INTRODUCTION

‘There’s not a two million dollar gross in the country now,” said Brady…. “Probably not,” agreed Stahr. He paused as if to make sure that all were listening. “I think we can count on a million and a quarter from the road-show. Perhaps a million and a half altogether. And a quarter of a million abroad.”

So concluded Monroe Stahr in F. Scott Fitzgerald’s The Last Tycoon, a penetrating study of Hollywood in the 1930’s. Stahr’s calculations were, for that time, keenly accurate. Some thirty years ago, the American motion picture industry was essentially a domestically based and oriented industry. Practically all of its revenues came from the United States. To be sure, American films were sold abroad but the resulting revenue hardly compared to what the domestic market yielded. Foreign revenue was simply an additional increment, extra profit upon which American film companies did not depend. The foreign market did not warrant enough attention to force Hollywood to modify significantly the content of its films to suit tastes abroad, nor to induce the film companies to maintain elaborate overseas organizations. Fitzgerald’s Stahr, for example, felt that his picture could count on approximately 15 percent of its gross revenue coming from abroad.

Today, the situation is markedly different; the American film industry now derives at least half of its theatre revenue from foreign markets. Of course, some companies and some films exist on revenue derived predominantly from the United States. But for the industry as a whole, the foreign market has become highly important. Eric Johnston, the late president of the Motion Picture Association of America, referring possibly to member companies, stated publicly that “no other major United States industry is perhaps so heavily dependent upon exports for its economic health and well-being.” He went on to declare:

It’s a little known fact that 9 out of 10 United States films cannot pay their way in the domestic market alone. It is only because of revenue from abroad that Hollywood is able to turn out pictures of high artistry and technical excellence.¹

While that might have been a slight exaggeration, it is true that just four countries in western Europe—the United Kingdom, Italy, France, and West Germany—can yield almost half of the domestic (i.e., United States) gross for a film. Beyond a doubt, western Europe as a whole constitutes today the most important overseas market for American pictures.

The object of this study is to uncover and analyze relationships between the American and European film industries, keeping in mind the financial stake American companies have in Europe. Penetration of the European market by the American industry has generated changes in policy and structure on both sides of the Atlantic—changes which have important implications for film production, film content, and film marketing. The economic base of the American industry has expanded and the related drive to secure Europe as a market has provoked clearly detectable reactions within the European cinema. In the same way, the need of European countries to protect and expand their own markets has been manifest in modifications of American organizations and in their plans for action.

Film is not only a business commodity but a vehicle of communication. It presents an image of the world, life, events, and thoughts. It tells what has happened, is happening, and will happen, in terms of the perspectives of those who make the film. Producers select the materials to be dealt with, and handle them in a way which they consider meaningful and which they believe will be acceptable to audiences. They choose from the total universe of real and unreal things certain elements, and then fashion these elements into productions which are to be viewed by people throughout the world. The content of a film, whether reality or fantasy, depends on the producer, and the way it is perceived depends upon the images it presents and the perspectives of the people who view it. Those elements selected for presentation command the audience’s attention at the expense of other elements which are omitted. Film is important not only for what it says but for what it does not say. The boundaries of human experience can expand or contract on the basis of what people have presented to them. In this study we will suggest that economic imperatives have in part determined what elements will be embodied in film.

Three broad areas of investigation will be scrutinized in this study. First, we must describe the interaction between film industries in the United States and Europe. Second, we must analyze those structures and policies which have been developed to control, facilitate, or stabilize interaction. Finally, we must delve into the production of films to understand how response to interaction and economic imperatives bear on what is made available to world audiences.

The investigation begins with a discussion of the economic and technological nature of film, which differs from most other commodities in that it tends to be infinitely exportable. And we shall see that the need to export is not confined to the American industry, for European producers have been active in trying to expand their own markets.

The second chapter surveys the various schemes developed by European nations to protect their domestic markets from being flooded by American films. We will evaluate the effectiveness of screen quotas and import quotas in controlling the number of American films on the market and suggest why quotas have been generally reduced and eliminated during the 1960’s.

In the following two chapters, we will discuss the transatlantic flow of films. First, we will examine the American film in Europe since the end of World War II. We shall study data on the number of American films available for exhibition in various markets, and survey their share of box office revenue. Then we will reverse our perspective and study the foreign film in the United States. We will examine certain forces which once worked to keep foreign pictures out of the American market but which have largely disintegrated in the last ten years. Our analysis will cover determined efforts on the part of foreign producers to penetrate the American market, and the means they used. Finally, we will review data on the number of foreign films in the United States, and the revenues accruing to them.

In chapters five, six, and seven, attention is directed to the foreign policy of the American film industry as it seeks both to expand and to defend its position overseas. Our investigation will cover the Motion Picture Export Association, which was founded in 1945 under the Webb-Pomerene Act to operate as a legal cartel representing the American industry overseas. We shall see this monopolistic organization demanding, in its overseas operations, free competition, open access to markets, and unhindered trade. The American industry has helped to determine the policies of foreign industries through membership in overseas film industry trade groups. On the other hand, American membership in these associations is often one way by which foreign industries or governments can control the activities of American companies. Thus membership can be both to the advantage and to the disadvantage of American interests.

The propaganda quality of film has also played a part in the American industry’s policy in foreign operations. We will examine the extent and nature of cooperation between the American film industry and the American government, with particular reference to West Germany. The original purpose for having American films in West Germany—to educate the nation away from Nazi ideology—was abruptly changed to one of indoctrinating West Germany for its place in the Cold War. Hollywood’s overriding concern for profit tended to work against the programs of our Military Government, and it was not until the film industry was, in effect, subsidized by Washington that it actively began distributing pictures in the West German market.

In the chapters following, we will concentrate on film production in Europe, beginning with a survey of the types of financial assistance made available to film production by European governments. Our major concern will be the subsidy which provides an increment of revenue to producers over and above normal box office receipts. We will refer to the rationale justifying governmental support of production, and to the reasons film must be considered a vehicle for expression as well as a commodity. In relation to subsidization, we will note how films are declared eligible for payment, and the connection between this and the definition of a national film. The impact the European Economic Community is having on film legislation, production, and trade will also be reviewed.

The American presence in Europe is not confined merely to American distribution companies and American films. American subsidiaries abroad, and foreign companies in which there is an American financial interest, have been making films which, meeting criteria for being declared “national” by European governments, thereby have access to subsidy funds. The analysis will reveal that rather than being regarded askance as American penetration, the practice is often encouraged by foreign governments. European-American cooperation in production also will be discussed in terms of its influence on film content. We will suggest that a new style of film is developing which cuts across domestic cultural characteristics.

The tenth chapter deals with the coproduction trend in Europe. The imperatives of coproduction will be examined relative to the bilateral treaties which govern this form of film making. The chapter also discusses American investment in films of the Common Market countries.

The final chapter draws together important points and offers a statement on European-American interaction in film making.