Men and Money Behind
Do you understand the organization of filmland ?
Do you realize the amount of money involved in this industry which—in America at least—is the third greatest of its country ? Do you understand how the various producing companies have grown to their present importance ? I11 this article the writer has set out as briefly and simply as possible just how and by whom film production is sponsored.
by Mackenzie Winter
The ramifications of the motion picture world are great and puzzling. The finance of film-making is bewilderingly involved from the moment a man buys a share in a film company to the moment a film-goer pays his entrance fee at a cinema.
Let us begin with the production of a film. Few people realize how much it actually costs to produce a picture. A quarter of a million pounds is sometimes spent on a big spectacle such as Grand Hotel, although /80,000 is recognized as being a fair figure for a “ super ” film, £40,000 to £60,000 for a good programme picture, £10,000 to £20,000 for a less important production, or a “ quickie.”
Of these production figures, the actual negative on which a picture is “ shot ” is the least expensive. It rarely reaches five percent of the total. Actors' salaries are generally reckoned to amount to twenty-five per cent of the total; ten per cent is approximate for the technical staff and perhaps five per cent for actual recording costs ; ten per cent for scenario and story rights ; twenty-five per cent for “ sets ” (scenery) and locations. The remaining twenty per cent or so is marked to overhead expenses.
These figures are semi-official. They are based on statistics given by Wills Hays, the “ Tzar ” of filmland.
General overhead expenses are a considerable item. When twenty per cent is allowed for this charge with each picture, this percentage applies only to the actual costs of the film in question, and not to the ordinary running expenses of the studio. Whether a picture is in production or
фг Men and Money Behind Fictures
not, money is still being spent on a scale which would make the average man gasp.
Executives are paid very high salaries. There are enormous staffs to maintain, ranging from technical men to publicity departments and manual workers—one studio even has its own police force—and there are always j the basic costs of running a big building, such as lighting, rentals, andi numerous other similar items.
Much is heard of the romantic climbs to sudden fortunes of the film stars themselves. Equally romantic are the stories of the men behind the films, the people who have built up the picture industry from humble little' peep-shows in shops to the large palaces that exist to-day.
Many such men, most of them born in very humble circumstances, are to-day rich and famous.
Among the highly-paid film executives Louis B. Mayer, chief of Metro-Goldwyn-Mayer, receives over £3,000 a week, and Irving Thalberg, his vice-president in charge of productions, receives nearly £2,000 a week, plus a percentage of the profits.
These executives are worth every penny of the money they receive. They have gained their positions through great business acumen and hard work. Louis B. Mayer, who was in the salvage business before entering films, has done a great deal towards making Metro-Goldwyn-Mayer the important firm that it is to-day. Of Irving Thalberg it is no exaggeration to say that he is one of the most remarkable young men in the industry. He is shrewd and possesses both brains and courage. He controls the destinies of such stars as Greta Garbo, Clark Gable, Marie Dressier, Marion Davies, John and Lionel Barrymore, Norma Shearer, Joan Crawford, Ramon Novarro, and Wallace Beery ; and his company has to its credit such outstanding masterpiece pictures as Trader Horn and Grand Hotel.
Almost every film company can point to at least one man who, by his perseverance and enterprise, is responsible for a company’s progress. And of each man a romantic story can be told.
"Uncle” Carl Laemmle.
Carl Laemmle, President of the Universal Film Corporation, can look back on a career as exciting as any of the stories his concern has filmed. To-day he is a millionaire. Fifty odd years ago he was a boy in a stationer’s shop in a little country town in Germany.
He travelled steerage to America, with barely a penny in his pocket, and there worked in several shops before becoming book-keeper in a clothing store in Oshkosh. He eventually became manager of the business, but one day he saw his first motion picture.
It changed his whole life.
Crude though films were then, he was enchanted. He foresaw for them a golden future. Throwing up his job and borrowing money from a relative of his wife, he went into the film business. He opened a cinema in Chicago and soon realized that his forecast of a golden future for films was likely to come true. He began to make money.
He had difficulty in renting films ; he bought them outright and then rented them to other exhibitors, thus entering the distributing side of the trade.
Men and Money Behind Pictures 463
A business war between a powerful body that tried to monopolize the business led to the formation of the Universal Pictures Corporation, which began producing its own pictures. To-day the Universal company is still one of the biggest in Hollywood, with its own vast studios, and with Carl Laemmle still at its head, though his son is now in active charge.
Carl Laemmle’s story is similar to many others in filmland.
There is, for example, William Fox, who founded the firm of Fox, still one of the most important producing companies, though Fox is not actively interested in it now. He entered the film business nearly thirty years ago, and was formerly a clothes presser in New York City. Motion pictures awakened a new enthusiasm in him. One day a local nickelodeon (as the first picture houses were called) was put up for sale. He bought it, though he had great difficulty in raising the necessary money. Later he bought other theatres and then formed a renting organization. Just before the war he founded the Fox Film Corporation, and became a millionaire.
There is also Sir William Jury, concerned with the English renting side of the Metro-Goldwjm-Mayer business. He was a London exhibitor in the earliest days of the screen when he first had the idea of distributing films. He began in a small way and eventually amassed a fortune. He gained his knighthood for his services as organizer of the supply of films for the British Armies. He was, towards the end of the war, in charge of the film propaganda department of the Ministry of Information.
He still has an office in the Metro-Goldwyn-Mayer building in London, although he has little need to work. Films have gained for him comfort and security.
One of the most powerful men in the British film industry is С. M. Woolf, Joint Managing Director and Deputy Chairman of the Gaumont-British Picture Corporation.
His story goes back to those days when films were very new. He was originally associated with a friend named Freedman. They were furriers, but they foresaw a future for films, and they started a distributing agenc}7 in London, known as W. & F. films, the two giving their initials to the name of this still-existent firm.
For the most part films were sold in the saloon bars of the public houses in the Soho district. But slowly the business grew and the firm of W. & F. became more important. To-day, Freedman is dead, but Woolf remains a power behind the British screen.
There is another British film magnate who, though he has not worked his way up from very humble beginnings as have so many other important film people, is nevertheless a romantic figure. He is John Maxwell, chairman and managing director of British International Pictures. He is one of the most distinguished figures in the industry, for it was mainly due to his foresight and enthusiasm that British films turned the corner after the long period of slow development following the war.
John Maxwell was a solicitor practising in a small Scottish town, and he was shrewd and a clever financier. He saw the potentialities of the cinema, and began, first of all, in a small way, buying theatres. Soon he had a group of important houses. He then gave his attention to distributing and became associated with Wardour Films (now a subsidiary of British International
464 Men and Money Behind Pictures
Pictures, with Woolf as its managing director). He transformed this then small company into one of the most important in Great Britain.
Theatres—renting—the next logical step was the production of pictures. And Maxwell formed British National Pictures, with studios at Elstree. The company was the forerunner of the powerful British International Pictures. When British International was young, British films were in a bad way. B.I.P. was one of the few companies to produce anything worth while. It did more than any other company to put British films on a higher footing than for many a long year. And now British International has its own allied chain of theatres, the A.B.C. Circuit.
Adolphe Zukor, Jesse L. Lasky, Jack and Harry Warner, Samuel Goldwyn and many others have equally romantic stories to tell of fortunes amassed from the screen. Their histories are equal only in interest to the stories of the film companies themselves. Countless companies are involved one with another, and many of the producing companies are now owners of big groups of cinemas.
Here is a chart which gives an example of how many companies can ultimately be linked up.
WESTINGHOUSE GENERAL ELECTRIC
RADIO CORPORATION OF AMERICA
NATIONAL RCA R К О VICTOR RCA
BROADCASTING COMMUNICATIONS | TALKING MACHINE PHOTOPHONE
CO CORP I CO
KEITH-ALBEE-ORPHEUM R К О PRODUCTIONS
I ItKO BKO I BKO EKO
I EXPOET STUDIOS I DISTB1BUTING CANADA
ORPHEUM CIRCUIT RADIO PICTURES LTD
This talking picture enterprise is known generally as the Radio Company.'
Similarly, there is the Western Electric Company. This descends, via. the Bell Telephone Laboratories and the Electrical Research Products Inc., from the American Telephone and Telegraph ; it is also connected with the International Telephone and Telegraph, the Standard Telephone and Telegraph, the Standard Telephone and Cables, and, if you care to pick your way carefully through the various interesting ramifications, with Warner Brothers and Vitaphone !
The Metro-Goldwyn-Mayer concern has no fewer than about 140 separate corporations headed under the parent company. These include numerous producing and distributing companies, the Culver Export Corporation, and about thirty affiliated companies ; the Robbins Music Corporation ; and nearly one hundred corporations covering vaudeville productions, real estate, and other activities. Metro-Goldwyn-Mayer itself is the offspring of several companies.
First of all, there is Metro. This producing company was organized in 1915. It became an influential one, with theatres of its own, and was taken over by Loew’s Incorporated, the giant theatre organization, in 1920.
Men and Money Behind Pictures
The Goldwyn company was formed in 1916, and became equally as powerful as Metro, with its own chain of theatres. It was consolidated with Metro in 1924. The third of the companies, the Mayer company, was organized in 1920, and soon became an important producing unit, with such stars as Ramon Novarro and Norma Shearer. This company joined up with the two others also in 1924, and since that date the firm has been known as Metro-Goldwyn-Mayer.
Loew’s Incorporated itself is still at the head of Metro-Goldwyn-Mayer, although the Loew Theatre circuit is a separate subsidiary. This large organization grew out of a penny arcade, which was opened in 1905 by Marcus Loew and David Warfield.
It was in 1913 that the Paramount company first saw the light of day, though it was not known under that name then. In the middle of December, 1:913, Jesse L. Lasky bought a barn in Hollywood and transformed it into a film studio. The company was known as the Jesse L. Lasky Feature Play Company.
Earlier in the year Adolphe Zukor had organized the Famous Players Film Company, and soon these two companies joined forces and became known as the Famous-Players-Lasky.
With other interests, this company has acquired large theatre chains in many countries. It has production interests in New York, Great Britain, and Paris as well as in Hollywood. It has renting organizations all over the world. It changed its name some years ago, after an amalgamation, and though to-day Lasky is not connected with the firm, Adolphe Zukor is still its president.
The other companies have spread in similar fashion, as can be traced by the stories of some of the magnates of whom I have already written— William Fox and Carl Laemmle, for example. With the single exception of Carl Laemmle’s Universal company, every picture organization in America has gone through numerous changes and affiliations before reaching the position it is in to-day.
Only in rare instances does one man possess a complete holding in any one company. In this country one of the rntst powerful film magnates is Isidore Ostrer, President of Gaumont-British, who owns a very large number of his company’s shares. He entered the film trade through the financial world.
This company has its subsidiary film interests in England, to which I shall refer in a moment; it has important links with the powerful German U.F. A. company ; and you can also trace strong financial interests in newspapers and radio.
I will now revert to the financial side of films themselves. By the time a picture is shown to the public, it has passed through other hands besides those at the studio. A film must be distributed—that is to say, sold to the cinemas. It requires a large organization to do this, an organization which concerns itself with the renting side of the business.
The producing company generally has a distributing company of its own (a subsidiary of the parent company), which receives the pictures, and sells them to the cinemas. It takes a certain percentage of the receipts for this work. Thus, in Britain, there is the Gaumont-British parent company, which has under it three separate renting organizations : Gaumont,
Men and Money Behind Pictures
W. & F., and Ideal. Generally, Gaumont distributes the Gaumont-British films, produced at the company’s studios at Shepherd’s Bush. W. & F. and Ideal share between them the output of an associate producing company, Gainsborough, with studios at Islington. The three companies also take films from other independent producing organizations.
Selling talking pictures is anything but a clear-cut business. There are no hard and fast rules. No two cinemas pay the same price for a film. In the old silent days the cinema manager would be asked to pay a certain sum for a picture, according to the size of his theatre. He might be asked to pay £50 for three days, and that was the end of the matter.
Now, however, films are rented on a percentage basis. A company might ask for 40 per cent of the receipts for a very big picture ; 30 per cent for a less important one. “ Second features ”—rather unimportant productions, or fairly old big ones, put in programmes to support the main attraction—• are let out for a sum agreed upon by the cinema manager and the renting company. The price may be anything from £15 to £150 for three days, according to the size of the hall and the district.
There was a fierce price war when Charles Chaplin asked for 50 per cent of the receipts for his picture, City Lights. The theatre side of the Gaumont-British Corporation (a vast organization, with 325 cinemas in this country and new ones being planned) refused to book it on this basis, stating that it would not pay them to do so. The Cinematograph Exhibitors’ Association (the association of the cinema managers) backed Gaumont-British, and advised its members not to pay more than 331 per cent.
Chaplin declined to abate his terms, and there the matter stood until the A.B.C. circuit—the large theatre organization run in conjunction with British International Pictures—agreed to take it on a 50-50 basis. Thus Chaplin won through, though his picture was not, perhaps, seen at so many cinemas in this country as it would otherwise have been.
The percentage charged on films is, of course, lower when the pictures are getting old. The price goes down gradually from the first week of “ general release.” A stated sum is paid for “ pre-release runs ”—the exclusive showing of a picture before its general release. The amount varies considerably. One cinema may take £5,000 in receipts in a week, whereas another takes only half that, and the prices paid for films vary accordingly. For instance, the Empire, London, took over £10,000 in one week when a Greta Garbo picture, Mata Hari, was showing.
Further, a film programme consists not merely of one big film, or even of one feature and one second-feature. There are the news reels and comedies to consider, and perhaps a stage show. “ Shorts ” cost £4 or £5 for three days, but a stage show may cost anything from £5 to £500 for the same period.
When you remember that in one week London alone has spent as much as £300,000 to see talkies ; that there are 3,600 cinemas in the British Isles ; that there are over 20,000 cinemas in America, it is possible to realize how large a profit a £40,000 picture can make even if distributed on a 25 per cent of receipts basis to a comparatively small percentage of those cinemas.
When a film-goer pays his humble money through a cinema box-office window, he is putting it into a far vaster and more involved machine than he ever dreams !
The world film encyclopedia, 1933
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