Last week’s $350 million merger of Cineplex Odeon Theaters and Cinemark USA to become the largest theater chain in the world couldn’t have come at a more propitious time than the annual NATO/ShoWest convention, which opens March 6 in Las Vegas.
The union of the two exhibition heavyweights (see story, page 22) is a clear sign of consolidation, growth and confidence in the domestic theatrical market.
But despite the positive financial outlook and an approaching summer brimming with strong commercial product, the annual Las Vegas love-in between exhibitors and distributors may be fractious.
Exhibitor consolidation is actually making ShoWest less necessary for studios because they can gather execs from the top chains, representing some 80% of the box office, in more intimate private gatherings.
Three studios – Universal Pictures, MGM/UA and Disney – decided that separate junkets for top exhibitors would be more effective than lavish presentations at ShoWest, where many attendees are vendors that the studios don’t need to impress.
Meanwhile, the current downturn in movie attendance – first-quarter ’95 will be off roughly 12% from 1994 – is in sharp contrast to the convention’s thrust as a summer cheerleader. Theater owners are less complacent about the feast and famine cycles, with so many major commercial titles battling for summer and winter screens. For the past three years, even studio execs have been begging to roll out major project in the first quarter of the year.
“The great strength in the business is that it can expand to virtually any dimension,” says Jeff Blake, head of Sony Pictures Distribution. “There are no bad weekends and, assuming you can get screens, seemingly no limits to the number of films which can be released at any time of the year.”
Box office slump
But recent experience flies in the face of industry wisdom. Unadjusted box office is at a five-year low, with few bright spots on the horizon before May 19. So far this year there’s been nothing comparable to recent early-year hits such as “The Hand That Rocks the Cradle,” “Ace Ventura” and “The Silence of the Lambs.”
And once again, summer is promising to be a bloodbath. “This summer could be the biggest we’ve ever had because every studio has two or three major pictures in its lineup,” says Michael Patrick, chairman and CEO of Carmike Theaters, one of the nation’s largest chains. “That’s why the jockeying began so early.”
Disney kicks off its summer slate with “Crimson Tide” May 12 and then bows its latest animated musical, “Pocahantas,” and the Sylvester Stallone-starrer “Judge Dredd” – which is rumored to be going head to head with Universal’s Tom Hanks-starrer “Apollo 13” on June 30.
Universal also has a potentially potent slate, with “Casper” and “Waterworld.” Warner Bros, comes in with “Batman Forever” and “Under Siege 2: Dark Territory,” while Fox has “Mighty Morphin Power Rangers” and “Die Hard with a Vengeance.” Paramount’s triple threat is Mel Gibson’s “Braveheart,” Michael Crichton’s “Congo” and the Harrison Ford-Julia Ormond starrer “Sabrina.”
May 5 has suddenly become a battleground, with a half dozen preems, including Universal’s “To Wong Foo” with Wesley Snipes and Patrick Swayze, the romantic comedy “French Kiss,” starring Meg Ryan and Kevin Kline, and Michelle Pfeiffer in “Dangerous Minds.”
“I’d say there’s no question that spreading out hit releases would be better for everyone. I’m just not sure it would appreciably change the annual box office,” says Cineplex senior VP Howard Lichtman. “You can see a long-term consistency and stability in the yearly box office.”
Daniel Harkins of the Scottsdale-based Harkins Theater chain goes a step further, referring to moviegoing as “virtually bulletproof.”
“It’s the strongest of any nonessential commodity,” says Harkins. “It’s elastic; no one needs it and everyone wants it. It survived television, which gives essentially the same product away for free, and it defies retail value. For $5.50 you can buy something that cost $100,000 or $100 million.”
Meanwhile, credit rating agency Standard & Poors signaled some worries March 3 about Cineplex Odeon’s merger plan with Cinemark USA. S& P put the ratings of both companies on credit-watch with negative implications, which means the ratings could be downgraded after a review.
The agency noted that a downgrade was unlikely because Cineplex was buying Cinemark mainly with stock, but it added that it had “several concerns” about the merger.
The agency said: “Given the historically different operating strategies (between the two companies) S& P is concerned that unforeseen issues could arise with the consolidation of the two groups.” Cinemark has concentrated on building new theaters in smaller markets, charging lower admission prices, whereas Cineplex theaters are in bigger markets and charge higher prices.
S& P said it had “further questions” about the expansion plans. Karp said March 2 that the new company planned to build or acquire 900 more screens over the next three years, at a cost of $200 million, to add to its 2,800 screens.
Cineplex’s rival exhibitors downplayed suggestions that the merger would spur any similar deals. Several of the other top 10 exhibitors are pushing ahead with consolidation but by small acquisitions rather than through big deals.
Rival execs differed on the merged company’s ability to extract better pricing terms from the Hollywood studios. Michael Campbell, CEO of the eighth largest theater chain, Regal Cinemas, said a more important factor for bargaining with Hollywood than market share was competition in an exhibitor’s markets.
“I think there has always been some misconception that the bigger you are, the more buying power you have. I think that is a factor but in many cases Cineplex and Cinemark theaters are still going to be located in competitive situations to other operators and I think that is the real factor,” Campbell said. He added that the presence of competing theaters in individual markets meant that exhibitors bid up the prices for pix.
But Philip Singleton, exec VP and chief operating officer of the fourth largest exhibitor, AMC Entertainment, said the merged company would benefit somewhat in its dealings with the studios as a result of its stronger domestic market share.
Last month, about 32 major exhibitors travelled to London for a junket sponsored by MGM/UA. The studio screened “Rob Roy” and showed footage from four of its upcoming releases – “Hackers,” “Species,” “Showgirls” and “Goldeneye” – with a guided tour of the James Bond set with Pierce Brosnan. Some who attended the bash said they were extremely impressed with the presentation. The strongest reactions to the product reel were for “Goldeneye” and “Showgirls.” About the latter comments ranged from “sexy” to “raunchy,” with one particularly explicit scene described by several exhibs as “offensive” or “over the line.” Several exhibitors were also disappointed that no “Cutthroat Island” footage was available.
“I think MGM/UA is back in business,” says Ted Conley, head buyer for Cinemark. “Brosnan has the old Bond flair. It looks very, very good. ‘Showgirls,’ everyone agrees, has a major problem unless it can be trimmed. Theaters located in shopping malls have leases that prevent us from showing those type of films.”
Travis Reid, executive VP of New York-based Sony Theaters, said all four titles “looked like they had a shot. ‘Showgirls’ is very, very sexy. What I’m worried about most is the problem with advertisers. Television networks can’t advertise this. Maybe the studio can capitalize on the controversy.”
Universal, which invited exhibitors to the set of “Apollo 13” in November to meet Imagine filmmakers Ron Howard and Brian Grazer along with stars Tom Hanks, Gary Sinise and Bill Paxton, had another shindig after the film was moved into the summer. On Valentine’s Day, the studio put up select exhibitors at the Four Seasons Hotel in New York and showed slides of several films, including “The Hunted” and “Billy Madison,” before rolling out the trailers and extra footage for “Casper,” “Apollo 13” and “Waterworld.”
The response was upbeat from exhibitors who attended the event, who compared the enthusiasm around “Apollo 13” to that of last year’s “Forrest Gump,” which got tremendous audience buzz at ShoWest.
After the footage was screened, the studio took exhibitors to the Toy Fair to see Casper merchandise, an excursion that was not well-received.
“It was chaotic,” said one exhibitor. “I don’t think any of the film buyers really cared. I think they just wanted to show us that this was their juggernaut film.”
And “Waterworld?” Many exhibs were disappointed that they didn’t get a chance to see Kevin Costner’s gills and webbed feet, but the footage the studio screened received a positive response, with one calling it “Mad Max on Water.”
Disney, meanwhile, has opted for a Friday event on the lot immediately after the Las Vegas show ends March 9, with a day in Disneyland on Saturday. That event, which is limited to a key group of exhibitors, is officially the final presentation of Showest.
“You wonder if these separate little junkets are going to be a trend for studios,” says one exhibitor who attended the Universal bash.
“We accomplished a great deal,” says MGM/UA worldwide distribution president Larry Gleason about his studio’s bash in London.
“The invited group represented about 80% of the domestic box office and we had their attention for three days. It also provided us with a venue to meet with our UIP managers.”
Although MGM/UA popped for airline tickets and hotel accommodations for attendees of the London event, the studio will still wind up hosting a lunch at ShoWest, although it won’t be showing a product reel. Insiders say that the studio had lobbied for the lunch prior to a change of heart in mid- January. NATO/ShoWest officials refused to let it back out.
But organizers told MGM/UA that they wouldn’t have to shoulder the entire cost: NATO would underwrite talk by luncheon speaker Gen. Colin Powell on 100 years of exhibition.
Powell backed out last week, which may be just as well. When asked about Powell’s familiarity on the subject of cinema history, a NATO/ShoWest official said a military aide assured him the general “has a standard speech that can be adapted for any occasion.”
Martin Peers in New York contributed to this report.