FILM IMPORTING

Evening Post, Volume CV, Issue 126, 30 May 1928, Page 10

FILM IMPORTING

STATUS IN AUSTRALIA ' BRANCH OF U.S. PRODUCER BUT NO COMBINE It is abundantly clear to your Commissioners' from the evidenco adduced that thero is no American combino in existence in Australia exercising a stranglehold, over tho motiou-picturo industry. This is one of the findings of the Australian Boyal Commission on the moving picture' industry. At tho samo time, tho Commissioner also reports on tho Australian film-distributing companies:— '.'Most of/the registered capital at the companies is held in America, and in_ the majority of instances tho share dapital of tho Australian company has little or no bearing upon its operations. The working capital is provided by America, and tho organisation of tho Australian companies is such that no capital need bo provided in Australia at all. Tho working capital is generally the supply of film. The directors have been appointed, apparently with the'object of complying with the requirements of Australian eb.mpany law, and, generally speaking, they are employees of the company, or lawyers, receiving no fees in respect of their directorship, i The officers and directors have no pecuniary interest in the profits; that is, their salaries are fixed; and Commissions, where ' paid, are based on turnover. Their interest therefore ; lies rather in maintaining a large turnover than in securing a surplus over expenses on the percentage of rentals retained. The venture is that of. the American company. The risk of starting the enterprise is all theirs, and losses incurred or any deficiencies in tho forwarding of the stated allotments are on their account. HEAD OFFICE AND BRANCH. "Even though the financial books showed that the Australian 'company ' may 'owe its American supplier large sums, no security is held, and the meeting of the debt is altogether dependent ■upon the recepits in Australia over and above tho expenditure. Pull details of all expenditure and r-eceipts are forwarded regularly to America. This system is that of head office and branch rather than that of tho seller and the purchaser of a marketr able product. Your Commissioners are of the' opinion that most of these companies are virtually distributing tranches of American concerns. The Australian exchanges under review assume that the cost pri^e to them of the films is that proportion of the rentals which is due to America under their agreements. -» Judging by- other passages in tho report, the "proportion of the rentals which is due to America" means that the Australian importing-and-distribut- ■ ing companies (which are mostly "virtually_jdistributing brandies of American concerns," but which must not be confused with the Australian exhibiting companies or firms to,whom they hire film) generally remit to their American principals a percentage of the gross earnings of tho pictures in Australia, and "this percentage varies from 50 per cent, to 65 per cent., according to agreement. , . The 35 per cent, to 50 per cent, retained in Australia tears the cost of distribution, and if there is any surplus after meeting these costs, such surplus represents profit to tho Australian company, and it is upon this profit that income tax .is paid." But, as tho above-quoted-passage shows, the Commission finds that the officers, and directors of the Australian import-ing-and-distributing companies (or ■branches) have no pecuniary interest in profits, ana are motived not to secure "such surplus," but to secure turnover. NO PRICE-FIXING. The percentage (50 to 65) is remitted to America weekly. Though this tri- ' • bute is strictly rendered ■iinto Caesar, yet the Commission finds that ' the American Caesar exercises no stranglehold. The iilm distributors in Australia have formed themselves into an organisation termed "Tlie Motion ..Picture Distributors of Australia," but ' this is clearly a trade protective association, and in no way controls or directs the selling operations of the respective companies. Outside the organisation, tho members display the keenest rivalry in their attempts .to place their products. Tho prices obtained T>y distributors for their firms are not fixed, but vary accord-1 ing. to the ability of the exhibitor to pay and to the distributor's value of the films to the exhibitor con- . cerned. The Commission also says that .tho importing-an'd-distributing . companies (or branches) are "conducted on very efficient lines.. Certain salaries are high, but not disproportionate to the amount of the turnover, and a it, no doubt, commensurate with the ability of the recipients." Here is another important point:— Many of the distributing companies representing American interests have distributed in Australian Brit-ish-made pictures, and liavo' an-| nounced their willingness to handle British and Australian, pictures of a standard which will guarantee reasonable returns. But the guarantee is not always forthcoming, and ia not always to bo implied from a test sci'ccning «i" iK- fi'm. EXHIBITING CAPITAL IS AUSTRALIAN. So much for tlu producer (who is; mostly American) and the iniporter-:ind-distributor. Now let -ionic attention l^o paid to the exhibitor. It is the exhibitor who owns and controls the theatres. Whereas the Commission, finds that most of the importiug'-and-distributing companies are "virtually distributing branches of American concerns" paying to those concerns weekly 50 to C 5 per cent, of the money they make out of the. exhibitors, the latter are Australian. The approximate amount of £25,----000,000 invested in the picture theatres of tlu\ Commonwealth is entirley Australian, and not one tlieaf.ro is owner or controlled by foreign interests. It is estimated that tho picture-exhib-iting industry in Australia not only represents an investment ,of twentyfive millions of Australian capital, but employs over 20,000 people, The gross receipts from Australian picture theatres arc estimated t:> be £5,500,000 yearly. Compare this with the import-ing-aud-distributing companies' remittances of film hire, (50-G5 per cent.) from Australia to America, which re- ■ mittanees come to about three-quarters of a million yearly, being .£740,000 for 1926-27 and £771,000 for 1025-20. "It, / is considered worthy of notice (comments the Commission) that ■of tlic gross receipts from picture theatres only approxiniatcly 14 per cent, is sent abroad,1 the remainder, being absorbed in Australia in wages, rents, advertising, printing, lighting, music, taxes, profits, and dividends." Approximately 00 per cent, of the films imported into Australia are pro- j

duccd in tho United States. Tho pieturo industry is the eighth largest industry in that country. LINKS IN THE CHAIN. The links in the chain are: (1) Tho producer, mostly American; (2) the importer-and-distributor, who is mostly an Australian-registorcd company, but at the same time is generally a virtual branch of some American picture concern; ( 3) tho exhibitor, who, tho Commission finds, is all-Australian. The importer-and-distributor generally buys film from tho American producer on. the bases of sending back tho above-mentioned percentage of gross earnings in Australia; but sometimes buys a picture outright- for cash. Sometimes an importer-distributor contracts for a producer's whole output. , When the importer-distributor proceeds to pass the film on to the exhibitor, tho transaction becomes a hire &\fi tern, with the film passing from one ex.hibitor to another, or from one theatre to another. (Ono exhibiting company in Australia has interests in 89 theatres, another is concerned in 42; and as these two companies "ontrol a majority of tho city and suburban theatres, and' as a city release is important to the popularity and successful distribution of a picture, such companies stand in a strong position for price-negotia-tion with the importer-distributor.) Thero. may or. may not be a contract between the ,importer-distributor and tho exhibitor for supply of film; if thero is a contract, it is usually for twelve months. "Exhibitors are charged rental for films on a percentage of tho theatre takings, or on an agreed price for each film, or a price for a term for the whole output o| a producing organisation." A whole output contract is called in Australia ".block-booking"; it assures the exhibitor continuity of supply. Whore an exhibitor contracts to take the output of a certain producer and does not know what the picture will be (the pictures possibly being not yet made) the system is called "blind-booking." To make room for Australian-made films, and to remove any temptation to' exhibit an undesirablo picture, it is proposed by the 'Commission that such booking contracts must in future contain a rejection clause empowering the exhibitor to reject-5 per cent, of the total films covered by such contracts.