Shochiku restructuring

[Mark Schilling]

As regrettable as it may be, the Shochiku restructuring is simply
unavoidable -- the company was hemorrhaging red ink under the Okuyama
regime, with Cinema Japanesque contributing large gouts, and the company's
financial health is in a parlous state. As one Shochiku staffer explained
to me, the Cinema Japanesque movies may have been low budget, but if your
Y300 million movies only earn Y30 million at the box office, its only a
matter of time before you find yourself in bankruptcy court.  

As much as Aaron may despise the "Ofuna line" films, as exemplified by the
work of Yamada Yoji, they have long been reliable profit earners across a
range of media -- theatrical, video and television. In a chart of top-rated
films broadcast on TV in 1997 I recently compiled, three of the
top-ten-rated domestic films were from the Tsuri Baka Nisshi series. At the
theatrical box office, however, the series earns about half of what the
Tora-san films used to bring in. 

Unfortunately for Shochiku, the Tsuri Baka Nisshi films alone are not
enough to carry its lineup -- it desperately needs another hit series. 
Yamada's attempt to replace his signature Tora-san series with the Niji O
Tsukamu Otoko films -- two so far -- has been a disappointment. The
Salaryman Senka series, which began as the bottom half of the double bill
with Tora-san, does not yet have stand-alone potential. It's hard to see
how Yamada, who has basically been carrying the studio on his back for
nearly thirty years, can rescue it singlehandedly -- a character like
Tora-san comes along only once in a lifetime. Too bad Yamada can't generate
an Atsumi Kiyoshi clone -- he would still be making hit movies and
Shochiku's bottom line would be considerably brighter.  

For more information on Shochiku's woes, here's a recent story I filed for
Screen International.

Mark Schilling (schill at gol.com0

Tokyo: Family Theatre (Eisei Gekijo), the satellite channel subsidiary of
Shochiku, has closed its film production unit and dismissed its staff. The
head of the unit, Kazuyoshi Okuyama, was deposed from his vice president's
post in a boardroom coup in January and resigned from Shochiku at the end
of February to start a new production company under the aegis of game maker
Namco. 
      Family Theatre launched the production unit in October 1994 to supply
content for the film channel it was broadcasting on cable and satellite TV.
The unit released 10 films during its existence, including Cannes Golden
Palm winner "The Eel" and Montreal Best Director prize winner "Tokyo
Lullaby," but despite the critical praise and festival honors, none of
films turned a profit. 
      Shochiku will distribute seven of the unit's films that are not
either in production or awaiting release. Development of what one staffer
called "a huge pile of projects that we discovered after Okuyama left" will
be discontinued. 
      The restructuring at Family Theatre is part of a company-wide effort
to stanch the flow of red ink that was the legacy of Kazuyoshi Okuyama and
his father, former company president Toru Okuyama. In the 1997 fiscal year,
which ended in February, Shochiku recorded a total loss of Y9.8 billion
($75.4 million). a stunning blow to a company who ordinary profits had
averaged only Y500 million ($3.8 million) over the past five years.
Included in this figure is an extraordinary loss of Y7.2 billion ($55.4
billion) resulting from a write-off on uncollected ticket revenues and
settlements with production companies that the younger Okuyama had
contracted to make films for Shochiku. The company also suffered an
ordinary loss of Y3.1 billion ($23.9 billion), which was attributed to the
poor showing of recent films and slack attendance at the company's movie
theme park. . 
     Particularly outstanding is the size of uncollected ticket revenues,
indicating that Shochiku was grossly inflating earnings reports from ticket
sales. Although overreporting of box office revenues is a widespread
practice in the Japanese film industry, whose three major domestic film
companies all operate nationwide theatre chains, it became particularly
flagrant under the Okuyama regime. By recording an extraordinary loss on
its books for 1997, the new management is attempting to wipe the slate
clean and put the company's finances on a sounder footing. 
      Nonetheless Shochiku will have a hard time digging its way out of its
financial hole. It is finding it increasingly difficult to raise funds on
the local capital market and, despite a vow to return to the basics, has
nothing on its 1998 lineup that promises to equal the popularity of its
long-running Tora-san series.