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United Artists Theaters Declares Bankruptcy  

post #1 of 9
9/18/00 at 8:11am
Thread Starter 
On September 5th, 2000 UA declared Chapter 11 in the US Bankruptcy Court for the District of Delware. This for all of UA's holdings.

Lee

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post #2 of 9
9/18/00 at 11:17am
Thread Starter 
Eric,

What shoould relly be done is to lift the Consent Decree that was setup in the 1940's, officially, so that Sutdios can also own movie theaters. There are three parts to movies:

1. Production
2. Distribution
3. Presentation

The Consent Decree made it illegal for studios to own all three. Two out of three was acceptable. NOTE: How Sony managed to get around this when they bought the Loews Theater Chain is beyond me.

For Hollywood to break even on a picture they have to earn bewteen 2.5 and 3 times the cost of the movie. If the movie costs, say 50 Million, then to break even will take bewteen 125 Million and 150 million. Hollywwod likes to break even on the theatrical showing, which represents 25% of the total revenue that the movie will generate. This way the remaining 75% which comes from some form of video presentation can be declared as profit.

Hollywood had a very dismal summer this year. Fewer people went to the movies due to expense, other interests and just a plain bunch of bad movies. I believe if the 11/15 to 12/31 "season" doesn't reverse this trend, you will see many more theater chains bleeding red ink.

Lee
post #3 of 9
9/19/00 at 4:41am
I happen to know a person in the Southern Corporate Office for UATC. What they basically were told is that they are overbuilt, and underperforming.

I don't know about anywhere else, but in the Dallas area, theaters have multiplied like rabbits everywhere. There are just so dang many, there isnt enough patrons to go around. AMC's and Cinemarks rule around here. I always choose UA because they are the only ones with THX houses. And even with that statement, UA's newest theater, the MacArthur Marketplace, less than a year old, was built with SDDS ONLY! No THX. Needless to say, I went there just once.

Todays movie public wants stadium seating, flip-up arm rests and cup holders. I could care less. I want a well lit presentation, adjusted and calibrated THX sound, and no crying babies.

Obviously I am in the minority.

So...what UA is going to do is close down the theaters that they lease, not own. Then start looking at performance. If it's marginal, it gets cut. Such is business, I guess.

CFG!
post #4 of 9
9/19/00 at 5:55am
Thread Starter 
Eric,

How the studios look at the total cost is as follows:

1. Actual cost of the movie
2. Prints - 2500 X $2,000
3. Advertising - Radio, TV, Newspapers
4. Points for major stars and the director.

Many times #3 costs more than the movie itself. All this is factored into the creative accounting that the studios have been doing for years.

Theaters bid for movies. The studio charges the theaters on a sliding scale. Here is an example of a "A" movie:

Week 1 - 100% of ticket sales
Week 2 - 90% of ticket sales
Week 3 - 80% of ticket sales

All the way down to 20% of ticket sales. In the first week the theater is only generating revenue from the candy, soda, popcorn, etc. If the movie is a "keeper" than the theaters make money. Titanic stayed in the theaters for 26 weeks and the theaters cleaned up. Battlefield Earth was around for 2 weeks so they made almost no money.

Lee
post #5 of 9
9/19/00 at 11:47am
Thread Starter 
Eric,

For The Phantom Menance. Lucas charged 100% for the first 2 weeks so it has definitely gotten worse since Batman.

Rocky Horror can really reck havoc in a theater. The ones that I went to were always run down and they even left the light partially on. I reember taking a date to one showing in Syracuse, NY. We got there late. What I saw was people buying the biggest popcorn, than dumping the popcorn in the trash and filling these huge containers with water, waiting for the rain scene. I immediately turned around, demanded my money back and went to see another film at another theater. But the theater showing RHPS held 700 seats and almost all were filled!

I believe much of the fuss with the FCC, MPAA. etc. is an attempt on the Studios part to help the theaters recover revenue and force people to come back to the theaters. Last weekend was the worse weekend in three years. The problem is that word..."force." We the consumer do not liked to be forced to do anything and I predict that this will backfire in their faces big time.

Lee
post #6 of 9
9/19/00 at 5:19pm
I wouldn't get too excited about UA filing Chapter 11, as this is the reorganization Chapter for business Bankruptcy. What it means is that they receive protection from creditors while continuing operations, though I believe that they are subject to Trustee approval for certain if not all expenditures.

It would be reasonable to expect marginal theaters to be closed, however.
post #7 of 9
9/20/00 at 11:09am
Thread Starter 
This information is very interesting. It looks like if things continue the way they are today...almost half of the theaters in the USA will enter bankruptcy.

I believe the theater chains are to blame for over building and the fact that Hollywood as not delivered good solid money making pictures.

I get the feeling that the theaters knew this might happen and will take advantage of the Chapter 11 to keep their theaters (where ever they can) and wind up owning them for a fraction of their cost because they will screw the people who built and financed them.

Lee
post #8 of 9
9/20/00 at 12:30pm
Greetings,

I attempted to post a few comments yesterday but midway this computer crashed and saved me from sending the blather.

Today: however, I feel susinct with my blather.

Stadium Theatres seem a short lived venue. Aside from the irony of a large crowd gathered to be mostly silent, our movie theatre expert (daughter, 14) finally admitted that the scene was about being seen not what you were going to see.

You still have all the same problems but now there on a bigger scale. More herding like cows, more cars/ parking in the lot, longer lines, longer waits, the list goes on forever. Fire codes, Blah blah...

The concept seemed doomed, to me, from the conception. And what are the rooms good for otherwise? Mary K meetings? No. Infomercial stages? No. How about converting them into class rooms as the average class will be 600 by the completion date.

Your grumbling pack mule, jdb

Investors get very excited about chapter 11.

------------------
Peabody Theatre
post #9 of 9
9/20/00 at 1:59pm
Theaters face a tough road. They keep building them larger and larger with more amenities to make them more of a destination rather than just a place to see a show. Some say that nicer theaters make it easier for a ticket buyer to rationalize the higher ticket prices.

With respect to stadium seating, I heard once that one of the main reasons for it was that more seats could be put in a smaller amount of floor space. Real estate is typically one of the most expensive parts of the whole theater, so if that's true, they might be around to stay.

------------------
Steve

Trying to figure it ALL out (and hope I never do!!)
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