Ina Bertrand `David and Goliath: the Grand Theatre Company and the National Exhibition Chains. In T. O'Regan & B. Shoesmith eds. History on/and/in Film. Perth: History & Film Association of Australia, 1987. 106-9.
DAVID AND GOLIATH: THE GRAND THEATRE COMPANY AND THE NATIONAL EXHIBITION CHAINS
Had you lived in Perth as the thirties decade opened you could have seen plenty of films in the central city area. There were seven cinemas in operation. Three had survived from the first building boom of the war years: the Pavilion, the Majestic and the Grand. The other four were the picture palaces of the twenties. The Prince of Wales had been built in 1923 on the site of West's Melrose Theatre. The Regent had been built in 1927 on the site of the old Queen's Hall, owned by the Methodist Church but leased for film exhibition to Hoyts. The Ambassadors, Perth's atmospheric theatre, smaller than Melbourne's State and Sydney's Capitol but similar in design, had opened in 1928. And the last was the Capitol, built in 1929 at the foot of William St., on the site of Spencer's Esplanade Picture Gardens which had been a landmark in the city since 1909.
As the next decade opened, there were still six cinemas available to city patrons. Of those operating in 1930 only the Grand and the Ambassadors remained apparently unchanged. The Regent had become the Metro in 1938 when the lease had been acquired by MGM, and the Majestic had been replaced by the Plaza in 1937. The Pavilion had closed before the end of 1930 and the Prince of Wales in 1935, but, to help to balance this, the Picadilly had opened in 1937. Similarly, the Capitol had ceased showing films in 1938, but the Theatre Royal, which had been used for live performances in 1930, had reverted to film screenings in 1934. Despite the changes of name, and the decline from seven venues to six, you, as a cinema patron, might not have noticed much difference over the decade. The publicity at the time of the opening of new or renovated cinemas reminded you of the reputation of the industry for innovation, but the kind of films offered, the style of service from the staff, the comfort of the accommodation - all stressed familiarity and continuity.
So, you may not have been aware of the enormous changes which had taken place in film exhibition in the city of Perth over the decade. In such a small community, where everyone knew everyone else, most of the key events had in fact been reported in the press, but their significance was not always obvious till later. At the start of the thirties, the two national chains - Hoyts and Union Theatres - shared the city market between them, with Hoyts running the Majestic and the Regent (and taking over the Capitol from Stanley Wright during 1930), and Union Theatres operating the Grand, the Prince of Wales, the Ambassadors and the Pavilion. By the end of the decade Union Theatres had disappeared entirely, retaining only an interest in the Ambassadors, which was run as part of the Hoyts chain. Hoyts were reduced to two city cinemas - the Plaza, and the Ambassadors (in which Union Theatres still had an interest). MGM had entered the field with the Metro. But the really big change was the emergence of the Grand Theatre Company, which by 1940 had three city cinemas - the Grand, the Theatre Royal and the Picadilly. Where did this company come from, and how did it manage to survive when earlier attempts (such as Stanley Wright at the Capitol) had failed? Some background to the history of the national chains is necessary before we can return to these questions.
Hoyts Pictures had been founded in 1909 by Dr Russell in Melbourne, and its strength continued to be mainly in Victoria. In 1926 the company had merged with Frank Thring's Electric Theatres, and in 1927 with Sir John Tallis' Associated Theatres Ltd, to form Hoyts Theatres Ltd. By 1928 the company owned 68 theatres,(1) and controlled many more, spread by this time throughout the Commonwealth. It had entered Western Australia comparatively late, in 1927, purchasing the Majestics (Perth, Fremantle and Kalgoorlie) and converting the old Queen's Hall into the Regent. Taking on the lease of the Capitol in 1930 brought the circuit to its greatest strength in the state: by comparison, in 1930 Hoyts in Victoria was operating seven city cinemas, more than thirty suburban venues, and several country cinemas as well.
Union Theatres had a rather more complicated history. In March 1911 Johnson and Gibson had merged with J. and N. Tait to form Amalgamated Pictures, which in November 1912 had merged with West's and Spencer's to form the General Film Co. of Australia. In January 1913 General Films had merged with The Greater J.D. Williams Amusement Company to form the exhibition company Union Theatres and the distribution company Australian Films Ltd. At that time the group controlled 29 theatres, and by 1921 they controlled more than 80.(2) By the end of the twenties, they had the largest cinema chain in the country, larger even than Hoyts.
In Western Australia, the company was incorporated in Perth in September 1914, and soon after entered a partnership with Sir Thomas Coombe, who had extensive experience in the film industry in Western Australia, having been attorney for T.J. West (whose company was one of those in the Union Theatres group). A number of the companies which had merged to form Union Theatres already had venues in the west, which automatically joined the new circuit: J.D. Williams and the Pavilion; West's ran the Melrose, the Princess (Fremantle) and the Palace (Subiaco); Spencer's had the Esplanade Picture Gardens and the lease on the Theatre Royal. Coombe brought in the Grand, the three Majestics and the two Palladiums (Perth and Fremantle). While he remained as managing director, the circuit was the largest, and certainly the most powerful, in the state. During this time the Prince of Wales was built by the company on the site of the Melrose in 1923 and the Ambassadors was built in 1928. Then Coombe retired, and Hamilton Brown, whom Coombe had trained, took over full control.
By 1930, then, one of the national circuits was already well-entrenched, and the other seemed poised to expand. Each had begun to introduce sound technology, Hoyts starting at the Regent and Union Theatres at the Prince of Wales, simultaneously on 6 April 1929. The public had welcomed sound, but for exhibitors it meant a heavy financial burden, particularly for Hoyts, which had the added expense of conversion from the sound-on-disc system, once sound-on-film became standard.
The depression hit all exhibitors hard. Distributors' profits fell during the years 1929-1931, but the exhibitors moved from profit to quite substantial losses. Union Theatres, for instance, made a profit of £102,184 in the financial year to June 1930, but a loss of £114,268 in the following twelve months. In October 1931 Union Theatres was liquidated, and its assets purchased by a new company - Greater Union Theatres Pty Ltd. This was still not enough to keep the operation viable. Hoyts were having similar problems, and pressure from the banks finally brought the two giants together.
In August 1932 General Theatres Corporation of Australia Ltd was formed by the amalgamation of most of the interests of Hoyts and Greater Union Theatres, and the industry conflict, which had been simmering ever since the first hints of financial depression, burst out in open rancor. The intention of the merger was to eliminate costly competition for contracts between the two major exhibition circuits, to give the new company the edge over the distributors in contract negotiations. The distributors, fearful of the bargaining power of the combine, threatened to build their own first-release theatres in the state capitals, in competition with the"combine".
The meat in this sandwich were the independent exhibitors, who feared that the "combine" would absorb all film supplies, leaving them without programs, or forcing them to go cap-in-hand to General Theatres to join the pool buying scheme. To discourage the latter, the distributors threatened not to make contracts for film supply with anyone but the owner of the theatre for which the films were required.
For several years, the industry in the eastern states was involved in internicine warfare, leading to appeals to state governments, several official enquiries and repeated regulatory legislation. Although the major battles were fought out in the east, it was unlikely that the west would remain unaffected, as the underlying cause of the whole fuss - the economic depression - was a worldwide, not a local, phenomenon.
The depression produced much the same effect in the film industry of Western Australia as in other states, beginning with a pronounced drop in cinema attendances. I have been unable to find specific box office figures to substantiate that claim, but there is plenty of more circumstantial evidence. Hoyts, because of their smaller circuit, survived better than did Union Theatres. The latter had found it necessary to divest themselves of some of their circuit earlier, but in 1931 they also sold the Grand, to Town and Suburban Properties Ltd, and leased it back to continue to run as a Union Theatre. In 1931 the choice had to be made of closing either the Prince of Wales, which was still paying its way, or the Ambassadors, which was not. The decision was made to close the Prince, because it cost less to keep shut than did the Ambassadors, and so it was dark from September to November 1931.
In November 1931 Greater Union (WA) was formed, with Coombe returning to the sinking ship as Managing Director, but Brown remaining as General Manager. By December 1931 the company was operating only four theatres: the Ambassadors as a first-release house, the Prince of Wales as a first-release house but with second quality product, the Grand with mainly second releases and the Princess (Fremantle) was their only suburban venue. In August 1932, they were unable to keep up rental payments for the Grand: the bailiffs were called in and the theatre was taken over by the owners, Town and Suburban Properties Ltd.
By the time, then, that General Theatres Corporation began operating, in January 1933, it was hardly a powerful company in the west. Hoyts had brought in the Majestics (Perth and Fremantle)(3), the Regent and the Capitol. Union Theatres had only the Prince of Wales, the Ambassadors and the Princess (Fremantle) to contribute.
The smaller operators, those with a single theatre or a small suburban or country chain, were also affected by the depression. As attendances dropped, and returns declined, they sought means to restore profitability. Film hire charges remained stable, and the distributors resisted all efforts to reduce them. Exhibitors were unable to offer cut-rate tickets, as the contracts with the distributors stipulated a minimum price, so they began to follow the practice rife in other states of offering "free gifts" in the form of door prizes, handouts to all children in the audience, or other forms of lottery. This upset not only the distributors, whose contracts were being subtly undermined, but also the larger exhibitors, who suffered from the competition but who could not accommodate this kind of price-cutting within their own management practices.
The depression, then, was not only affecting the hip pocket of exhibitors and distributors, it was also breaking down hard-won balances of power, not only between the two groups, but within each group as well. It is within this context that the Grand Theatre Company (GTC) emerges.
This was the company formed out of Town and Suburban Properties Ltd, to continue to operate the Grand Theatre, after the defaulting tenants - Union Theatres - had been removed. The shareholder of the two companies were similar, and both were headed by James Stiles, who was personally to take on the management of the new enterprise, rather than risk another tenant. It was a bold move. Stiles had a little experience of the film industry, which he had entered in 1927 by building the Gaiety Theatre in South Perth. He had appointed Cyril Phoenix, who had previously operated the only cinema in the area in the local Roads Board Hall, to manage that cinema for him, but he had always shown a personal interest in the venture. Now he was proposing to enter cinema management himself, in the most competitive of all areas - the city centre - at a time when the industry was in the throes of a crisis of its own as well as embroiled in the general financial crisis of the time. Success depended on Stiles' ability to obtain a reliable supply of product for the enterprise.
Stanley Wright, a local entrepreneur with just as high a reputation as Stiles, had opened the Capitol in 1929 with high hopes, but because of failing film supply, had relinquished the lease to Hoyts within 18 months. How, then, did Stiles succeed? Much must be put down to timing. The Grand opened under its new management in August 1932, just as the announcement was being made in the east of the formation of the General Film Corporation. Knowing that the GTC was to begin operations in January 1933, the distributors tried to hold out against signing contracts for the new year, hoping to break the combine. Amongst the most determined of the distributors was MGM, with whom Stiles made one of his most important contracts. As well as contracting as far as possible with cinemas outside the GTC for first release of their product, MGM decided to build their own showcase cinemas in the state capitals - Melbourne first, then (despite protests) Sydney. Finally it was Perth's turn: the lease of the Regent was taken over and the cinema converted and renamed the Metro in 1938. By then, however, the association with Stiles and his Grand Theatre Company was firmly established, and the overflow of MGM product from the Metro continued to go into Stiles' theatres.
By then, too, Stiles' own bargaining power had considerably increased as he had acquired the Theatre Royal lease, bought the Princess (Fremantle), and built the Picadilly, as well as expanding his suburban circuit with two more venues in the South Perth area (the Hurlingham and the Como). This was a well-balanced circuit: the Grand, as the oldest of the group, was relegated to being a "churn house" (one which churned out sessions continuously), the Picadilly was the newest and most modern cinema in the city, the Theatre Royal had the prestige of age and size, and the suburban cinemas supported the city chain.
In contrast, Westralian Cinemas (the successor to GTC in the west) held in 1936 only the Ambassadors, the Capitol, the Regent, and the two Majestics. And by the end of the decade, when the amalgamation had broken up, only three of these remained - the Ambassadors, the Majestic (Fremantle) and the Plaza (on the site of the former Majestic, Perth) - all now run by Hoyts.
So does it all amount to a lucky break on the part of a remarkable individual? Well, James Stiles was certainly a charismatic person - captain of the West Perth cricket club, founder of the orphans' picnic, everybody's friend. And he was also an astute businessman - with interests in real estate as well as in film exhibition, experience of the world of finance, an effective communicator and a confident negotiator. However, the idea that he (or any other single individual for that matter) could take on the powerful Hollywood distributors and win seems completely unconvincing. Even if he happened to be in the right place at the right time, a structural explanation is still needed to account for the circumstances which gave him his lucky break.
Perth was the furthest outpost of Hollywood's international distribution empire and of the national chains' exhibition empires, and so the place most likely to be overlooked or to be withdrawn from in a crisis. And there was no crisis more severe than the worldwide economic depression of the early thirties. So, was there perhaps a deliberate decision to make a strategic withdrawal from the area, and an equally deliberate decision after the crisis was over not to become so over-extended again?
Greater Union Theatres showed little interest in the state for several decades, until they reentered as partners with the local company, Ace Theatres, in the seventies. Hoyts continued to maintain a presence in the city of Perth and in Fremantle, but never developed a suburban chain in the west like in other states.
There is also that important point raised at the beginning of this paper that the film-going public could see little difference over the decade, despite the dramas behind the scenes. To sustain his position, Stiles had to beat the national chains at their own game: he could not rewrite the rules, even if he had wished, and there is no evidence that he did wish. He marketed the same films in the same ways as the national chains, according to rules laid down by distributors, who decided what films would be available, for what cost, at what prices to the public, and for exhibition in what kinds of venues. There was no local (WA) feature production industry to present a claim on locally-owned exhibition venues, and Australian production from the eastern states had just as hard a time securing release in the west as in the rest of the country. So as far as the city venues were concerned, the real victor was not Stiles or the Grand Theatre Company, but the structure of the international film industry.
Nevertheless, there are some interesting questions raised by this story concerning the relation between Australia and the rest of the capitalist world, between Western Australia and the other states, between film exhibitors and film distributors, as well as between the national exhibition chains and those exhibitors operating outside them. There is also the possibility that the important differences were not in the city cinemas, but in the suburbs, in developments like the picture gardens, made possible again by the absence of the domination of one or two (whether national or local) suburban circuits. But that is another story.
1. Everyone's, 29th August 1928, p. 30.
2. Film Weekly, 11th July 1935.
3. The Majestic, Kalgoorlie, was probably one of the theatres added to the General theatres pool in January 1933, but it was sold very soon after to Goldfields Pictures.