Hollywood Goes Its Own Way

While many a corporation was losing its shirt, Hollywood's studios were able to fit themselves out in the finest mink-lined sport shirts. Last year had been a record year. This month Paramount's President Barney Balaban declared that 1946 would be even better. This meant that profits would be in the supercolossal class of around $130,000,000--double last year's. And dividends might run as high as $42,000,000, almost double last year's.

Hollywood, which can explain everything, had an explanation for this, aside from the general prosperity. Twentieth Century-Fox's shrewd Darryl F. Zanuck credited 1) crowded living (from which movies provide temporary relief), 2) the newly educated audience of veterans (who got the movie habit overseas), 3) the reopening of foreign markets (which normally account for close to 35% of the industry's gross).

Movie attendance was indeed up to an all-time high (95,000,000 a week) and the excess profits tax was gone. But the payoff fact was that Hollywood was selling products made a few years ago at comparatively lower costs, at record-high box-office prices (some 37% higher than in 1940).

In the jampacked theaters, first-run pictures were kept for months instead of weeks. New York's Radio City Music Hall, which used to show 20 pictures a year, last year showed only seven. This boosted the revenue per picture and per dollar investment enormously. It had also enabled studios to cut down on picture making, dole out the pictures already on its shelves. Item: Paramount's current smash moneymaker, Two Years before the Mast, cost only $1,000,000 to make two years ago, about half of what it would cost today.

By the same token, Hollywood was far from happy about the future. The big increase in operating costs, which had tripped up many another industry, was getting ready to catch up with Hollywood's supercolossal profits.

Metro-Goldwyn-Mayer's President Nick Schenck, who had joyfully announced that company profits for the first ten months of this fiscal year were a whopping $12,579,245, recently finished the third of a series of two-week conclaves on the problem. Out from New York to confer with production heads went President Spyros Skouras of 20th Century, whose six-month divvy of $11,449,449 was 111% higher than last year.

Costs for the industry were already up 300% since 1940. But part of this rise was due to Hollywood's notion that the more a thing costs the better it must be.

High Cost of Fame. In budgeting, Hollywood draws a line through its costs. Below the line are stagehands, properties, locations, etc.; above it are scripts, stars, scenarists, directors, etc. Although the rise in below-the-line costs has been proportionately greater than the U.S. average, it is above-the-line costs that are responsible for most of the industry's trouble. Story prices, which a few years ago were considered daring if they hit $100,000, now frequently reach $500,000 (for Life with Father; The Voice of the Turtle).

Joan Bennett, who made The Woman in the Window two years ago for $50,000, now demands $100,000 a picture. Dick Powell, who cost $50,000 a picture until this year, has just signed with Columbia to do one for $150,000.

Similar raises have been gotten by directors and producers, who probably fired and forgot the wartime underling who cracked: "A good showman today is a man who opens his theater doors and has sense enough to get the hell out of the way before he gets trampled to death by the incoming audience."

Low Use of Legs. Another cost booster was overall inefficiency. Production hands liked their overtime; production heads were no longer anxious to finish a picture that might be kept in the can for two or three years. Typical result: 20th Century, which a few years ago finished pictures in an average of 47 days, now takes 85 days.

And such delays are costly. For example, Betty Grable may have been signed to a $3,000 a week contract based on her studio's calculation that it could star her in four pictures a year; since each picture now takes about twice as much time, that same contract must be supported by two pictures or less. All of this means trouble when the present abnormal movie boom tapers off and admission prices are cut. The box-office take, which soared with rising ticket prices (see chart), can drop just as rapidly.

If it does, all the things which add up to enormous profits now may make for losses. The high-priced movies Hollywood is making this year may not be shown for as long as two years from now. And by then, even Hollywood's optimists expect that the present box-office rush will be subsiding. In short, Hollywood may find itself peddling high-priced products in a lower-priced market. That thought alone was enough to take some of the shine off this year's pot of gold.

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