From Where I Sit...Again

I am lucky.?I had the privilege of growing up in this business of motion pictures.?This year I am celebrating 48 years in exhibition and distribution and looking back on my dad’s 38 years in distribution.?I think my diapers had the Universal International logo emblazoned on them.?

My mom once told me that I got the nickname Buck because it was the first year that Universal offered health insurance and that year the deductible for child delivery was one dollar.

In the year of my birth, there were 26 branches spread across America.?And, each branch was a unique film community.?Those communities consisted of bookers, buyers, branch managers, division managers, theatre managers and local advertising and marketing people.?

One the things that is burned into my memory is there was a drive-in theatre in Pittsburgh that every year at the end of the season, they would invite the entire film community to an event celebrating the end of a successful season.?It was hosted by an Italian family (the Ranelli’s, I believe).?They slaughtered a pig and a lamb and made the best fresh sausage which they cooked in a giant cauldron.?It was spectacular.?It was a great way to celebrate the end of the season. It brought the community together and erased any vestige of competition aside

My dad’s 60th birthday was celebrated at Holiday Amusements owner Joanne Cohen’s home in Cincinnati even though we had moved from that city on the Ohio years earlier.?What a celebration!?Exhibitors and distributors alike all come for one heck of a party.?It was a special day that I will never forget.

It’s always been about community and giving back.?While playing cards one evening, back stage of the Sheraton Theatre, eleven exhibitors in Pittsburgh heard a strange noise coming from the auditorium.?It was an abandoned baby!?They named her Catherine Variety Sheraton and raised her.?Thus was the start of today’s Variety Club for Children.

In a recent article, Barry Diller claimed that the movie business was dead.?Yes, the people centric movie machine that he knew no longer exists.

We are at a threshold of one heck of a big decision.?The movie business can either move forward rebuilding the community I described previously, or movies can become a blur of content, a commodity, much like the music industry.?Look what happened to the music business.?It’s a good lesson.?The music business has yet to fully recover and probably never will from the digital transition that it faced over 20 years ago.?Can you name the number one song on the charts this week? ??They don’t release albums, they stream singles.?And it all just runs together, frankly for me it’s a huge ball of confusion.

When I was young in the business, it seemed that every movie was an event, a happening.?You looked forward to the opening week because you were bombarded with press, promotion advertising and marketing.?While most people can still tell you, without looking it up, what the number one movie was at the box office, almost no one can tell you what the number one movie streamed was.?We need to learn from the music business’s lessons.

We have a choice.?We, as an industry, we can make a commitment to what has been a successful pattern of release and honor the theatrical window of at least 60 days, or face an economic slide that will be unprecedented in our industry along with many unintended consequences.?(Subliminal message:?Hey Wall Street!?How many billion dollar movie franchises have there been without a theatrical release??I’ll wait…)

While business has been picking up, it is still only at half of where we were for the same week pre-pandemic.?How many theatres will survive at 50% of revenues??If the total box office goes from $11.3 billion to $5.7 billion can AMC, Regal and Cinemark, who invested in theatres that cost upwards of a million dollars per screen survive or will they slowly go back to the landlords and smaller local deluxe, boutique cinemas, multi-use family entertainment facilities and restaurants that show movies will emerge?

The New Media trend has been built to operate in a vacuum. ?It a horribly vertically integrated monster. A production, distributed by our company, goes to our cable network or our streaming service.?Sounds to me that is exactly what the Paramount Consent Decree was for.?This myopic view is very dangerous as it limits your audience to only your subscribers. It stratifies the magic in a horrible way.?I’m happy to see the digital expand the market. But the market is not infinite.?It has limitations. This market is about to kick back??First, consumers are not going to subscribe to every service.?Churn rates are going to become very important.?I absolutely hate my credit card getting hit each month by these services, along with music service, satellite radio and now all of my “cloud” software for managing my home and business. The market is also limited by time.?People are not going to watch your any one service 24/7.

The Scarlett Johannsson suit against Disney is just the tip of the iceberg.?The stars, agents, directors who share in the back-end of a picture will all be disadvantaged.?You will see more and bigger clashes between Hollywood, talent, agents and “New Media”.?If the movie studios are so myopic that they only serve their company, their stockholders and their subscribers, then they are doing a disservice to the film community.?This battle will determine if there is any remnant of the Star system left intact.

In reviewing the grosses of the past few weekends, I have realized that we are still being affected by the Covid pandemic.?Theatres have yet to bring back their audience in full.?We have learned a lot.?Yes, if there were no theatres, people would stream more.?But, when Disney touts that they did $60 million in premium streaming on Disney Plus, the inference is that 2 million paid $30 each to Black Widow or Jungle Cruise.?This is not the case.?I estimate that a minimum of 5 additional people watched those movies in the subscriber’s living room, on a blow up screen in the back yard, in a large group at a campground or in a pop-up theatre.?Also, the current mindset that “If it’s on the internet, it’s free” also has an effect.?These movies show up faster and on more pirate websites.

When our industry first talked about converting to digital, my response was “Not everybody has a 35mm lab in their basement.?When we convert to digital, anybody with a computer has a lab.”

Anybody can go to a theatre. You aren’t limited by a subscription. ?It’s just a matter of choice.?But if your movie is on a service that people don’t subscribe to, it doesn’t necessarily mean that they will convert to a new subscriber.?I’m glad to see the digital footprint expand our business, but it is in many ways a pandora’s box.

In a strong economy, money flows.?In a weak economy, money sits still or stays in one place.?Hey, Wall Street, think about how the money flows on a billion dollar movie franchise.?60-65% goes to the studio, the theatre gets its share.?The attendance generates concessions sales so monies go to Coca-Cola, Pepsi, Hershey’s, Nestle as well as the distributors of those products.?The theatre pays its rent or its mortgage from those revenues.?They pay their banks, REITS and shopping center developers.?The movie studios pay the hedge funds that financed the movie, they pay SAG royalties, agents, agencies, stars, producers and directors.?There is a whole economic ecosystem that is disrupted by the change in distribution.?It’s not as simple as if we don’t play theatres, all the money will then go to the streamer.

We had our fun.?We learned some things.?But, it really is all or nothing.?The industry as a whole must make a collective commitment to the theatrical window or the results will mirror the music industry.?It’s been 20 years since streaming music made its impact.?They industry has yet to recover.?Let’s not look back 20 years from now and say the same thing about the movie business.?We can prosper if we do it as the film community.?Just as the Pittsburgh film community saved Catherine Variety Sheraton, we can save this baby.