News

Cinema Re-investment Continues

October 12, 2007 -- Pundits periodically warn that the end of the movie theater business is at hand, but that message is never believed by theater operators, such as Carmike Cinemas. With 2,399 screens at 276 locations at mid 2007, Carmike this week announced plans for the College Square 12 in Morristown, Tennessee, which is expected to be completed in Spring 2009 and will replace a nine-screen theater nearby.
Cinemas are essentially the “stores” of the movie business that interface with consumers, so continued theater construction is vital to maintaining movie going.
The cinema outlook was cloudy when a building boom in the late 1990s triggered a bust at the start of this decade. “In the 1999 to 2001 time frame, 13 sizable United States theater chains landed in bankruptcy, a casualty of audience demand for  state-of-the-art facilities and overexpansion of theater circuits,” notes Marketing to Moviegoers: A Handbook. Chapter 8 of the book titled Exhibition is completely devoted to movie theater issues.
U.S. screens soared from 17,590 in 1980 to an interim peak of 37,396 in 2000, according to the Motion Picture Assn. of America. After a two years of decline, U.S. screen count again began growing, reaching 39,688 in 2006 (see bar chart below). Most circuits are cautious about expansion, which should leave the industry healthier assuming attendance remains stable. Keep in mind that it is unwise to judge the health of the cinema industry by movement of screen count.
Carmike, which is based in Georgia and went through reorganization bankruptcy, was particularly hard hit because, until the bust, it emphasized modest theaters in underscreened suburban and rural areas. The circuit

 

 

now builds better-equipped theaters, but says 80% of its theaters today are in communities with population of less than 100,000, which indicates a strategy of avoiding costly big city locations.  Carmike – whose annual revenue runs at about $500 million annually now -- opened four new theater locations (with multiple screens each) in 2006 and plans one new theater in 2007, while closing unprofitable theaters.
            Regarding the College Square 12, a joint press release from the real estate developer and Carmike stated: “The new College Square 12 will have state-of-the-art stadium-style seating auditoriums, digital projection and digital sound, wall-to-wall screens and high-back plush seating with retractable armrests equipped with cupholders.”
“We are committed to the community and look forward to bringing the latest digital technology and state-of-the-art amenities to the area,” Fred Van Noy, senior vice president and chief operating officer, Carmike Cinemas, Inc., said in a statement. A nine-screen theater exists in the mall and will remain open during construction, and then will be converted into specialty stores. The mall already has 60 stores and restaurants. # # #