Theater owners and investors won’t find much encouraging news in the latest overview of the exhibition industry by Moody’s Investors Service. “Despite an increase of about 6% in US and Canadian movie theater admissions in 2012, the overall trend is negative,” the debt-rating firm’s Assistant VP Karen Berckmann says this morning. Last year’s increase shows that “appealing product will still draw people to theaters.” But attendance remains 15% lower than it was in 2002 when it came close to 1.6B. “Given alternatives for consumers’ leisure time — from video games to Netflix to web surfing — we do not expect a rebound in movie attendance,” she says. Exhibition chains also have discovered that if they continue to raise ticket prices then “they risk turning off customers and reducing attendance.” What to do? Theaters have fattened their bottom lines by improving concession offerings, selling more on-screen ads, showing alternative content (such as concerts and sports events) on slow nights, and generally cutting costs. The premium-priced tickets for 3D movies are probably a wash since they also come with higher licensing costs, but could provide some modest help as studios and theaters experiment with the format.
The country’s two largest theatrical exhibition chains, AMC and Regal, this morning officially launched Open Road, a venture that will acquire and distribute films that can play in wide release on about 2000 screens. Distribution veteran Tom Ortenberg will run the company. He expects to have three pictures out starting this fall. “Once we’re up and running, we will be distributing 8 to 10 films per year, and possibly more,” Ortenberg said.
The move had been expected since the Sundance Film Festival in January. Open Road joins a crowding field of companies targeting wide-release finished films. What’s unusual here is that two theater chains are behind what Ortenberg termed a “straight content play.” The two entities control between 5,000 and 6,000 venues each in the U.S. (Regal is slightly larger) and between them are responsible for about 31% of the theaters in the U.S., doing about 45% of weekly business. Theater chains like AMC and Regal have railed as big studios continue to shrink theatrical windows on their event films. This venture gives the chains a little opportunity to push back: When those same studios supply stinkers that barely pack theaters or after their big films are mostly played out and hanging on to squeeze out those final drops of theatrical revenue, AMC and Regal can conceivably allocate screens to its own product. Just recently, AMC and Regal were among the chains that said they would not give screens to films that DirectTV wants to show on VOD four to six weeks after theatrical release.
While the largest allocation of P&A is TV commercials, Open Road product has the potential benefit of in-house promotion for films that will get at least 25% of theater penetration in AMC and Regal theaters. Ortenberg said he was unsure exactly how those promotional opportunities would manifest themselves.
“At its core, Open Road is a content play that recognizes that in many weeks of the year, AMC and Regal have excess capacity in their theaters,” Ortenberg told Deadline. “What’s better than to address this by filling those screens with great movies and stories looking for distribution? These films will be playing in all theater chains nationwide, and we will be competing for the same films that other midsize distribution companies go after. We will be an acquisitions-based company. We will not produce, we will not develop, but we are open to pre-buying from script stage or acquiring a completed film. Within those parameters, we will look for films we can acquire at an attractive price and market and distribute in a cost-effective manner to as broad an audience as possible. My experience shows those pictures will be available.”
EXCLUSIVE: The latest in a parade of major stars being drawn to the Broadway stage: Ben Stiller and Edie Falco are making deals to star on Broadway next spring in The House of Blue Leaves, a revival of John Guare’s seminal stage play. Mark your calendar for an opening date of next spring, at the Walter Kerr Theatre, with Scott Rudin producing. For Stiller in particular, the stage turn is a homecoming. He made his Broadway debut in the 1986 revival of The House of Blue Leaves, a play that originated off-Broadway in 1971. This time, he’ll play the male lead role of Artie Shaughnessy, a frustrated zookeeper who dreams of making it big as a songwriter. The play takes place in 1965 on a day that Pope Paul VI is visiting New York. Falco will play his wife, Bananas, a schizophrenic who is headed for a mental institution. The play takes place in their Queens home. It is a 60s-centric storyline, with political bombings and the Vietnam War among the plot developments, but the 1986 production won the Tony and Drama Desk Awards for Best Revival.