Loews defends ‘Menace’ hardball

Topper sez exhib avoided high rental costs

Loews Cineplex Entertainment CEO Larry Ruisi defended Thursday the exhib’s decision not to play “Star Wars: Episode I — The Phantom Menace” at its Manhattan theaters, declaring that Loews was determined to avoid setting a precedent allowing higher film rental costs.

“We play hardball … if you roll over on this, then we have to roll over for everybody else,” Ruisi said during a presentation at the ING Barings investment conference, adding that making such concessions would eventually lower the value of the company’s theaters.

“That is one of the reasons why we have the lowest film costs in the business,” Ruisi added.

Loews and “Phantom Menace” distrib 20th Century Fox deadlocked on negotiations over film rental terms for the pic last week. As a result, the “Star Wars” prequel is not showing on any of Loews’ New York screens, which include the nation’s top-grossing theater, the Sony Lincoln Square.

However, the disagreement, which centers on Loews’ unwillingness to change its long-standing policy of not paying a “floor” or minimum percentage of the box office, actually started well before “Star Wars” negotiations got underway.

In fact, Fox hasn’t booked a film into Loews’ Manhattan theaters since February. The studio’s last three films, “Entrapment,” “Never Been Kissed,” and “Pushing Tin,” played only in rival theaters in Gotham.

Ruisi argued that the decision not to play “Menace” was “not a material event for this company,” because Loews ended up playing the pic on 500 screens at 200 theaters elsewhere in the country. He said the circuit ended up generating $2.6 million on the pic Wednesday, or about 9% of the pic’s first day box office.

Earlier in the presentation, Ruisi noted that costs of operating theaters in Gotham were three or four times higher than elsewhere in the country. As a result, Loews has a “certain formula” it uses for negotiating film rental terms, but Fox did not want to use that formula with “Phantom Menace.”

In a separate interview, Lucasfilm president Gordon Radley told Daily Variety, “It was important to both Fox and us that the terms were the same for everyone. Other theaters are playing the movie in New York which are very good. It’s not like no one in New York wanted to play this movie. Why should (Loews) be given an exception?”

For years, most theaters in Manhattan did not pay floors, which meant studios sometimes ended up getting no money at all from Gotham houses on many films, despite brisk ticket sales.

But as more complexes have been built in New York in recent years, competition for titles has heated up, causing some theaters to agree to pay floors.

Loews’ tough stance won praise from some industry pros, who noted that no other major exhib stood up to Fox on “Star Wars.” But with a number of new multiplexes in the works in Manhattan, including an AMC megaplex in Times Square that will compete directly with a planned Loews site just steps away, holding the line on the no-floors policy will only become more difficult.

Asked by one investor whether the policy may have benefited rival theater chains, Ruisi noted that the condition of rival theaters in Manhattan compared with that of Loews theaters was “really night and day.”