Rank Progress

Britain's moviemaking Rank Organisation--and the entire British movie industry--was in deep trouble in 1948 when Managing Director John Davis received a letter from a bank to which Rank owed a cool $45 million. Written by the bank's chairman, the letter was accompanied by a copy of Rank's annual report--with a circle scrawled around the picture of a statuesque Rank starlet. Said the notation: "If worst comes to worst, we'll settle for this one." Heh, heh.

Though amused, Davis had other ideas for solving the crisis. "Some may treat change as an enemy," he says, "but I prefer to believe it to be an ally." Steadily moving Rank beyond motion pictures, he diversified it into everything from testing machines to tenpin bowling, chopped down the bank debt within four years. Such change has proved a powerful ally indeed for Rank and Davis. This week Rank reports record fiscal 1964 earnings of $13 million on sales of $250 million, up 50% over 1963 and 13 times those of pre-diversification days.

Crime & Comedy. Formed in 1936 by devout Methodist J. Arthur Rank to make and exhibit wholesome family films, Rank faced a postwar crisis that sprang from a double source. For one, the British government in 1948 revoked prohibitive duties on foreign movies, and a stream of U.S. crime and comedy films quickly cascaded in. More important, as in the U.S., audiences in Britain deserted to TV. From a 1946 peak of 1.6 billion, British moviegoers dwindled to 400 million in 1963. To meet the change, Davis sold 100 theaters, wisely followed his customers into new leisures.

As a result, 58% of Rank's current profit comes from nonfilm activities. Capitalizing on Britain's rising incomes, Rank's 19 divisions run 18 "Top Rank" bowling alleys, 38 bingo clubs, 29 ballrooms, 15 coin-op laundries, 25 dance studios. The firm has also opened three motor inns and ten highway service centers, runs 184 TV and appliance retail stores and six factories that make radio and TV sets, appliances and electronic equipment.

Explosive Performance. For Davis, 57, a jowly gentleman who moved up to chairman when Founder Rank retired two years ago, Rank's most spectacular sideline has been its entry into Xerox duplicating equipment. Searching for profitable ventures after the diversification decision, Davis in 1956 agreed to bankroll the U.S.'s struggling Xerox Corp. (then called Haloid Co.) in return for rights to make and market its duplicating machines outside the Western Hemisphere. Xerox, of course, has been a huge success. Result: Rank Xerox last year accounted for a third of the Organisation's profits. The company this year expects to distribute 15,000 machines, last week opened a subsidiary in South Africa, its 13th worldwide operation. Even Davis, who usually retains the calm and conservatism of his early days as an accountant, calls the performance "explosive."

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