From the Alamo Drafthouse Bankruptcy to Refusing to Play Disney, It’s All About Exhibitor Survival
Tom Brueggemann
After a devastating 2021, exhibitors are united in their desire for survival. Their approaches are not.
For Alamo Drafthouse, that means Chapter 11 bankruptcy reorganization, closing three locations, and selling out to a private-equity investment group, with Alamo founder Tim League retaining a minority stake.
For Cinemark, it means turning away the opportunity to play Disney’s animated “Raya and the Last Dragon” March 5.
Nearly a year after domestic theaters closed in response to the growing COVID-19 threat, exhibitors face another reckoning: Now What? Their core business of showing movies for profit remains the same, but each theater or chain must also confront its own sets of strengths and weaknesses in order to move forward. That process places them on many different paths.
The Drafthouse reorganization, announced March 4, will allow its 37 owned-and-operated locations (as opposed to their franchises) to operate in the short term, increase their ability to negotiate with landlords, and potentially regroup. It’s a sequence we did not see with the much-larger AMC, which has been able to refinance without bankruptcy protection.
If moviegoing makes a substantial recovery, this approach positions Alamo to benefit. Even if exhibition shrinks significantly with theater closings, those that remain could add to the box office with less competition. That makes near-term financial grounding important.
Alamo will close the Ritz in Austin, Texas, as well as theaters in Kansas City, Missouri, and New Braunfels, Texas. The Kansas City location gained notoriety last summer when employee complaints about working conditions gained national attention. Alamo will also discontinue development of a new site in Orlando, Florida.
Cinemark, another Texas-based circuit, has reportedly refused to play Disney’s animated “Raya and the Last Dragon,” which debuts March 5 — the first day that New York theaters can reopen for business. Per Deadline, Harkins Theaters, dominant in Arizona, and Cineplex in Canada also won’t play the film. On the surface, it’s a strange choice. “Raya” is highly anticipated and the appetite for animation is high; last weekend, Warner Bros. title “Tom & Jerry” opened to nearly $14 million.
Like “Tom & Jerry,” which is available day-and-date on HBO Max, “Raya” debuts concurrently on Disney Plus for those subscribers who also pay $29.99 for a 48-hour rental. However, that’s not where Cinemark’s objections lie; industry sources confirm that exhibition terms are the problem.
In pre-COVID times, most major circuits and studios created a sliding scale of rental rates based on domestic total gross. For studios, that’s a lot less attractive in the face of a severely reduced box office. These deals are never made public, but sources suggest Disney has been more aggressive than other studios in its demands.
In the short term, this hurts the exhibitors. While it denies revenue to Disney, in many cases other theaters will have available screens that replace some of the loss. It also represents a kind of brinksmanship that can have unexpected consequences.
A one-film failure to come to terms is very unusual, but the Cinemark stance is meant to tell Disney that the theaters can’t (and won’t) operate under onerous terms. A strike’s success generally runs in parallel to the absence of alternatives, and for Disney — and many other studios — that’s not the case. Upcoming in May are “Black Widow” and “Cruella” and while Disney has committed to their dates, it’s made no promises as to the platform.
If enough theaters refuse to play shock-and-awe titles like “Raya,” or even Marvel, Disney could lose the premium presentation that fans want, along with their enthusiasm. By the exhibitors’ logic, that’s enough of a threat to force Disney to the table. On the other hand, it also could encourage further streaming adoption and push more Disney+ customers to pay the $29.99.
On the same day Drafthouse announced its bankruptcy, Angelika Film Center announced that it would expand its brand to include the Village East and Cinema 123. In reality, this represents little more than a logo change. Parent company Reading International owns 58 theaters under a half-dozen brand names, including Angelika and City Cinemas. The Angelika “expansion” is actually brand consolidation: the Village East and Cinema 123 were previously marketed under City Cinemas.
Key Southern California locations remain closed, but San Francisco is reopening theaters with a 25 percent capacity. It’s a positive move, however small: the city itself has only a few theaters. Many more are in the much-larger Bay area, which is already in operation.
More encouraging is Sony’s decision to move its release of “Peter Rabbit 2: The Runaway” May 14 (previously June 11). This suggests confidence that most theaters could be open by then and that the family-film audience is eager to return. Best of all for theaters, Sony provides a longer theatrical window than most studios.
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