In 1948 the British public paid a total of £109 million at the box offices of the approximately 4,800 cinemas in the United Kingdom. For those unfamiliar with the peculiar structure and economics of the film business this did not obviously suggest an industry in crisis. And yet it was also estimated that in the same year the British film industry had lost £5 million on film production. The combined producers’ shares for all British films – the amount returned to producers following deduction of Entertainment Tax and after exhibitors and distributors had claimed their share of box-office receipts, and from which producers still had to cover their costs and overheads – amounted to £7.5 million in total. However, this was rather less than the £12.5 million estimated to have been invested in domestic production. Even some very popular films did not make a profit. An example widely cited at the time was The Courtneys of Curzon Street – reported by the trade press as the top box-office attraction of 1947 – which ‘collected for the Exchequer £406,250 in Entertainment Tax. Yet the Producer did not recover his production costs, which were on a very reasonable level.’

There is much anecdotal evidence from producers’ memoirs and the trade press that film production was an unprofitable business. On one level the film industry was like any other commercial enterprise: put simply, the return from sales must be greater than the cost of manufacturing and distributing the product in order to make a profit. But on every other level the film industry was unlike other businesses. For one thing the cost of production was much greater than the individual unit of revenue (the price of a single cinema ticket): therefore it depended on a very high number of individual sales which in turn required a large market. Britain had the largest domestic market for films outside the United States: in 1947 there were an estimated 1,514 million cinema admissions per year in Britain compared to 525 million in Italy and 419 million in France.