The Movie House Massacre

Swelling monsterplexes. Bankrupt chains. Cutthroat competition. A glut of screens leaves the national and local movie-theater business reeling.

When Minneapolis Mayor Sharon Sayles Belton broke ground for a new 17-screen cineplex on downtown's long-dormant Block E last fall, it appeared that our fair city had picked absolutely the worst time to get into the movie business. Throughout the summer, the country's film exhibitors had stumbled gloomily, one after another, into bankruptcy court. The first to go was Dallas-based Silver Cinemas International, which owns the leading art-house chain, Landmark Theatres. In short order, Carmike Cinemas and United Artists Theater Co. followed. Finally, and to the chagrin of Wall Street investors, General Cinema Corporation declared bankruptcy, and industry-leading Regal Cinemas confirmed that it, too, was considering Chapter 11. The cineplex bubble had, by most accounts, burst spectacularly. The August 24 issue of Variety wondered along with many observers whether "a whole industry [can] declare bankruptcy."

The cause, those observers agreed, was overexpansion: A glut of theaters, combined with a depressed box office, meant that exhibitors were competing for increasingly meager shares of a shrinking market. Not surprisingly, the nation's theater chains began closing their less profitable outlets almost at once. Within the next few months, local venues like United Artists' four-screen Burnsville Center theater and General Cinema's Shelard Park theater followed downtown's last picture show, the Skyway, into oblivion. Despite Block E's $134 million worth of bells and whistles, the prospect for a new downtown cinema looked decidedly unrosy: A first-class and a coach ticket on a sinking ship get one to the same destination.

How did the film exhibition industry, once the darling of Wall Street, fall into this financial quicksand? And, perhaps more to the point, what do cutthroat capitalism, corporate myopia, and the commercial real estate market have to do with the average Twin Cities theatergoer's yearning for an Adam Sandler flick and a barrel of popcorn on a given Friday night?

Jeremy Eaton

The answer, as is often the case, depends largely on whom you ask. Russ McGinty, who watches the industry locally for the Illinois-based real estate firm of Grubb & Ellis, sees the current tumult as a period of retrenchment. "The big megaplexes are actually doing pretty well," he says. "But they're also siphoning business from older, smaller theaters. Those are the theaters that are going to get weeded out."

Like many analysts, McGinty suspects that the weeding is not yet finished. Of the major local players--Carmike, Marcus Theatres, United Artists, General Cinema, Loews Cineplex, Mann Theatres, and Muller Family Theatres--United Artists and General Cinema may be especially hard hit in the coming shakeout. The problem, McGinty explains, is a surplus of suburban theaters--especially in Maple Grove, Oakdale, Woodbury, and Brooklyn Center. Consequently, the first casualties, he suspects, will be the smaller, older theaters in these locales: The four remaining screens of UA's Eden Prairie theater, the four-screen Burnsville theater, and the six-screen Maplewood Mall theater are all oft-mentioned candidates for demolition.

Size may not be a defense for some older multiplexes. UA's 11-screen Woodbury theater could be eclipsed by a new Carmike 20-screen operation nearby. In Maple Grove, Mann's 10-screen theater could be hurt by an amenity-laden 16-screen megaplex, built by the aptly named MegaStar Cinema and scheduled to open this spring. Meanwhile, a new facility planned near Southdale could siphon business from General Cinema's eight-screen Centennial Lakes site. And, last week, rumors circulated that Loews would be closing its nine-screen Willow Creek cineplex and three-screen Westwind theater (though Willow Creek's manager, denies it). As a general rule, McGinty speculates, any small venue within five miles of a megaplex may soon meet the same fate.

What's happening is, in essence, economic Darwinism. And if the natural selection continues, the low end of the food chain--neighborhood theaters around the Twin Cities--will likely soon be extinct.

 

Stormy as the current climate may be, the turmoil doesn't surprise those familiar with the exhibition business. According to Stan McCulloch, a local film booker and former theater operator in River Falls, Wisconsin, with 50 years of experience in the industry, the latest spate of closings is standard operating procedure. "It's a business like any other. There's so much greed," McCulloch says. "But the competition's gotten more killer. The way it is now, the big guys get bigger and the little guys go to hell."

That mentality, McCulloch continues, is typical of the hypercompetitive film industry and may indeed date all the way back to the 1940s. In those days the majestic palaces that lined Hennepin Avenue in downtown Minneapolis dominated the local film business. Some of those, like the Gopher and Lyric, have since faded into memory. But the State, Orpheum, and migratory Shubert hint at the grandeur of Hennepin's "gilded ladies."

Because these theaters had long been owned or controlled by studio monopolies, McCulloch explains, they were insulated from competition by distribution deals that gave them exclusive access to first-run films 28 days before other area theaters. MGM, for instance, might release The Philadelphia Story at one or two theaters weeks before it appeared elsewhere, and audiences would be forced to congregate downtown to see the film.

Then, in the late 1940s, the U.S. Department of Justice dismantled the studio monopolies. Downtown's stately pleasure domes, stripped of their advantage, were now forced to compete with former second-run houses, including the Parkway Theatre, and now-defunct venues like the Terrace, the Nile, and St. Louis Park's Cooper Theatre. These were, by and large, magnificent places to see a film: Jack Liebenberg's Riverview Theater and Uptown Theater testify to the art-deco elegance of their ilk.

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