COVID threatens ‘the cultural water cooler’ of small movie theaters. Will they survive a slow holiday season? – USA TODAY

Film writer Lindsey Bahr of The Associated Press ponders the future of movie theaters post-pandemic. (Dec. 10) AP Domestic

A smattering of moviegoers filtered into the Cinema Arts theater this week, a cozy art house wedged between a Korean barbecue restaurant and a school uniforms shop in a nondescript, 1970s-era strip mall in Fairfax, Virginia.

Normally, the place is pulsing with activity during the two-week holiday period, with long lines at the box office and to enter the six theaters, and sales generating a sizeable share of annual revenue.

Its terrible, theater owner Mark OMeara, who founded Cinema Arts 21 years ago, says of the current paltry crowds. Sales, he says, have been down about 80% during the pandemic compared with the same period in 2019.

The COVID-19 crisishas devastated movie theater owners of all sizes, but small independent owners are feeling it more profoundly. Nationwide, a handful already have gone dark permanently and 70% of small- to midsize movie theaters are at risk of shutting down without federal aid, according to the National Association of Theater Owners (NATO).

Many are scrambling to survive with private screenings and popcorn specials, among other strategies. Their loss would be a big blow to Americas cultural life. They represent a major source of independently-produced, more serious art films. And in an age dominated by sleek multiplexes, their grand old, marquee-adorned theaters often provide the only entertainment in Americas small and rural towns.

Fortunately, salvation appears on the horizon. A little-noticed provision of the $900 billion COVID relief bill passed by Congress this week would provide $15 billion to struggling small movie theaters, live entertainment and performing arts venues, and museums. A last-minute lobbying campaign by NATO added movie theaters and $5 billion to theoretically cover their financial needs.

It means they get a lifeline to get them into the spring, when a coronavirus vaccine is projected to be widely available, says NATO Vice President Patrick Corcoran. They get a chance for business to get back to normal.

Under the legislation which is being delayed by President Trumps push for bigger stimulus checks for households -- movie theaters can receive up to 45% of their lost revenue since April, capped at $10 million per entity. Priority goes to those with the sharpest revenue losses. The legislation excludes publicly traded companies, among other criteria to ensure the money goes to smaller operators. Yet theater owners must compete for the $15 billion with the live venues, and while the vast majority should be served, several could be left out, Corcoran says.

That could be fatal for some. Movie box office receipts have tumbled about 80% this year, says Paul Dergarabedian, senior media analyst at Comscore. While most states let restaurants reopen their dining rooms last spring, cinemas in many states werent allowed to return until August or later. About 55% of the 40,000 screens across the country are still dark, NATO estimates. Dergarabedian says about two-thirds of theaters are temporarily closed.

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While thats partly due to state mandates, many patrons are avoiding large indoor gathering spots out of health concerns, even with strict capacity limits. Theres also far less to watch. Hollywood studios have pushed back releases of blockbusters such as "Time to Die," the new James Bond movie, and Steven Spielbergs "West Side Story" from November or December into 2021. Others, such as Warner Bros. Wonder Woman 1984" and Disney/Pixars "Soul" have been simultaneously released in theaters and on streaming services.

The four big theater chains AMC, Regal, Cinemark and Marcus -- are suffering as well and their overhead costs are far greater. Regal Cinemas opted to close all 552 of its U.S. theaters in October. But unlike the independent owners, the public companies can raise capital in bond markets to tide them through, Corcoran says.

Independents broadly categorized as all those other than the top four -- face other financial pressures as well. The largest companies typically pay movie studios or distributors 52% to 55% of ticket sales, Corcoran says. That fee is somewhat larger for independent firms, which have less leverage. And with fewer screens, their sales, particularly for art movies, are highly dependent on the crop of films available at any moment.

17. Independent movie theaters     Just as major theater chains like Regal and AMC have shuttered thousands of cinemas across the country, smaller theaters that show independent films have also closed. While larger theaters could declare bankruptcy and still emerge after the pandemic, smaller cinemas may not have that option. Some theaters have offered virtual cinemas, selling passes for viewers to stream films online but with the abundance of streaming options at home, this option will likely not come close to regular ticket sales. Independent theaters may struggle for a long time to come as film production has largely stopped. Even when theaters eventually reopen, there will likely be a gap in new films being released to draw moviegoers back to the theaters.(Photo: RgStudio / E+ via Getty Images)

Its a smaller economy and more volatile, Dergarabedian says. Theyre having just a tougher time.

While the top four companies ownabout 55% of the nations screens, 1,214 firms have just one location, compared to 115 with five ormore, according to NATO.

Besides providing a showcase for art films, he says, independent owners can better tailor movies to local audiences, Dergarabedian says. And as the sole source of entertainment in many small downtowns, they generate significant additional revenue for the community.

They serve as a cultural water cooler and community gathering place, says Todd Halstead, executive director of the Independent Cinema Alliance. In turn, he adds, They drive foot traffic to other businesses. Movie patrons go to restaurants, they go shopping.

Even before the pandemic, independent theater owners grappled with persistentthreats from videocassettes to DVDs to streaming. Yet they were holding their own and enjoying steady sales before the pandemic, industry officials say.

The health crisis, however, has amplified earlier trends, particularly streaming.

OMeara, who owns another theater in Fairfax that plays second-run movies, called University Mall, says sales are down 73% there and 82% at Cinema Arts compared witha year ago.

Im losing money every week, says OMeara, who temporarily closed the theaters in March and reopened them in late August. Hes drawing from cash reserves to survive, deferring his building lease payments and taking a salary every third month. He and his wife, he adds, are dining out less.

OMeara has come up with ways to squeeze out a little more revenue. They include $100 private screenings for 12 or fewer people, curbside pickup of $3 popcorn and virtual cinema, which streams movies from Cinema Arts website and splits the proceeds with the studio. Hes showing "Wonder Woman" at University Mall starting Christmas Day, the first time he has run a new release at the theater, which charges discounted ticket prices of $5, and $4 for kids under 14 and seniors

Cinema Arts Theater in Fairfax, VA(Photo: Handout)

Without those measures, he says, sales would be off 90%. Although he says he would lose more money if he closed, he adds, I have to weigh it every day whether to be open.

He chooses to do so, he says, in part, because hes employing 25 mostly young workers, down from 42 pre-Covid.

I dont want to have people not working, he says. He also doesnt want to disappoint all the people who say how much they love us.

Jack McHale, 69, of Burke, Virginia, takes in a movie at Cinema Arts about twice a month.

It creates a community of filmgoers, he says. I like going with knowledgeable people who get all the right cues.

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He also enjoys kibitzing with people he knows as he waits in line and the intimacy fostered by OMearas film introductions on Saturday nights, which include asking the audience what movies theyd like to see. He can do without the larger screens provided by a chains art movie complex down the road because hes not watching the films for the spectacle.

Bill Campbell has a different business model. His sixplex in Sheridan, Wyoming, a twin-screen theater in Livingston, Montana, and single-screen venue in Miles City, Montana show first-run, mainstream movies in traditional-style theaters in rural towns that otherwise wouldnt have access to the releases.

But revenue is down 90% in the health crisis. Each week, Campbell is losing $1,000 at the Livingston theater and $5,000 at the Sheridan theater, prompting him to keep the Miles City venue shuttered. He could cut his losses by temporarily closing the other two, But once we reopened, I dont like the idea of closing again, says Campbell, who is also chairman of the Independent Cinema Alliance.

Bill Campbell in Centennial Theater in Wyoming(Photo: Handout)

When he heard about the federal relief money, I felt much better, he says. But he worries thenew studio trend of streaming some new releases the same time theyre released in theaters could continue even after the health outbreak.

Its going to hurt the industry, he says.

Lynn Kinsella, who owns the 646-seat Aurora Theater in East Aurora, New York, already has been contending with an 18-screen Regal multiplex just 10 miles away that boasts recliners and stadium seating. And studios insist that she run movies for at least three weeks, a challenge for a single-screen theater in a small town. Kinsella also steers clear of blockbuster science-fiction hits like Tenet," noting the areas conservative audience prefers family-oriented comedies and dramas.

The pandemic shut down her 95-year-old theater until late October. Then, because the Aurora region entered the orange COVID designation, she had to stop serving popcorn because it was deemed indoor dining.

Aurora Theater(Photo: Reagan Kinsella)

It kills, she says. She notes that movie revenue has dwindled to nothing she has been showing Christmas movies for free -- but shes eking out a small profit because of an adjacent gourmet popcorn shop and room rentalsfor corporate events. VIllage stores have been seeking donations for thetheater, raising about $2,000. Fortunately, shell start showing Wonder Woman Saturday but she'sunsure how it will perform.

One patron Wendy Alpin, 54, sees every movie at the Aurora. She grew up in town and the theater brings back childhood memories. She doesnt care a whit about stadium seating or recliners.

I dont go to movies to stretch out and lay around, he says. Id rather sit and watch the film. She also enjoys seeing neighbors she knows.

Kinsella says the federal aid would be a big help to us. It would allow us to rebuild.

Meanwhile, Its hard to be motivated, she says. Its very scary what the virus has done to small businesses... Is there going to be something else after the health crisis?

In the near term, she says, I may have to go into hibernation and temporarily close the Auroraagain.

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COVID threatens 'the cultural water cooler' of small movie theaters. Will they survive a slow holiday season? - USA TODAY

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