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TOPIC: Why the huge theatre chains are having problems

Why the huge theatre chains are having problems 30 Aug 2000 08:56 #663

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Laura from Milan Italy writes:

Now I have a question for you. For my thesis I am reading and trying to find as much info as I can on the exhibition industry in the US. I read an article on Variety and other online publications that Carmike and Regal have filed Chapter 11. Obviously I understood that it has to do with financial problems/bankrupty but I will grealty appreciate if you or other bigscreenbiz users will explain me more in depth.

Thank you in advance for the help you may give me
arrivederci
laura



Mike Hurley
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Re: Why the huge theatre chains are having problems 30 Aug 2000 09:08 #664

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Hi Laura, it's complicated but I'll give it a try. In the early and mid 90's grosses were going up as good movies kept being made and people were going to the movies more and more. These tickets were being bought in fairly non competitive markets. The independents that were going to be killed off had been already, all the markets were being served fairly evenly. Along came stadium seating which some people think is just about the cure for cancer. At the same time the American economy was on a great big hot streak. There was a stock market bubble. The theatre comapnies stockes went up and up and they started building new theatres, expensive theatres, state of the art theatres often in direct competion, sometimes accross the street from each other, or next to their own still functioning theatres on which they had long term leases. So they built and they built. But the problem was that people don't go to the theatre they go to the movie. And with fewer huge pics (oh Titanic where were you???) doing less buisness (this summer was the straw that broke their back) and with so many screens that everyone who wants to see a movie often sees it in the first couple of weeks and there's less holdover at lower film costs %...it all adds up to trouble with a capital T. I have [people threatening to build a 3 million dollar theatre near me and it's a stupid joke. They're insane! There isn't enough people but investoprs did not understand that and they rushed to make this all possible. Now they've rushed away and very little new construction is possible. In fact the industry stock anaylsts are estimating that in the USA we need to lose 15,000 screens! That's 3,000,000!!! seats!
Wow. It's still unravelling and will continue to. Stay tuned for more grief!

Mike Hurley
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