June 30, 1975

Scene from 'Day of the Locust': The risks are great but so are the reward.

It has long been one of the anomalies of a recession: as jobless rolls grow longer, so do the lines outside movie theaters. Last year was no exception. One billion customers left $2 billion at the box office and helped give motion‑picture studios their best year since 1946. Attendance leveled off early this year, but movie men say that the crowds will reappear as such expected blockbusters as "Jaws," "Nashville" (page 46) and "Bite the Bullet" start hitting theaters nationally. The Department of Commerce predicts that box-office revenues this year will jump another 15 percent.

Obviously, Americans have been flocking to the movies as an escape from economic hard times. But that isn't the only reason for the boom; some others were cited when a number of top movie men held a two‑day Symposium on Movie Business & Finance a fortnight ago in New York. Producers managed to come up with sure‑fire films like "The Sting," "The Exorcist" and "American Graffiti' which grossed enormous sums. In addition, the studios are no longer making the mistakes of the 1960s and the early 1970s, when they lost huge amounts of money glutting the market with large numbers of money‑losing films ranging from grade‑B types to superduds like "Star." “The movie industry is a little smarter now," said former M‑G‑M executive Benjamin Melniker. Producers are more selective and they are turning out fewer films. They are also learning to trim costs.

Despite its current prosperity, moviemaking is a perilously risky, boom‑bust business. And today, the industry is plagued by many of its old problems -and some new ones as well. Though the recession has boosted attendance, it has also made it more difficult for producers and studios to raise cash to finance pictures. As a result, moviemakers are turning increasingly to outside sources such as Wall Street money men and tax-shelter groups formed specifically to underwrite films.

Dangers: But investors who expect to cash in on another movie like "The Sting" or "The Godfather" are likely to be disappointed. Generally, about 70 per cent of the outsiders who invest in films "get creamed," according to Richard Albarino, who is producer‑director Otto Preminger's executive assistant. One reason is that movie blockbusters are rare exceptions; in fact, only one out of every ten movies actually returns a profit, said Albarino. In addition, most newcomers simply don’t know how to negotiate a contract. They usually settle for terms that allow producers, distributors and others involved in the moviemaking process to siphon off receipts. "This is not a field for the uninitiated or the unwary," warned Albarino.

Promoting movies is a tough job and getting tougher all the time, said Edward P. Seigenfeld, vice president of advertising for Allied Artists. One problem is that promoters have limited flexibility in composing ads because performers and other movie participants usually have contractual rights to approve copy in advance. Another problem, said Seigenfeld, is the growing number of critics who blast the industry for using favorable phrases taken out of context from movie reviews. Even more upsetting is the fact that promoters can no longer count on a single "bankable star"‑a John Wayne type whose mere appearance can put over a movie. "There are not many people left who will see a Paul Newman movie just because Newman happens to be in it," said Seigenfeld.

While Newman, Robert Redford, Gene Hackman and a few others can't automatically make a film a hit, they can substantially improve its prospects‑and because of this ‑they can command $1 million or more per picture. But most actors earn much less. The great majority don't even have jobs; the unemployment rate for performers in Hollywood is estimated at 85 percent. Even those making seven‑figure salaries have their troubles. Surrounded by agents, lawyers, accountants, business managers and artistic managers, they frequently are so confused by conflicting advice that they end up listening only to lovers and other intimates. "It's a shame," said Martin Bregman, producer of "Serpico." "The career of one famous actress is now going down the drain for this very reason."

Of all people in the movie industry, none are more troubled than the theater owners. Operating costs are rising faster than revenues, said Joseph G. Alterman, executive director of the National Association of Theatre Owners. There are also too many theater impresarios and too few moviemakers. So when a promising picture appears, there is, according to Alterman, "a tremendous scramble by exhibitors," who end up leasing pictures on terms less favorable than they might have been.

Risky as it is, the movie business is still the road to riches for many people because the occasional blockbuster more than makes up for the nine out of ten movies that flop.