A Look at the Books

Cinemogul J. Arthur Rank had stood his ground against his critics with all the solemn dignity of an elephant harried by terriers. But last week, the heel-nipping of London's press drew blood. So did their implications that Rank's General Cinema Finance Corp. Ltd., which produces Rank's pictures, was short of cash. Reluctantly Rank opened the books of G.C.F. and gave outsiders their first peek into his movie finances.

Rank's producing companies--all controlled by G.C.F.--were leaner than even his U.S. rivals had hoped. Hollywood had guessed that he had lost money on such prestige pictures as Caesar and Cleopatra. But they had not suspected, as the books showed, that the loss in 1944 through 1946 had been a thumping -L-2.2 million. The company's other interests had pulled it into the black in 1944 and 1945, but last year the net loss was -L-474,777.

Obviously, G.C.F. needed a transfusion. The best way to get it, apparently, was to merge G.C.F. with Rank's profitable Odeon Theatres, Ltd, an exhibiting company (TIME, Dec. 8). By the merger, Odeon (which is Rank-controlled but partly owned by public stockholders) will shoulder a -L-1.1 million debt for unpaid dividends on G.C.F.'s preferred stock and the job of raising another -L-2 million needed to continue production on the 44 pictures scheduled for next year.

Raised Eyebrows. Once aired in Britain, these black realities stirred up more criticism of Rank. The sober Manchester Guardian was shocked that Rank's privately owned G.C.F. "could make a heavy loss without any general shareholder of the public companies . . . knowing anything about it." Repeating the charge of Brendan Bracken's Financial Times that in taking over G.C.F., Odeon was getting a pig in a poke, the News Chronicle tartly observed that the pig was "a lanky beast of decidedly questionable value."

Yorkshireman Rank went imperturbably on with his plans. He expected to complete the Odeon-G.C.F. merger this week by voting the 90% of Odeon common stock that he and his friends control. Said Rank: "My shareholders have the greatest confidence in me. . . . After all, why should they complain? When I took over Odeon, the five-shilling common shares were worth four shillings only. Now they are worth 40 shillings."

As Rank explained it, the merger was needed less because of G.C.F.'s losses than because of the 75% British tax on U.S. films which had shut them out of British theaters. Odeon, which had made good money showing films, would have few films to show when the present stock of new U.S. films runs out in a few months. Odeon had no choice but to take on the "more hazardous" job of making films to keep its theaters running.

Lowered Ax. The merger would also make possible "administrative economies." They had already begun. Less new talent would be hired and there would be no pay increases for stars. Such a policy had long been recommended by Rank's penny-wise chief adviser, ex-Accountant John Davis, 40. In the past he had lost some tiffs to producers who put prestige before profit. Now profit-minded John Davis was the undisputed operating manager.

Despite Rank's failure to fulfill his great expectations, he was yet far from being odd man out. If he had trouble getting bank loans, he could tap his flour-milling fortune or some of his big backers (e.g., Eagle Star Insurance Co. Ltd.). Under austerity, the principal sufferers would be the hard-won prestige of British movies and the artistic souls of British directors. Producer Filippo del Giudice, who had left Rank, cried: "Artists . . . who have worked with me on great pictures must not be controlled by moneybags in Wardour Street." But last week, moneybags were what J. Arthur needed most.

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