"Arabella and the Water Tank"

This view to the back of the auditorium at the Million Dollar Theatre is seen twice in the 3 minute Soundie titled "Arabella and the Water Tank" (Soundies Distributing Corporation, 1941). Note that at the time of this shot two of the skulls were still on the front of the balcony and that they had added banks of spotlights on either side of the booth. 

The Soundie features "Doodles" Weaver performing a piece written by James Copp III. Thanks to Mark Cantor for spotting the theatre and running this short as part of a presentation at Cinecon 58. He's the author of "The Soundies: A History and Catalog of Jukebox Film Shorts of the 1940s," available on Amazon. The short can be seen as a post from Mark on the Facebook page The World of Soundies. It's also on the site Jazz On Film. 

This 1918 vintage theatre at 3rd & Broadway was Sid Grauman's first Los Angeles operation. See the Million Dollar pages on the Los Angeles Theatres site for a history and many, many photos.