Although by the mid-1960s all the majors had diversified to other media-related fields (television production and distribution, music licensing, and so on), film distribution and production had certainly remained their main sources of income (with the exception of Disney which had several profit centres). When in the late 1960s some of the majors' expensive films started faltering at the box office and the losses brought down the value of their stock, the majors became ripe targets for corporate takeovers. Apart from their real estate holdings, what made the majors important corporate acquisitions were their film libraries which could be exploited perpetually in a number of existing and future ancillary markets.6 Within a short period of time (1966-9) the landscape of American cinema had been transformed radically, even though the names Paramount, MGM and Warner continued to exist.
Among the changes the conglomerates brought to the American film industry, four present the most interest in terms of their impact on low-end independent production and distribution. First, conglomerates shielded the majors from the vicissitudes of an unpredictable film market as their extremely broad economic basis allowed them to absorb much more easily the increasingly large losses during periods of box office drought. The ex-studios therefore found themselves in a position where they could afford to take expensive gambles with the potential for huge payoffs. This meant that they could concentrate strictly on the production and finance/distribution of a few blockbuster films per year.
Second, and largely as a consequence of the first repercussion, the average film budget started increasing exponentially. While negative costs had certainly increased throughout the years (from slightly over $1 million in 1950 to $1.75 million in 1971) the increase was never too far from national inflation rates. However, during the following eight years (1972-9), negative costs multiplied five-fold (from $2 million to approximately $10 million).7 This increase limited even more the number of films financed by the majors.
Third, conglomerates installed new management regimes which tried to rationalise the conduct of film business. Besides emphasising further the production of blockbusters, the university-trained management teams put in place various scientific audience research mechanisms to measure tastes, preferences, viewing habits, and so on. This information was subsequently fed back to decisions about production which became increasingly dependent on research reports, charts and data and, not surprisingly, more formulaic and uniform. These practices seemed justified when the rentals from theatrical exhibition of some of these films (Jaws - $133.4 million and Star Wars - 188.1 million) reached unprecedented levels.8
Finally, as experts in matters of corporate diversification, conglomerates recognised the importance of opening up to new markets and creating more outlets for the commercial exploitation of the product their subsidiaries produced and distributed. For that reason, they actively encouraged the expansion of the majors to media and leisure-related fields with an eye to creating new profit centres for a commodity that was already produced and therefore in need of only additional marketing and advertising costs. This development became particularly notable from the mid-1970s onwards when new technologies such as video and cable presented great possibilities for perpetuating the commercial career of a film, to the extent that some of the conglomerates dispensed with many of their non-media-related subsidiaries and concentrated solely on media acquisitions.
These developments were instrumental for low-budget independent cinema. Specifically, the renewed emphasis of the majors on the production of a small number of blockbusters created even bigger gaps in the film market which independent producers and distributors exploited. With the yearly releases by the majors dropping from 145 in 1972 to 78 in 1977 (before bouncing to an average of 100 for the rest of the decade),9 the perennial problem of access to exhibition seemed to be all but resolved. This was especially so when the number of screens increased (from approximately 14,000 in 1970 to 16,300 in 1977)10 and when even weekly attendance, which had reached an all-time low of 15.6 million in 1971, started increasing again, reaching 20 million visitors a week by the decade's end.11 Not surprisingly then, a large number of independents flooded the market with low-budget product, while even the kings of exploitation, American International Pictures, stepped up a gear and produced considerably more refined pictures.
The end result of all these developments was the gradual polarisation of the US film market with the conglomerate subsidiaries/diversified corporations and their expensive films occupying one side of it, and the rest of the film companies - 'the independents' - with their much cheaper productions occupying the other. It was at this point that the discourse of American independent cinema started privileging more firmly low-budget filmmakers over top-rank ones.
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