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Featured player: Stelios Haji-Ioannou

Radical cinema plan isn't flying with distribs

LONDON — In Milton Keynes, a midsize town 50 miles north of London, the Hollywood studios have got a fight on their hands.

Their adversary is Stelios Haji-Ioannou, a ebullient 36-year-old Greek entrepreneur who has already humbled Europe’s biggest airlines with the success of easyJet, his revolutionary budget airline.

Now Stelios (as he’s known to everyone) has set his sights on conquering the film exhibition biz with the same no-frills concept — doing away with popcorn and selling tickets weeks in advance via the Internet for as little as 20 pence (32 cents).

His aim is to make his money by filling screens at times when they normally lie empty, and slashing overheads. But there’s one big problem — distribs, both majors and indies alike, are refusing to play ball.

The first easyCinema, a 10-plex which opened its doors May 23 in Milton Keynes, has so far failed to secure any first-run movies.

Stelios is offering a flat upfront fee, instead of the usual percentage of the gross. But he says no distribs will even talk to him about their latest releases. Instead, he is having to make do with yellowing second-hand fare such as “Catch Me If You Can,” “Daredevil” and “Bulletproof Monk.”

Facing with such unanimity and sniffing a conspiracy, Stelios has called for an investigation by anti-trust watchdogs.

“We’re in direct conflict with the distributors,” he says. “They are trying to put me out of business.”

He argues that distribs may be guilty of abusing their collective dominance and of “resale price maintenance” — the illegal practice of dictating the price at which exhibs sell their tickets.

The Office of Fair Trading has told his lawyers to go away and find the smoking gun.

Distribs deny any collusion.

Given the threat of legal action, none will speak on the record. But privately they complain variously that easy Cinema has not adequately explained its business model or its technology; isn’t offering enough money to make the experiment worthwhile; and is tearing at the complex value chain that binds producers, distribs and exhibs in a fragile web of mutual self-interest.

“Stelios has jumped right into the deep end without realizing quite how deep the water is,” says one distrib.

On a simpler level, they have been aggravated by the confrontational tone of Stelios’ public pronouncements, particularly when they have been willing to supply him any films at all.

That may explain why Stelios admits that he’s now having “extreme difficulty” in renewing the films he’s already got or getting new ones.

In its first week, the Milton Keynes cinema managed to sell 6000 tickets for a total gross (at 32 cents per head) of about $2000. The occupancy rate was 56%, well above the industry average of 20%. But that was only achieved because the cinema opened just three of its 10 screens and didn’t bother with matinees.

“It’s an uphill struggle,” Stelios admits. “But it’s right up my street.”

Despite his moneyed background (he’s the son of a Greek shipping tycoon), Stelios has always slipped comfortably into the mantle of the populist David against the corporate Goliaths, fighting for a better deal on behalf of the common man.

He comes from the Richard Branson school of populist self-promotion, performing his own stunts to boost his brand.

After Sony only agreed to give him “Darkness Falls” on payment of $2.08 for every 32 cent ticket sold, he stood outside the theater on opening night with a collecting tin, asking people to donate the difference towards his “Fund for the Protection of Consumers against the Hollywood Studios.”

He raised $80 — more than the entire audience had paid for their tickets — and gave it to a local charity.

Such provocative grandstanding has served him well in his other businesses.

But Stelios acknowledges that film exhibition is different. “In the past, I’m used to fighting competitors. Here I’m fighting suppliers. I have to admit it’s a tougher challenge.”

He has leased his Milton Keynes multiplex for five years, but has an option to exit after three. Although his preferred model is based on getting first-run movies, he’s willing to explore whether the second-run business could be a viable long-term alternative.

No such chain currently exists in the U.K.

One thing’s for certain — Stelios is not going away without a fight, and it’s sure to be entertaining however long it lasts.

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