Profit through Loss

William Loss never expected to go into the movie business. But as a financial analyst with Manhattan's H. Hentz & Co. and a director of Citizens Traction Co., he often noticed another entry in the "Ci" columns: Cinecolor Corp., a company which processes color movie films. As the stock crept from 4-c- a share toward $1, he noticed Cinecolor more & more.

Color photography was not new (books had been written on it in 1855). But only one company, Technicolor Inc., had produced it successfully for the movies. Now Technicolor had a virtual monopoly of A pictures. This fact did not discourage Loss. Technicolor was booked solid (about 30 feature pictures a year, plus shorts), and it was turning business away. There seemed to be room for Cinecolor too.

Hollywood warned Loss that Cinecolor was a bad risk. The company was on the verge of bankruptcy; it had no big clients and "a 15-year record of mistakes." But it also had some assets: 1) a couple of able technicians, Alan Gundelfinger and William Crespinel, who had founded the company in 1932; and 2) a process which could produce "rushes" (unedited film) in color film 24 hours after it was taken and at a cost of only 20 to 25% more than black & white film. Moreover, the movies could be taken with ordinary film cameras and with black & white film plus special filters. Technicolor needed about four days to print rushes, needed special cameras and technicians to handle them, thus cost some 40% more than black & white. True, Cinecolor had only two colors, thus could not mix all shades. Technicolor, with its three colors, had a complete palette. Artistically Technicolor was far superior. But in the sudden public demand for color-(bad movies in color were outgrossing fair black & white ones), Loss figured that audiences would probably not care, as long as the sky was blue and the grass green.

A Break with Bess. What Cinecolor needed most was money, management and the confidence of the movie industry that it could turn out the films it promised. Loss provided all three; first he raised $500,000, cleaned up debts of almost $100,000. Reorganized with Loss as vice president and general manager, Cinecolor's output of film was increased 250% in six months, chiefly for a dozen small-budget pictures (best-known: The Enchanted Forest).

Then came the big break. Loss persuaded Metro-Goldwyn-Mayer to make a $1 million horse opera called Gallant Bess in Cinecolor. Due for release this week, M-G-M expects it to be the "sleeper" (surprise hit) of the year. Result: Cinecolor is now booked solid until July 1947, expects to make its first profit this year, about $200,000 net. By the end of next year, Cinecolor expects to be printing 100 million feet of film a year, about half Technicolor's normal production. It also expects to turn out three-color films, with a new simplified process of its own, to compete with Technicolor's.

Last week, Boss Loss saw a pretty sight when he looked at Cinecolor stock. It was $7.50.

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