What would you say if I wanted to open a business with you? I have a great idea. We will make 85% of our money by selling three simple products. Sound good so far? Okay. So. To get people into our building to purchase these three products, we will install extremely expensive state of the art high tech equipment and lure the customers in by selling tickets to someone else’s product. Still with me? Not really? Well, then, I should probably tell you that the business supplying our “bait” will take more than half of the money we make selling their product. They will also have us at their mercy and threaten to pull their product from our shelves even after we’ve promised our customers access to it. Sounds insane, right?
That’s the nature of the theater business.
To be honest, I have no idea who in the world thought this type of business model was a great idea. In my simplistic view, the studios would own theaters. They would compete with other studios. So instead of corporate theaters like Regal and AMC, you’d have a Warner Brother studio next to a Disney studio.
I don’t know a lot about the history of theaters but will do some research and save that for another post. For now, I will tell you a little about the weird way the studios operate.
In the interest of full disclosure, this blog is reflective of my experience over the last 15 months and may not be true of all theater/studio experiences. You, our amazing friends, have been with us since way before we opened and we have always shared the theater process with you. It’s been a while since we went there.
This is one of those things I thought would get easier over time as we figured out what the studios wanted. And at times, this has been true, but overall… dealing with the studios is an incredibly difficult and frustrating experience.
Before we opened, there were the agreements. Pages and pages of documents and contracts that even me with my law degree struggled to comprehend. Unfortunately, it was kind of an all or nothing scheme. Kind of like those “do you agree to these terms of conditions” boxes you check on virtually every website ever. If I disagreed with a term, the studio wasn’t open to negotiation. It was more likely to be an “Okay, so, no Disney movies for you” type response.
These agreements are full of payment terms that are muddy and complicated. We received pages with addresses for overnight film rental payments and regular payments. We had information for bank wires. We signed personal guarantor forms making individuals liable for the corporations’ debts. (This troubled me as an attorney because of the protection incorporation supposedly offers the individuals).
A couple of weeks before our first public shows, our film booker, J. told us to send $500 to two different studios for advances on two of our first movies. Great. We haven’t even opened yet, and we owe money for showing movies?!
Advances serve as a credit and prepayment. Essentially, we send film rental payments every week. After the first week of the film, we subtract the amount of any advance from the total we pay. It could take us several weeks to use all of the advance. It’s also possible that we don’t use it all and will have a credit on account. Example: we pay $500 for Spongebob. We owe the studio $1500 for the first week rental based on ticket sales. We will only send them $1000. Or. We pay $2000 for the advance for Terminator. We owe the studio $1846 for the first week. We do not send payment the first week and save the remaining credit for the next week.
Credits are frowned upon. I once argued with a studio representative because he insisted that any credit on account would go to unclaimed property for the state. I was vaguely familiar with the concept from my time in law school and while I didn’t know the California specific approach, I was pretty sure that a credit would not turn into unclaimed property overnight.
The problem with advances is that we don’t always have a lot of notice. Our week is a little complicated so stay with me while I explain. New movies typically release on Friday. So, our week is Friday to Thursday. Usually, we get a chance to premier the movie on Thursday nights.
We talk with our film booker on Monday. She gives us a general idea of what the movies for the week will be. That means that on Monday the 1st, I know what we will be playing on Friday the 5th. Sometimes, we have to wait till Wednesday to get full confirmation because things can change. That gives us 3 days to get the studio the payment.
Sounds simple enough, right? In theory. However, the payments are mailed across the country. Occasionally, the money goes to a lock box nowhere near the studio accounting department. When that happens, the check has to be processed in several different places before the studio even finds out that we paid. Those different addresses I mentioned earlier also affect things. If a studio wants a payment overnighted, we will send it to a different place than a regular payment.
When we know a week early that the new movie will play on Thursday, we have a few more days to work with, but it’s not a fast process.
For a while, we got into a routine, knowing when our advances were due and how much. This changes over time.
The other problem we run into quite consistently is that we don’t pay the right amount. Not by choice or intention. Simply by means of their strange ways.
We don’t get statements generated regularly. We get a booking confirmation. This contains the terms of our agreement. Sometimes the booking is “aggregate” and we pay the same amount for each week we have the film. More often, we pay “scale” and the amount we pay depends on how well the movie does.
For example, we were told to pay 60% of Batman v. Superman. So for the first few weeks, we calculated what 60% of our ticket sales on that film would be and sent WB a check. A couple weeks into this, late on a Wednesday, we received an email explaining that we should pay 62% and the money was due by Friday. These small percentages can be very little money. (Next week, we are trying to get cleared with Disney over a 1% difference in Zootopia equal to $12.02).
The scale can go the other way, too. We might be told to pay 60% and we actually owe the studio 58% and this results in a credit. (see above)
The scale can change over time and isn’t finalized until after the movie is finished. I don’t mean finished at our theater. I mean finished in general. After a movie leaves our theater, it might still be in theaters. After a film finishes the run in main theaters, it will go to sub run- the dollar theater types. This means that it could be weeks/months before we know we owe money. Then, surprise! We won’t release your movie because of $12.02 you owe on a movie from 3 months ago.
The other complication is that studios do not have the same payment routine. Generally, we could pay every 14 days. On some films, the studio will want a “7 day pay” and they want payment before Thursday of the following week or they won’t give us the movie for week two. They might give us the keys week to week so they can control whether or not the movie will actually play.
The scary thing about all of this is that the studio can literally deny us the movie. While it might not sound like a big deal, it is. By this point in the week, we’ve already published our ads in the newspaper and our website has been broadcasting our new movies and showtimes. We’ve done a lot to help promote the new movie. We may even have sold tickets. All of this and at the movie time we might not be able to show it, and unfortunately, most of our customers would not be okay with us saying “The studio didn’t give us the movie.” Especially when they’ve made special arrangements to come. Customers shouldn’t be okay with this either. It’s totally not fair.
I see it as the studio hurting themselves. I know we are a small theater and our numbers won’t matter in the big picture, but I like to think the studio would want all the money they could get on their opening numbers.
The part that frustrates me the most is that this isn’t an issue of us not paying. It’s an issue of us being trapped in this world where corporations have the upper hand. You wouldn’t see Disney threatening to keep Star Wars off of Regal’s 7000 screens.
In most worlds, you know what is expected of you. This theater world is really hard to exist in when you’re used to that type of arrangement. While most parts of working in a movie theater are fun and interesting, this is one that is pure stress and frustration, but it is also interesting and we love sharing the experience with you. Hopefully, this shows you a little bit more of the complications behind what goes into running a movie theater. It really is so much more than “just pushing play.”
We also don’t have a lot of remedy. What are we going to do? Just get the movie from somewhere else?
I hope that you are reading this in a hypothetical situation and haven’t just returned home from a disappointing trip to see the new movie that we weren’t given. However, if you are sitting on your couch, disappointed, my hope is that this helps you know that we are disappointed, too.