His plans for use of television in .some of
his British theatres, he said, were still indefinite
because the British Broadcastmg
system to date has granted him only experimental
licenses and these do not permit
showings before paid audiences. He hopes
to get this permission. If he does, he said,
he will put television into two theatres.
In reply to a question he said that in England,
at least, he did not feel television would
be theatre competition, because sporting
events which he wants for theatres take
place afternoons when theatres need a boxoffice
stimulus.
British income.
In recent weeks it had become apparent
that Great Britain and other European countries
had begun to realize that this country
was not going to toss Marshall plan fmids
aroimd like Lend-Lease and UNRRA, but intended
to use them where they would benefit
business in this country as well as In the
countries receiving them.
The State department took this stand some
time ago and all the congressional discussion
has indicated that there will be strings
on the spending.
About the same time that the British leaders
indicated they were in the mood for
further discussion of the tax, Denmark decided
to peiTnit the entry of 81 films from
this country in the next ten months.
Toward the end of February Mexico began
talking about imiwsition of an ad valorem
tax on American films. The MPEA immediately
asked for .state department intervention.
It thus became apparent that the state
department had decided to go into foreign
restrictions in a realistic way.