Good Year for Granada – Record Profit

GRANADA has had a good year. Mr. Sydney L. Bernstein, chairman of the company, says in his annual report this week that the net profit of £242,920 [about £5.3m in today’s money, allowing for inflation – Ed] is a record, and an increase of £26,803 [£587,000] on the previous year.

He tells his shareholders that the Granada television interests will not outweigh its kinema [sic – this was the house style for the word ‘cinema’ in this magazine] interests, although TV will represent a very considerable undertaking.

In brief, Mr. Bernstein says that both in America and Britain, while television has been expanding like prarie [sic] fires, the box-office at the kinema has been increasing as well. “Show business never stands still,” he says.

Although Granada has made a record net profit, 65 per cent. of this is taken in taxation.

When all taxes, including entertainments duty and local rates have been paid, Granada has benefited the Chancellor and local authorities by over £1,000,000 [£22m] during the year.

Of the total profits tax paid, £13,500 [£296,000] relates to the fixed dividends on the preference shares.

Mr. Bernstein says there would seem to be no logic in legislation that penalises a company for operating its business on sound financial lines and, at the same time, grants benefits to those who adopt the less sound policy of financing by way of loans.

Mr. Bernstein refers to the Eady levy [a tax, notionally voluntary until 1957, on ticket sales which was paid into the British Film Production Fund between 1950 and 1985] and says that it cannot be the solution to the industry’s problems. Granada has not changed its views that a voluntary levy in support of British film production is wrong. The Government, which received £37,000,000 [£847m] in entertainments duty from kinemas in 1954 should stabilise the position.

The levy should be a statutory one, says Mr. Bernstein, rather than a series of precarious agreements negotiated within the industry.

‘Scope Tests

It is illogical that the levy should be paid by exhibitors under industry agreements, when so great a part of he industry is represented by the major kinema circuits who have considerable interests as producers.

During the past five years Granada has spent £800,000 [£17.5m] on renovating its theatres.

Its experiments with CinemaScope and four-track magnetic sound have proved the wisdom of the company’s decision, and it is equipping the rest of its theatres as quickly as structural alterations can be made and equipment obtained.

The report shows that the trading profit for the group was £372,274 [£8.2m]. Payment of dividends and provision for dividends amount to £42,625 [£934,000].

The consolidated balance-sheet shows total assets of £3,264,607 [£71.5m]. The fixed assets, freehold and leasehold properties, furniture, fittings and equipment stands at £2,039,005 [£45m].

Finally, Mr. Bernstein stated that although the exhibition of films remains the keystone of the business it is increasingly supported by a number of profitable auxiliary enterprises.

Referring to the profits of the past five years which were for 1950, £201,456 [£5.7m]; 1951, £217,661 [£5.7m]; 1952, £212,912 [£5.1m]; 1953, £216,117 [£5.1m], and last year £242,920 [£5.6m – inflation is taken from the date given, which is why these conversion figures may seem odd at first glance] he believed that the figures “indicate the consistency of our business.”

Mr. Bernstein has this to say about the company’s television development:—

“Show business never stands still. In this country and in the United States today material standards are higher and opportunities to enjoy leisure are more frequent than ever before. Thus it has proved possible for a great new form of entertainment to establish itself alongside the kinema and theatre without materially damaging either.

“During the past five years whilst the network of television stations was spreading across America like a prairie fire the gross annual revenue accruing to the eight major American motion picture companies actually increased in volume, and so did their profits.

“Since September last, when the BBC’s viewing figure of over 12,000,000 was topping for the first time the combined listening figures for all three sound programmes, our receipts have shown an upward trend. I believe there is room to develop television entertainment alongside the kinema in this country; indeed not to do so would be to deny the present logic of the show business. And at the same time I would like to reaffirm that this company’s newly declared interest in television does not affect our firm confidence in the future of kinema.

This is borne out by the fact that we have this year added three new theatres to the group, are negotiating for others and acquiring sites where we think there is demand for the type of luxury theatres we operate.

Last year I told you of our application to the Postmater-General for a television licence: this year the Independent Television Authority, appointed under the Television Act to control commercial broadcasting, awarded the Granada group one of the first three licences to broadcast, in our case from Monday to Friday from the north region station. This region, for which we applied expressly, will eventually serve a population of over ten million.

“There is little doubt that this region comprises the most closely knit section of the industrial population and that it has traditions in entertainment and culture which are unique in Britain. It is too early to announce our plans in detail, but already the prospect of working with Granada has attracted a number of intelligent and suitable people and we are rapidly building an organisation of which viewers will hear much and which we are confident will do its job to the satisfaction of the Independent Television Authority, the public — and in the best Granada tradition.”