MOVIES Thriving business boosts theaters
Not since 1959 have so many flocked to movie theaters.
LOS ANGELES TIMES
Americans escaped to the movies more often this year than at any time since the Eisenhower administration, giving the nation's theater operators a much-needed surge in business as they continue on the road to financial recovery.
By some estimates, admissions could climb more than 10 percent over last year's record levels, with folks flocking to theaters more than 1.5 billion times.
When the holiday season wraps with major fare including "Lord of the Rings: The Two Towers," "Chicago" and "Catch Me If You Can," attendance is expected to hit levels not seen since 1959. Then, admissions totaled 1.488 billion.
Jack Valenti, president of the Motion Picture Association of America, said that although the population is larger today, this year's surge is "stunning" because of the choices technology provides, including VCRs, cable television, satellite dishes and the Internet.
Those outlets "didn't exist 42 years ago," Valenti said. "Movies were the prime form of entertainment." He noted that 1946 was the high-water mark for moviegoing at 4 billion admissions. The low was 1971, with 820 million.
Although Hollywood has released an enticing and diverse mix of hits this year -- from the budget-straining "Spider-Man" to the low-priced "My Big Fat Greek Wedding" -- there might be an undercurrent pushing consumers into theater seats: the lingering effects of 9/11.
"The real world is probably more terrifying than Americans have ever known," said Armond Aserinsky, a Philadelphia-based clinical psychologist who uses movies as a tool to treat patients and train colleagues. "It's the same kind of desire for escape we also saw during the Depression in the '30s."
Whatever's driving the trend, no one is complaining. Studio revenues this year are expected to top $9 billion for the first time, and exhibitors are anticipating a future without the need for Chapter 11 bankruptcy protection.
What caused problem
"If you're looking for a year to come out of reorganization, it doesn't get any better than this," said Larry Gerbrandt, chief content officer for Kagen World Media.
The theater business has spent 18 months trying to right itself after a multiplex building binge in the mid- to late 1990s forced a dozen movie circuits into Bankruptcy Court.
This move allowed exhibitors to shed unprofitable old theaters, exit high-cost leases and get out from under heavy debt loads.
This year, the last of the bunch -- Regal Cinemas, Carmike Cinemas Inc. and Loews Cineplex -- emerged from bankruptcy protection as various investment groups bought theaters at deep discounts.
The biggest of the deals belonged to Denver-based billionaire Philip Anschutz, whose assets include Los Angeles' Staples Center and the Los Angeles Kings hockey team.
He went on a buying spree that transformed the theater landscape, merging three major circuits that had filed for bankruptcy -- Regal, United Artists Theatre Co. and Edwards Theatre Co. A month later, he took them public. Parent company Regal Entertainment Group is the world's largest theater chain, with more than 5,660 screens.
Exhibitors are hopeful that this and other consolidations finally might give them more clout in dealing with the Hollywood studios, possibly leading to a reduction in the "film rental" that theaters pay distributors to play their movies.
The studios, which control how box office revenue is split with theaters, typically keep about 55 percent of the receipts today.
Concession profits
The surge in ticket sales also is important for exhibitors because of the vast sums moviegoers spend at concession counters.
"Not only are people buying more tickets to our movies, they're buying more popcorn, candy and sodas," said John Fithian, president of the National Association of Theater Owners.
Unlike having to split box office proceeds with distributors, theaters get to pocket the profits they make on food and drinks. Concession sales make up an estimated 35 percent to 40 percent of theater profits.
Still, as Mike Campbell, chief executive of Regal's theater operations group, cautioned: "Concessions make or break us, but we wouldn't sell anything unless the film product brings customers into the theater."
Although exhibitors tip their hats to distributors for providing movies people want to see, they say they also deserve some credit for the upswing by improving the moviegoing experience with updated megaplexes featuring stadium seating and state-of-the-art picture and sound presentations.
Campbell pointed out that during the last four or five years, "exhibitors have invested a huge amount of capital -- as much as $4 billion or $5 billion -- in new theaters." Meanwhile, they also have jettisoned their underperforming movie houses.