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Notes
from Austin: SPECIAL REPORT
THE CLASH OF THE CINEMA TITANS by Cinemad
(Our contributor is a theater manager for one of the
largest exhibitor chains in the country. Having spent decades
in exhibition, the author has seen many trends and fads in
the industry. He does not see a bright future for the megaplexes
which have invaded our communal existence or for the corporate
conglomerates that own them. No wonder he wishes this piece
to be contributed anonymously. Filethirteen is proud to present
this insightful look at the way movies are shown. And how
the end may be nigh... - Lodger)
It's been a war now for 4 years now. Exhibitor after exhibitor,
playing the battle zone game against each other. Who will
be the winner? The exhibitor... NO. The movie going public...
NO. The motion picture distribution companies... YES.
In the last 20 years, the motion picture exhibition industry
weathered the threat of video and cable. With NATO, it has
been a strong force in lobbying the lawmakers, working with
a coexistence that was paralleled by none. Over the history
of theatre ownership, exhibitors have come and gone. But,
in this recent history, nothing compares to the aggression
and greediness as witnessed by their own ranks against each
other. The era of showmanship has crumbled into the "I can
build it bigger and better and faster than you" mentality.
The blood bath has been explosive. The results have ripped
dramatically through the financial world.
The building boom for theaters has happened several times
over the last 2 decades. There has been a steady progression
of building, by screen count, by theaters. The single theaters
went to twins, then the triplexes and quads became the norm.
As attendance numbers continued to drop, more screens meant
more screens. The advantage of Dolby stereo offered what movie
goers couldn't get at home. By 1990, ten screen cinemas were
big business. Yes, the ten-screeners cut into the market pie,
but the coexistence was capable of surviving in most areas.
Wise exhibitors took to protecting their markets, or sat back
and watched the markets decrease. At about this time, a sleepy
format was beginning to show signs of growth. The IMAX theaters
with their booming sound and 4 story screens, featuring stadium
type seating, became the new standard for motion picture presentations.
It took nearly another 6 years for the exhibitors to wake
up to this unique way of showing movies. The exhibitors woke
up, all right, and then fell asleep and have been living in
a nightmare ever since.
From 1996 to 1999, several theater circuits took the IMAX
idea to heart and raced to build as many of these MEGAPLEXES
with stadium seating, large screens and booming sounds as
they could. The PRICE TAG for one of these MEGAPLEXES can
run between $10 and $20 million. How did they do it? They
simply went into.... DEBT. AMC, Cinemark, and Regal were the
huge aggressors in this game of one-up-manship. Other exhibitors
like United Artists, Carmike and LoewsCineplex, sat out the
race and built sparingly in key locations.
The dust has cleared and the pictures are not pretty.
In early June, Bloomberg.com reported that Moody's Investor
Service, which monitors the business world has reported that
due to the major theaters exhibitors "overextension" of borrowing
money to build these huge MEGAPLEXES, the credit rating for
most of the MAJOR EXHIBITORS has been lowered, including AMC,
CARMIKE, REGAL and LOEWS CINEPLEX. CINEMARK was put on notice
that it could happen again to them. United Artists has delayed
the possibility of filing bankruptcy several times and Silver
Cinemas in Dallas, the owner of LANDMARK THEATERS, has filed
for bankruptcy to re-organize after closing a majority of
it's non-Landmark locations. All exhibitors are scrabbling
to close "low performance" theaters to offset loses. In some
cases, facing lawsuits from violating lease terms with malls
and shopping centers. Some locations are closed because it
is cheaper to just "pay the rent" than to operate the facility.
The virus of "low performance" locations has spread nationwide.
The idea of closing, rather than find and explore other alternatives,
seems more favorable to most of the exhibitors. Reporting
quarterly loses is becoming a epidemic.
Watch out, your local area theatre could be gone in 60 seconds.
Movie goers are flocking to the new megaplexes and deserting
the other theaters in the area. Putting up with limited parking,
crowds of 2 to 3 thousand at one time, packed concession areas,
other inconsiderate movie goers, dirty restrooms that staffs
can not keep up with and the highest admission and concession
prices... all for the NEW, CURRENT-AT-THE-MOMENT, STATE-OF-THE-ART
MOVIE GOING EXPERIENCE.
Sitting back, quietly, counting all the money that exhibitors
are making for them are the Motion Picture Distribution Companies.
Year after year they see record income from theaters. A good
movie will recoup it's production costs at the theater level,
it will enjoy the profit in video, cable and television. So,
why not threaten the theater owners with new technology...
DIGITAL. No more film, digital will distribute movies to theaters
via satellite, cable or the Internet. The cost to retrofit
the theaters to DIGITAL presentations is mind boggling. This
coming just a few short years after the exhibitors have nearly
bankrupt themselves, overextending to build (and retrofit)
to stadium style seating.
With all the debt, the debt restructuring, cash flow going
out to pay for "low performing" theaters, theater owners are
forced to be able to think "creatively" in order to run their
companies and to STAY IN BUSINESS. Most of the exhibitors
ARE NOT THINKING OUT OF THE BOX, they seem to be running away
and hiding in the box. SURVIVAL should be on the mind of each
exhibitor. Yes, survival, until the next busy season. For
some, they won't reach the NEXT BUSY SEASON. The necessity
of throwing good cash flow money into bad situations will
continue. The return investment on the megaplexes will not
be realized for some time, if at all. In the end, after Digital
takes it toll on the theaters, the final curtain will fall
on most exhibitors. The exhibitors have no one to blame but
themselves.
THE
CLASH OF THE TITANS PART 2 - "Your Ad Here: Advertising at
the Multiplex" by CINEMAD
THE
CLASH OF THE CINEMA TITANS PART 3 - "A Gun to Our Heads: Violence
and the MPAA Ratings System" By CINEMAD
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