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While Film Exhibitors have made record revenues this year.......

Posted by Chris Garrett (B) on April 18, 2002 at 15:28:06

In Reply to: Why are theaters doing so well dispite DVDs and home theater? posted by TA on April 17, 2002 at 21:02:27:

attendance has been flat or slightly down. Ticket prices have been raised quite a bit over the past 1-2 years.

I ran a 16 screen theatre here in Miami for AMC and my company hadn't made money in two and a half years--and we were actually in good shape, LOL. Many chains filed for bankruptcy during this period, but this was mainly due to overexpanding and in having to close down the smaller underperforming stores, like mine in January. The problem with theatres is that they're a 'single use' facility and the exhibitor is usually locked into a 20 year lease, so if business turns south, you're still on the hook for the rent.

I was paying $78k/month for rent/tax/CAM on 48,000 square feet and about $10k a month on electricity---alone.

Going to the movie is still the cheapest form of entertainment (outside the home and excluding going to a park) and at $10/2+ hours in air conditioning, a good value. Bowling is close, but not for everyone.

There is still a two year window to navigate through, while the surviving chains cut their losses, but concession prices are maxed out and there is only a little bit of room left for raising ticket prices. Trust me, until then, Theatre Chains aren't the most attractive businesses to invest in.

As far as Digital Projection in the near future? Probably won't see it anytime too soon because at $100k/screen, the chains just don't have the cash.

Take care, Chris

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