Selling LA's Laemmle Theatres Could Mean Specialty Market Disruption: 6 Possible Buyers

Candidates include Amazon, Netflix, and Landmark, and a new owner's priorities could impact the future of specialty distribution.

Tom Brueggemann

The Laemmle Theatres still take newspaper ads, which proclaim its slogan: "Not
Afraid of Subtitles." A family-owned theater circuit that operates 42 screens in nine
Los Angeles locations, it's maintained a commitment to specialized film for decades.
However, sources confirm that the circuit is now for sale, and potential buyers have
been quietly examining its financials for some time. (A Laemmle representative did not
respond to a request for comment.) 

A Laemmle sale would be meaningful on the basis of history alone; the company was
founded in 1938 by Max and Kurt Laemmle, cousins of Universal Studios founder Carl
Laemmle. Their theaters remain a mainstay of specialized exhibition in Los Angeles,
where they provide the top platform for foreign-language films and for awards-
qualifying documentary engagements year round. They're also a major source of
revenue for smaller distributors. If a company without the same programming interests
acquired the Laemmle chain, it could have tremendous impact on the specialized
exhibition ecosystem. 

Industry sources point to a handful of potential suitors, none of which include the three
major national circuits (AMC, Regal, Cinemark). These include the Los Angeles-based
Landmark Theatres, the leading national specialized chain; Ventura, Calif.-based
Regency Theaters, with theaters in four states; New York-based City Cinemas;
streaming giants Netflix and Amazon; and Mexico-based luxury chain Cinepolis.
But who will buy? Specialized theater grosses face decline, the market for subtitled
films is particularly challenged, and these theaters face competition from larger chains
that play top films like "The Farewell." Sources say that Laemmle owns most of its
locations, and would prefer selling to a single buyer. 

IndieWire spoke with multiple sources in exhibition and distribution to create a
portrait of who might buy the Laemmle chain, and why (or, as is often the case, why
not).

Landmark Theatres
The dominant player in North America, it's the go-to suitor whenever any specialized
theater comes up for sale. Most recently, however, Landmark was for sale itself: Last
December, New York real estate mogul Charles Cohen bought its 56 theaters, which
contain 268 screens in 27 markets. That may leave little appetite for another
acquisition, particularly since Landmark already works closely with the distributors
that service Laemmle. 

The Royal is to Los Angeles what the Lincoln Plaza Theater was for New York, but it
isn't really competition for The Landmark in West Los Angeles, which is Landmark's
centerpiece LA theater. That prime theater rarely shows subtitled films — but Cohen
also owns Cohen Media, which primarily acquires foreign-language titles. Cohen's
first-run films usually open at the Royal; if Cohen doesn't buy it, who would? There's
no guarantee that a future owner would maintain the same policy, or even keep the
property as a theater.

Reading Cinemas
This New York-based exhibitor operates theaters in several countries under multiple
brands. In North America, this includes City Cinemas (a chain that includes the Paris,
which is expected to close soon ) and Angelika Film Centers in New York, as well as
several studio-release multiplexes under the Reading brand, primarily in California.
For a growing and dynamic chain, Laemmle could seem like a good opportunity to
expand. Reading already has expertise and contacts for both specialized and
mainstream films, it's familiar with platform runs of subtitled films, and it understands
the niceties of operating high-profile locations under the industry microscope.
Like Landmark, though, it's questionable whether the strategic benefit would justify
the expense and risk.

Netflix
Just as when Landmark was for sale, the Netflix name has come up multiple times as a
potential Laemmle buyer. Forging a theatrical presence is critical for the handful of
Netflix films that seek awards consideration, and there's a lot of value in a base of
established, upscale-audience theaters that count many Academy members as regular
patrons. Also, as a company with an elevated presence in documentaries, Netflix
theaters could offer filmmakers a guaranteed presence in a key market.
That said: If Netflix wanted to accomplish this without the bother of purchasing
theaters, it could be a silent partner for another buyer. Banks would welcome the
financing guarantee of Netflix making a multi-year commitment to rent screens at
multiple theaters. 

Netflix has had a national deal with the 16-location luxury theater chain IPIC, which
filed for chapter 11 bankruptcy this week. That may make finding another option more
appealing.

Amazon
Amazon Studios has a distribution arm that's seen several theatrical successes (and
failures), but it seems to be transitioning to a business model that allows faster
streaming availability for some films. While Amazon and Netflix share many business
concerns, some observers believe that Amazon might have greater interest in buying a
nationwide circuit that could also house Amazon Hubs.

Cinepolis
The Mexico-based international exhibition giant has 26 theaters in seven states, with
several in California. Well financed and primed to expand, it specializes in luxury,
amenity-laden theaters in upscale areas. It just acquired the two-city, five-theater Texas
circuit Moviehouse & Eatery, and Laemmle locations could serve as a starting point
for transitions into the Cinepolis model. However, that vision would almost certainly
exclude Laemmle's traditional specialized programming. It would also face some stiff
competition from Arclight. 

Regency
Perhaps the best fit could be this chain with about 165 screens in 29 locations, mostly
in Southern California. The circuit is a hodgepdge of acquisitions that include
Westwood's Village and the Bruin (currently featured in "Once Upon a Time in
Hollywood") as well as a number of mid-sized complexes in upscale and/or older-
audience areas similar to Laemmle's. These offer a mix of programming, with
specialized at some locations. The company's film buyers include veterans with an
interest in independent film.

Acquiring Laemmle would give Regency greater local and national prominence. This
could be the one buyer with the most to gain while maintaining Laemmle's role as a
specialized exhibitor.

Netflix signs lease agreement to keep New York's Paris Theatre open

Netflix on Monday said it signed a lease to keep open New York's Paris Theatre, one of the oldest art houses in the nation.

The financial terms of the lease were not disclosed. Netflix said it will use the Paris for special events, screenings and theatrical releases of its films.

"After 71 years, the Paris Theatre has an enduring legacy, and remains the destination for a one-of-a kind moviegoing experience," Ted Sarandos, Netflix's chief content officer, wrote in a statement. "We are incredibly proud to preserve this historic New York institution so it can continue to be a cinematic home for film lovers."

The deal comes as Netflix and large theater chains like AMC Theatres have been unable to reach an agreement on the length of time Netflix original films can be shown before appearing on the service. Netflix shows movies in cinemas at the same time or shortly before they are streamed in the home, a practice that many theater chains say undermines their business.

One potential solution for Netflix is to lease or buy its own theater chains. That would allow the Los Gatos-based streaming company to screen its own films, while also endearing itself to filmmakers. Netflix has been in talks to buy the Egyptian Theatre on Hollywood Boulevard. Showing movies on the big screen also makes them eligible for awards considerations.

Sarandos recently told the L.A. Times that Netflix's increasing number of original movies adds value to the service and that the platform's global reach is appealing to filmmakers.

"For less than the cost of the movie ticket, you get a month of Netflix," Sarandos said. "At the end of the day filmmakers want their films to be seen, their work to be out there in the culture and that happens on Netflix better than anywhere in the world."

  

AMC Theatres Faces Existential Threat From Coronavirus Shutdown: 'I Don't See How They Survive'
"We're witnessing the single greatest disruption of the film industry in American history," said Eric Schiffer, CEO of private equity firm The Patriarch Organization

AMC Theatres, the nation's largest movie theater chain with more than 630 venues in the U.S., faces an existential threat after the coronavirus pandemic forced the company to close all of its theaters in the U.S. and U.K. for the next six to 12 weeks.

The debt-laden exhibitor's stock price has plummeted 83% in the last year, finishing Tuesday's trading session below $3 a share as its market cap has shrunk to just $271 million. All of this raises questions about whether it will still be left standing when the dust of COVID-19 eventually settles.

"I don't see how they survive this," said Eric Schiffer, CEO of private equity firm The Patriarch Organization. And B.Riley FBR analyst Eric Wold on Wednesday downgraded AMC's stock from a buy rating to neutral and cut the price target to $3.50 from $13.

AMC was in a precarious state even before the COVID-19 pandemic, with more than $5 billion in debt at the end of 2019 and losses of $149 million for the year (after recording a $110 million profit in 2018). During the company's most recent fourth quarter conference call, AMC CEO Adam Aron said that he and other top executives had agreed to cut their salaries and bonuses for three years in exchange for stock that would only vest if the share price doubles.

One industry insider told TheWrap that the company's aggressive spending on acquisitions of chains like Carmike and the start of the A-List subscription moviegoing program has put it in a worse short-term position than other national theater chains like Cinemark.

AMC spent millions to build up its A-List service, an alternative to the now-defunct MoviePass that has lured 900,000 subscribers since its June 2018 launch but only turned a profit in the most recent fourth quarter.

In recent years, the company has also gone on an acquisition spree, buying Odeon and UCI Cinemas Holdings along with Carmike Cinemas in 2016, and Nordic Cinema Group in 2017.

For a while, AMC had a financial parachute from Chinese conglomerate Dalian Wanda, which acquired a majority stake in 2012. But in 2018 Wanda scaled down its position in the theater chain as Chinese regulators incentivized companies to cut back on their foreign holdings. AMC then turned to private equity firm Silver Lake, closing a $600 million investment in September 2018.

The coronavirus pandemic has only exacerbated AMC's predicament. Schiffer said this is simply a show of how flawed the theatrical release system is. "We're witnessing the single greatest disruption of the film industry in American history," he said. "It's a horrifying example of how vulnerable the ecosystem has become."

Not only has the spread of the coronavirus led to the closure of AMC and its rivals' theaters, but it threatens to upend studios' theatrical and business model. Studios have delayed productions and pushed release dates, and worse, some have decided to squeeze the theatrical window between an in-theater and video-on-demand home releases on titles like Warner Bros.' "Birds of Prey" and Universal's "Trolls World Tour."

Lightshed media analyst Rich Greenfield told TheWrap that if the "Trolls" on-demand release works, we could see a major change in how the major studios approach theatrical distribution. Debates around changing theatrical windows have been happening in Hollywood for years, but coronavirus has hastened studios' willingness to innovate.

The writing's been on the wall so long in fact that in October AMC entered the home entertainment business, launching a video-on-demand service that will be available to members of its AMC Stubs customer loyalty program.

"If we take a step back and look at the wider picture, there's been a move to streaming, this just escalates it," Schiffer said. "This is catastrophic for the industry, and it will forever change the industry because you're engraining in people new behaviors."

There are many questions that remain unanswerable, including how long the shutdown will last — and how quickly consumers will return to cinemas even if the pandemic subsides. "How many people are going to feel comfortable sitting in a crowded theater still come September?" Schiffer said.

While Wold lowering estimates for the company's revenue through 2021, he told investors that he didn't see any long-term impact to AMC or the the industry from moves like Universals to release "Trolls World Tour" direct to consumers.

"Not only do we view this as a unique and strategic move being taken by Universal to take advantage of the significant marketing dollars that have been spent ahead of those releases and to counter the adverse impacts of 'social distancing' and recently-impacted moviegoing demand, we continue to believe that this is not a strategy that can be financially successful for most big-budget, high-profile titles — and would expect this move (and possibly others) to be very unique to the near-term outlook and not one that would linger into the second half of 2020 or 2021 as the theaters reopen to the public," Wold wrote.

"We will assume that attendance and revenues are essentially eliminated until at least the end of April," he continued. "Although this will create a meaningful strain on AMC's balance sheet in the coming weeks, we believe the company has the ability to preserve necessary cash by reducing variable operating expenses and near-term capital expenditure spending"

The potential long-lasting ripple effects the pandemic could have on Hollywood aside, the nation's largest movie theater chain being forced to lock its doors as its shares inch further and further down does not bode well.

The pandemic is likely to sink domestic grosses for 2020 below $8 billion for the first time since 2000, analysts have said, and perhaps more troubling is that admissions could fall below 1 billion tickets sold for the first time since 1976.

"It's going to be very difficult for them to survive this, they're going to eat through so much of their cash. They're likely hoping for some sort of federal bailout," Schiffer said. "The damage AMC and the motion picture industry has endured has been exacerbated by a banana republic approach to how to fix this... You'll see a lot of people lose their jobs and some companies are likely going to go under."

https://www.thewrap.com/amc-theatres-survive-coronavirus/

James Mangold Says Movie Theaters Are Hurting Themselves with Awful Film Projection

The "Logan" and "Ford v Ferrari" filmmaker says theaters are creating their own damage in the fight against streaming.

Edward Norton made headlines in October 2019 after sharing his belief that movie theaters were doing more damage to the theatrical experience than streaming giants such as Netflix. The bulk of Norton's argument centered on movie theaters offering poor theatrical projection and thus not offering a better alternative to streaming and television, which is an opinion "Logan" and "Ford v Ferrari" director James Mangold doubled down on in a recent interview with Discussing Film. For Mangold, poor projection and lousy theater conditions aren't doing theaters any favors in the fight against streaming.

"The reality of theater projection has gotten so tragically bad in so many cases," Mangold said. "The fight to put your movie in a theater that stinks and someone's eating an enchilada next to you — half the screen is out of focus or too dim. Theatrical has its own problems, which is that if it doesn't make itself a sterling presentation that you cannot approximate at the home then theatrical kills itself without any other delivery method even competing with it. When I talk to theater owners or theater chains, that's the big thing."

Mangold recounted how a "Ford v Ferrari" screening earlier this year in New York City was ruined because of poor projection. The filmmaker was in attendance to participate in a Q&A and watched as "Ford v Ferrari" was screened through a projector that still had a 3D lens attached to it. Mangold noted it was an Academy screening of the film at a major theater in New York City. Two "Ford v Ferrari" screenings that evening were presented through 3D lenses even though the film is not a 3D movie. Mangold said this is a frequent issue at theaters and the reason for it is either "financial or physical laziness to send someone up and put a different lens in the projection system."

"My point really is just that theatrical is a wasteland right now of a lot of shitty delivery of movies to audiences who are paying a premium to see them on a big screen," Mangold said. "That's something that needs to be solved in the future."

When asked whether or not filmmakers should therefore have more involvement with the exhibition process, Mangold answered, "Well, of course, but do I believe they do? No, because the theaters are, like all capitalist endeavors, in a never-ending cycle of running from bankruptcy. They pay people as little as they can. They hire as few people as they can. They serve snacks that cost them 45 cents to manufacture at prices 22 times the cost of creating. They put you in a theater that is as possible as it can be at the minimum amount of expense."

Mangold added, "Once in a while, the main theater chain will renovate and put new equipment in. But if the people running the equipment aren't great, trained, or even give a shit because they're paid so badly then the result is always going to be questionable. It's just that simple. It really doesn't matter what filmmakers say when theater owners are worried about whether they can pay rent next month. More than whether some spoiled filmmaker thinks that their sound is too low or the image brightness isn't high enough. That's not where their heads are."

Agreed.  Although I wasn't aware that enchilladas were contributing to the challenges of properly projecting a movie.  (Unless it was the projectionist eating it, I suppose.)

Mega-Chain Cineworld Closing Regal Movie Theaters Following 'No Time to Die' Delay
The company is the largest exhibitor in Britain and the second-largest in North America.

QuoteFollowing the delay of more Hollywood tentpoles — including James Bond film No Time to Die — mega-movie theater chain Cineworld is planning to keep all of its locations in the U.K. and the U.S. closed for the time being,  The Sunday Times reported on Saturday.

The British-based company is the largest circuit in the U.K with more than 120 sites, and the second-largest in North America, where it operates roughly 540 locations under the Regal Cinemas banner. A substantial number of these theaters hadn't yet reopened after forced to go dark because of the coronavirus pandemic.

Across Hollywood, the surprise Saturday-night headline prompted immediate concern that AMC Theatres and Cinemark Theates could soon follow suit. The movie business had hoped the box office could recover in earnest this fall, but such isn't the case in many major markets.

Source

Regal is my town's chain, so this has such a stunning finality to it.  To think of not only the multiplexes here, but all over the world shuttering their doors is haunting.

Arclight Cinemas, Pacific Theatres Will Close Permanently - Variety

Rest well, former employer ~
You brought many a merry memory.
And to some, a public celeb spotting, to boot.

Crossing my finger some other landlord buys the Cinerama Dome and keeps it a cinema

That's AWFUL news.  Was telling eward we saw Mad, Mad World there--during it's first week of being open!  Saw first-run ET, Close Encounters, Apocalypse there.   The Master, opening weekend.  The last time I was there was literally for QT's drunken warm-up for OUATIH...

I was so looking forward to finally going 

https://twitter.com/ripleytenenbaum/status/1381788407614017536

I doubt PTA has anywhere near the fortune QT has amassed for himself.

Is it time to set up a GoFundMe?