The 3-year-old joint venture between General Cinemas and Robert Redford’s Sundance organization to build arthouse theaters throughout North America is as good as dead.
What may survive are a pair of solo proposals by Sundance to open specialty theaters without its joint venture partner in two West Coast sites — one at the historic Aero theater in Santa Monica and another in San Francisco’s landmark Presidio district.
Meanwhile, the de facto death of the Sundance Cinemas joint venture — reps declined to confirm anything officially Tuesday — means two high-profile theater projects in Philadelphia and Portland, Ore., are going belly up. Efforts have failed to find alternative ways to fund the projects in the aftermath of last month’s Chapter 11 bankruptcy filing by General Cinemas parent GC Cos., a source said.
The half-completed Philly project would have placed a theater on property owned by the U. of Pennsylvania, a co-financier on the development. The Portland theater, which is about 75% built, was being developed by the Rouse development company for Sundance Cinemas.
With its only two active projects halted, about a dozen Los Angeles-based employees of the joint venture have been laid off, a source estimated.
“The joint venture still exists, but it’s sort of an empty vessel,” the insider said.
A search is under way to find funding for the Aero and Presidio projects.
Timelines for greenlighting and executing those prospective projects were vague. But a spokesman for the Presidio Trust, which oversees development in the former military installation, said public hearings are expected some time in the first quarter on the Presidio proposal.
Though it’s never opened a single theater, Sundance Cinemas originally targeted markets including Chicago, Boston, Texas, Florida and Canada, in addition to Northeast and Northwest sites.
It was originally expected that some number of Sundance theaters would begin operating by the end of 1998. Then, after various delays, a Sundance Cinemas spokesman said in January 1999 that the joint venture hoped to operate upward of 10 theaters of six to eight screens each by 2002.
GC’s Chapter 11 filing proved the final writing on the wall for the joint venture, as the Chestnut Hill, Mass.-based exhibitor was to have provided the lion’s share of funding for Sundance Cinemas projects. That became impossible when it entered the court-supervised reorganization and halted all of the company’s construction projects.
The bankruptcy filing, as well as Chapter 11 moves by several other movie chains, are traceable to multiplex building binges throughout the exhibition industry. Circuits have become bogged down by inordinate debt as a result of their rapid expansion, and they have failed to create enough new revenue to adequately service their loan agreements.