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Netflix and Byron Allen Could Be Getting Into the Movie Theater Business

Landmark Theatres, a high-end chain known for its art-house offerings, has been quietly on the market for some time. But this week, two would-be buyers emerged as potential suitors: Netflix and Byron Allen’s Entertainment Studios.

The names of both companies floated in the press illustrates the seismic changes happening in the movie industry. At a time when ticket sales are on the decline, owning a theater doesn’t have the same profitability margins it once had. But there are other perks that could appeal to unconventional owners.

Netflix, which has been flirting with getting into the theatrical exhibition space as a way to qualify its films for awards consideration and to serve as a kind of test-kitchen for corporate experimentation, looked at the chain. However, it’s not interested in the company, according to sources.  (Netflix declined to comment.)

Netflix received four Oscar nominations this year for Dee Rees’ Southern epic “Mudbound,” but it has yet to crack the best-picture race with one of its movies. Although the streaming giant has had day-and-date releases for a handful of titles, such as “Okja” and Angelina Jolie’s “First They Killed My Father,” none of the major chains will carry a move if it’s simultaneously available on home platforms. If Netflix owned a theater, the company would be able to sidestep this barrier.

Byron Allen’s Entertainment Studios has also said it is kicking the tires on Landmark, as a way to give the newer distributor a higher profile in Hollywood. Some studios, worried about domestic attendance declines, believe that they need to more closely align themselves to the theatrical experience. Neon, for instance, was co-founded by Alamo Drafthouse head Tim League and the studio has used the theater-chain to engage in innovative promotions for its films, handing out merchandise and outfitting staffers with pins tied to its upcoming movies. And there have also been mutterings that Amazon Studios could be interested in buying a theater somewhere.

Disney owns and operates the historic El Capitan Theatre in Hollywood, using it frequently to tout its releases and to host premieres. It’s all part of a larger trend, where content creators are trying to forge a deeper bond with their consumers.

Disney is starting its own streaming service, following in the footsteps of CBS, and more entertainment companies are planning to build out their own over-the-top offerings as a way of better establishing their brands. Netflix already enjoys that kind of relationship with its users, having affixed itself in customer’s minds as a one-stop shop for video consumption.

It wasn’t always this way. Decades ago, studios owned the theaters that showed their films. That changed with United States v. Paramount Pictures, Inc., a landmark 1948 Supreme Court decision that ruled that this kind of distribution system was an anti-trust violation. That required most cinemas to be owned by third-party operators, requiring studios to have something of an arm’s length relationship with their clients.

The Landmark sale is a sign of changing business models. Studios are worried their films aren’t getting enough TLC when they’re screening in theaters and they may make start spending money to change things.

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