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Exhibs: Glass half full

ShoWesters see shakeout nearing end

LAS VEGAS — Happy days — or at least a lot of less miserable ones — are here again.

Exhibs breathed a little easier here at ShoWest, feeling that the worst of their fiscal woes is behind them. Yet Jack Valenti showed up to throw a damp towel on the exhibs’ party.

The Motion Picture Assn. of America chief gave his annual state of the biz report at the confab.

Domestic movie admissions fell 3% last year, even as grosses hit an all-time high. But Valenti also noted a 25% uptick in admissions in 2001 so far compared with the same period last year.

Other stats showed Hollywood studios released 18% fewer films last year — 84 — while spending 8% more to make and market individual pics. The average negative cost on studio pics released in 2000 rose to $54.8 million from $51.5 million a year earlier, and prints and advertising added an average $27.3 million compared with $24.5 million in 1999.

Although the statistics were sobering, the upbeat exhibs held onto the optimistic party line, especially since the first quarter of 2001 has been a blockbuster.

Indeed, there was scant evidence of the exhibition industry’s recent hard times among habitues of the annual trade show.

More than 3,000 exhibs, distribs and press hangers-on made merry during ShoWest 2001’s panel sessions and parties, despite the march of circuit after circuit into bankruptcy court over the past year. And there was a central premise for the what-me-worry mood: The worst of it is over.

Indeed, conventional wisdom has it that maybe another circuit or two will join the 10 gone before into Chapter 11 reorgs — Regal Cinemas is the one most closely watched — but observers also believe that most of the biggest dominoes have already fallen. There’s also broad consensus that bankruptcy reorgs have accomplished a lot of good.

Most important, the court-supervised proceedings, involving major chains such as United Artists Theatres and Carmike, have seen exhibs cut loose hundreds of money-losing theaters whose long-term leases otherwise would have been impossible to untangle. As a result, industry screen counts that had ballooned out of control are now decreasing at an estimated rate of 200 screens a month.

John Fithian, president of the National Assn. of Theatre Owners, predicted in his keynote address that the biz would emerge from its fiscal woes stronger than ever, and argued that the industrywide building binge some say led to the current financial woes are not to blame.

“These improvements were necessary to preserve exhibition’s preeminent status as the first and best movie entertainment experience,” he said.

The culprit, Fithian said, came in the form of exhibs’ inability to shutter older, money-losing properties quickly enough. With reorgs helping solve that problem, an industry peak of 38,000 domestic screens last summer was cut to 36,379 by year’s end, according to NATO stats.

Meanwhile, evidence surfaced at ShoWest that distribs are overcoming their historic reluctance to accept simultaneous foreign bows for movie releases. Closely timing pics’ domestic and international releases could help fight movie piracy, but distribs say such a practice will spread only incrementally, as foreign territories still require special handling.

Andrew Cripps, prexy of United Intl. Pictures, says limits to the use of simultaneous foreign rollouts include variations in worldwide weather patterns and the observation of local holidays. Availability of a pic’s talent for promotional pushes is a big consideration, he adds.

Still, execs agree studios will make increasing use of synched domestic and foreign rollouts, for example, UIP’s synched foreign rollout for Universal’s “Mummy” sequel in May.

It’s little wonder distribs are increasingly synching foreign releases to U.S. rollouts. ACNielsen EDI prexy Tom Borys dishes stats showing that global success is as key to pics’ box office success as domestic performance.

Of the top 90 pics released over 1999-2000, an average 46% of total B.O. came from foreign markets, according to a recent EDI study. Borys noted the stats came despite a general downturn in foreign B.O. in 2000, with Mexico bucking that trend with a healthy 20% uptick in grosses last year.

Indeed, according to ACNielsen EDI, some 35% of domestic film releases also launched in one or more foreign territories within two weeks, and a whopping 60% rolled out in foreign territories within a month of opening in North America.

Meanwhile, domestic financial crises notwithstanding, would-be vendors of electronic-projection technology talked a blue streak about ways to convert theaters to digital systems.

Lab giant Technicolor and fiber-optics networker Qualcomm floated a proposal to finance theater conversions by taking a few cents out of each B.O. dollar to pay for the costs, estimated about $100,000-$150,000 per auditorium. And Boeing Digital Cinema, a unit of the airplane maker that proposes to distribute digital pictures by satellite, pitched leasing services of its Boeing Capital to exhibs.

Internet movie ticketing formed still another area of gathering interest for ShoWest attendees. A handful of such services — including Fandango.com, MovieTickets.com, AOL MovieFone and Hollywood MovieMagic — hawked their sites as exhibs and distribs alike predicted the public increasingly will take to Internet ticketing.

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