Silver (screen) lining: Neighborhood indie/arthouse theaters like the Roxie are weathering the financial storm.

Recession-Proof Theaters, to a Point

Michael Fox May 14, 2009

The economic downturn is hurting everyone, right? Yet Hollywood is on pace to break the box-office record it set last year. Likewise, the arthouses are doing steady business. Even concession sales at smaller theaters are generally level. So what’s going on out there?

Landmark Theatres CEO Ted Mundorff reports that in 18 of the first 19 weeks of 2009, the arthouse chain’s ticket sales were up from last year. Nonetheless, he says, "I don’t believe the industry is recession-proof. It’s all about the films. If there were 20 films in the marketplace no one wanted to see, they wouldn’t come to the movies. If we had great movies and we were priced out of the marketplace, people wouldn’t go either."

Gary Meyer, formerly of Landmark (as founder) and now operator of the two-screen Balboa Theatre in the Richmond District, generally agrees. "There are different segments of the market and they’re being affected in different ways. Blockbusters are doing what they’re supposed to do in a recession: bring in a general broad audience. The art market, I believe, has less to do with the recession and more to do with [the question of] Are there films that connect with that audience, and are marketed to that audience? And [do they] open in a week not overwhelmed by so many indies that the audience can’t tell the difference?"

"I don’t think the recession has much to do with it," Meyer says. "It can have its effect, but that market is driven by the breakthrough film that does well, and that market is too crowded right now."

At the two-screen Roxie in the Mission, Rick Norris says that the recession isn’t tagging the venerable theater. Then again, the Roxie didn’t benefit from the dot-com boom. "It’s hard to say that our business is mirroring the macroeconomic trend," Norris says. "So we’re not doing too terribly. But it varies from week to week. It either has to do with what we have on our screen or what else is going on around town."

So much for the good news, such as it is. Claudia Lehan at the Red Vic in the Haight concurs that programming more than the economic climate drives the box office, but also points out that smaller theaters have less margin to weather a bad week or two. "For a little while there," she says, "I think we were thinking we were immune, because we’re low-priced. Really in the past few weeks we noticed that admissions have been taking a little dive."

One factor hurting the largely second-run Red Vic is the ever-shrinking window between a film’s national opening and the DVD release. (The Roxie’s Norris sums up home-video history, "VHS: There’s the end of rep [houses]. Then there’s DVD. Then Netflix. Man, pounding the nail down harder.") Lehan notes that the Red Vic has had to make a costly adjustment to keep up. "We used to have a 14-week calendar, and now we print a 10-week calendar. It’s really expensive, but we offset the printing cost by selling ads."

The Balboa’s Meyer reports a litany of headaches, not least an inability to get art films that he could effectively promote. His alternate strategy of booking commercial films with a bit of a sophisticated audience is hampered by the studios abandoning the practice of listing in the newspaper ad the theaters playing a movie. He asserts, "There are only two reasons that the Balboa is still open besides the fact that I’m a fool, take no salary and I put my money into the theater: I like to save a neighborhood theater and I’d hate to put my staff out of a job."

Whether their competition is the Metreon or Netflix, neighborhood theaters have devised unique events to lure moviegoers. Meyer has always been proactive about adding value to his programs with special guests from the local film community (i.e., a Pixar animator or a star visual effects pro or sound designer). The Red Vic is likewise focusing on more fun events, continuing the success of the late-night hit The Room by booking it the last Saturday of every month for the foreseeable future. They’ll bring in burlesque dancers to augment the local five-day theatrical premiere of A Wink and a Smile. The Roxie instituted $5 Mondays as of the beginning of the year, and its six-movie, $36 discount card is a better deal than ever.

Exhibition, Meyer says, "is an ongoing evolution, as it has always been." He predicts that the country’s 35,000 theaters will shrink by half in the next eight to 10 years.

Landmark’s Mundorff is more upbeat, even finding a silver lining in home-video. "In reference to competing forms of entertainment, we embrace those. People who watch a basketball game tonight are more likely to go to a basketball game. Film isn’t any different. [DVD] prolongs the health of the film business. Through the years we’ve been seeing a smarter audience. When VHS came into the marketplace, you had generations of people seeing older films."

Mundorff argues that the pervasiveness of home video has made moviegoers more educated and, therefore, more interested in seeing new films. The Roxie’s Norris doesn’t disagree, but thinks the current box office reflects a simpler dynamic. "I don’t think you can discount the fact that people are going to movies because it’s still the cheaper thing to do," he says matter-of-factly.

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