The American Movie Industry: The Business of Motion Pictures

By Gorham Anders Kindem | Go to book overview

13

The Effects of Television on the Motion Picture Industry: 1948-1960

Fredric Stuart

The motion picture industry entered upon a period of severe decline beginning about 1947. Table 13.1 and figure 13.1 illustrate the nature and extent of this recession. Between 1946 and 1956 the industry lost almost half of its customers, with the average weekly attendance at theaters declining from 90 million to 46 million (table 13.1, col. 4). This estimate is corroborated by Department of Commerce data on personal consumer expenditures on motion picture admissions which, deflated by the index of admission prices, show a reduction of 42 percent for the period (col. 2). This defection on the part of consumers occurred during a period of rising expenditures on most other goods and services, so that the industry's share of total consumer purchases was reduced from 1.15 percent to 0.49 percent in ten years (col. 3).

Though the reduction in attendance has been continuous since 1946, the profits of motion picture production companies reached a low turning point in 1952, having been reduced by over 80 percent as measured by, the experience of the seven leading firms (col. 5).1 The readjustments which permitted increased profits after 1952 will be discussed later.

Have any factors other than reduced attendance at theaters contributed to the decline in profits of the large studios? One factor which has been suggested is the divorcement of motion picture theaters from production companies pursuant to a 1948 Supreme Court decision on federal antitrust action which had commenced in 1938. By consent decree the combined production-exhibition companies were dissolved and reformed as indicated in table 13.2. The profit figures presented in table 13.1 include net profits of both production and exhibition companies,

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