It Just Ain't So

Movies do not escape bad times

When the mud starts sliding in Malibu or the smog hides the tops of the palm trees in Beverly Hills, movie executives console themselves with at least one thought: in bad times people will still go to the movies. It is one of the fondest myths in an industry that deals in myths, and everyone remembers Mom and Dad standing in line at the Bijou during the Depression. How much truth is there to that comforting accepted wisdom? None at all, according to a San Francisco financial analyst. When the rest of the country catches cold, so does Hollywood.

In an iconoclastic search back through 50 years of records, Theodore James Jr., a general partner in Montgomery Securities, has set the record straight. Box office receipts fell from $732 million in 1930, the first full year of the Depression, to $482 million in 1933--a drop of about 34%. Employment in the film industry also fell from 143,000 in 1930 to 119,000 in 1933.

James found the pattern repeated in recessions as well. In the slump of 1938, for example, box office receipts, which had recovered somewhat from their earlier lows, declined again. The last national economic slowdown, which occurred in 1974 and 1975, would probably have been matched by a similar slide in film attendance, James says, if it had not been for the huge success of Jaws, which distorted the figures for the industry.

Those recent figures may have reinforced the basic industry myth in Hollywood's executive suites, where 40 is considered aged. There was a similarly deceptive distortion when the Depression hit. Intrigued by the novelty of talkies, about 90 million people saw a film in 1930, 10 million more than in 1929. Even 1931 was not so bad, with an attendance of 75 million. The next two years, however, were awful: only 60 million people each year could afford the quarter it cost to get through the doors. Not until 1942 was box office back to where it had been in 1930.

What will happen during the projected recession of 1980? James is fairly gloomy. Attendance for the first three months of this year is off 6%, a partial result, no doubt, of the inflationary squeeze. Says James: "A teen-ager who has to pay $20 to fill his car with gas and $5 for acne medicine is going to be hard-pressed to pay another $10 for a couple of movie tickets, a bucket of popcorn and soft drinks."

Studio executives may not be hurt as badly as theater owners; the studios can count on ancillary profitmakers: foreign sales, network and local TV, videocassette deals and, increasingly, cable TV outlets as well. But all those may decline during a weak economy, James says, and sales to the new videodisc systems may not be important for at least a decade. So put the Mercedes in the garage, unplug the hot tub--and get out the handkerchiefs.

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