Closing of Chief theater shakes up film market for Wildhorse
August 31, 2012
Carmike chooses not to renew Chief lease
Carmike Cinemas, which will operate Chief Plaza Theater through Sept. 6, is a top-five theater company by size with about 240 locations and 2,245 screens, according the Ledger-Enquirer in Columbus, Ga., where the company is based.
Carmike decided not to exercise its option for a five-year extension to its Chief lease, which will expire Oct. 1. The Ledger-Enquirer reported Aug. 1 that Carmike had lower profits than expected in the second quarter of 2012, with part of the loss coming from moves to extinguish its debt. Carmike has been working on repairs and upgrades to its existing theaters for the past few years, according to the article.
Steamboat Springs — "Going digital is not going to bring more people in the door," David Corwin said about Wildhorse Stadium Cinemas’ conversion to digital projection. And while there might be some small consumer preference for digital, he echoes the sentiments of theater owners across the nation.
What will bring more people through Corwin's door is the Sept. 6 closing of the Chief Plaza Theater, which is operated by Carmike Cinemas. Corwin — who is the president of Metropolitan Theatres, which operates Wildhorse — estimated that when the Chief was open, his company's theater still played the majority of the top films and absorbed as much as 80 percent of the revenue from film in the city. Now, Wildhorse will get the whole pie.
More than that, the closing of the Chief opens up the film distribution market in Steamboat. With two theaters in town, Steamboat was what Corwin referred to as an allocated market: Film distribution companies split upcoming theatrical releases into bundles that then are allocated to theaters in the market.
Alan Stokes, vice president of film marketing and advertising for Metropolitan Theatres, said that in a market like Steamboat, distributors will offer a package of films with two tracks, or lineups, of films. The tracks contain a mix of films, pairing strong films with weaker ones to reach some parity of offerings between tracks.
"There was a time when it was blind bidding," Corwin said. "But not anymore."
Corwin said the film distribution company makes the final decision but that there is no objective standard of how that process goes. Even the period of the package varies depending on how many films a distributor is releasing in a given time.
When Steamboat has only one movie theater after Sept. 6, Corwin said, it becomes a closed market.
"We'll be able to play all the top films," he said.
"What it does is it makes it a little more selective in what we play," Stokes said. "Now, you’re down to six screens (in Steamboat). But we're going to get the best-quality film that's coming out.
"We're excited that we're going to be the premier venue, and we're going to do our best to accommodate everyone and what they want to see."
Transition to digital projection
While the Chief had completed the transition to digital projection (that equipment leaves with Carmike), Wildhorse only has two screens with digital projection. But that should change by the end of the year. Metropolitan Theatres is working on completing the transition to digital for all its 101 screens at 19 sites by the end of 2012, Corwin said.
Film production companies have been putting pressure on theaters to make the transition for the cost it saves in 35 mm production and distribution. Those savings are realized by the film companies while the initial outlay for new equipment largely is borne by the theaters. And because digital projection doesn't lead to more patrons and revenue, like Corwin said, it has been a tough transition for many independent theaters. Even for a chain like Metropolitan, it has been a process years in the making, Corwin said.
But it has to happen — and soon. Some studios will stop producing films in 35 mm by as soon as 2013.
The independently owned Majestic Theatre in Crested Butte finished its digital conversion Friday after a successful fundraiser for the initial costs and finding financing for the rest, according to an article from the Crested Butte News. The article also states that the Majestic Theatre is taking advantage of a subsidy from production companies that will pay back the cost of the equipment throughout 10 years if it is installed by Sept. 30.
Corwin said production companies do offer some incentives to theaters to make the transition. A virtual print fee is a payment from a studio to a theater when digital prints are delivered instead of film. The fee is set up to redistribute the savings realized from moving away from 35 mm prints by paying the theater part of the difference between digital print costs and film costs during a set period of time. A virtual print fee program typically sunsets when the equipment costs are recouped.
"We have 35-year-old film equipment that runs like new," Corwin said, but the digital equipment will have a shorter lifespan than film equipment as the technology will improve and change more rapidly.
But with the departure of Carmike, resulting in 100 percent market share, and the digital transition nearing completion, Wildhorse is looking pretty good.
To reach Michael Schrantz, call 970-871-4206 email mschrantz@SteamboatToday.com