Regal going Bankrupted

[Jedi Master Carr]

See this is what they get for not showing Rush Hour 2 :P

KNOXVILLE, Tenn. -- Regal Cinemas, the nation's largest movie theater chain, said Thursday it will file for Chapter 11 bankruptcy protection as part of a restructuring plan that will shift ownership to a group led by Denver billionaire Philip Anschutz. The filing "presents the most effective means to restructure the company's debt, strengthen its capital structure and position Regal to compete effectively in the film exhibition industry," Regal chairman and chief executive Michael Campbell said in a statement. Regal, like several other major movie chains, aggressively expanded in the late 1990s and ended up with too many theaters. The chain closed 98 theaters with 646 screens this year but still remains tops in North America with 3,898 screens in 338 locations. Under the reorganization plan, Regal's unsecured creditors stand to recover up to 100% of their claims through a $75 million pool set up by the new owners, the company said. (Associated Press

[Jedieb]

How the hell can you go bankrupt with so much revenue? I guess Regal and the industry really overextended themselves. The irony is that all of this expansion will probably eventually pay off big time. The original Regal owners just won't be there to cash in.

[Darth23]

Jedieb: it doesn't matter how much you gross if you don't make a profit. ;)

I just read where they were threatening to not show Lord of the Rings - apparently they've backed off that.

In related news Rush Hour 2 passed the 200 millon dollar mark on Wednesday. It's still the number 2 movie in the country. :)

[Jedieb]

It's hard to believe that these theater chains could have misjudged the market so badly. You'd think they would have paid attention to what their competitors were doing and how many new screens were flooding the market place. I guess they just thought that with so much money being spent on movies there was no way they could lose.

[Darth23]

It was the go-go 90's. Also, higher ticket prices means less people going to the movies, which means less concession sales, which means less profits.



Maybe if they didn't all show exactly the same movie they could have kept a few more theaters open.

[JonathanLB]

AHHH.

I just typed a super long post on this subject and my damn computer screwed up.

Well, what I was going to say is I've been waiting for this news for a very long time, haha. Everyone expected it anyway.

Now, the three biggest chains all filed for bankruptcy. I think all four of the biggest four did too. Let's put it this way, MOST of the top ten.

It was Regal, at 1, then Loews, at 2, and then Carmike at 3. That's the top three right there.

These bankruptcies are paving the way for Episode II to make a buttload of money, haha. More bankruptcies means more ticket inflation, or it has so far that's for darn sure, and it will continue, trust me.

Welcome $6 average ticket price by May 2002. lol. TPM cannot compete with that, not at all.

[Darth23]

If the economy skeeps slowing down I don't think they'll be able to afford to keep raising ticket prices.

[Jedieb]

Let's not forget what a slowing economy means. It means people are SPENDING less money. When people are spending less money one of the first places they start holding back are on entertainment expenses. There's no telling what kind of an effect that will have on EP2, but it's hard to imagine it being a good one.

[Darth23]

True, I think peole would rent more videos and dvds and watch more cable tv and go out to see movies less.

[JonathanLB]

Actually, that's not really true. My dad and I had this conversation about a month ago and we were discussing how even in times of depression, the movie industry has always done just as well. People do NOT spend less on movies, you are wrong there. They cut back expenses on unnecessary items, maybe so, but the entertainment industry rarely suffers from a staggering economy. Remember, entertainment is about escapism, especially Star Wars, and people who are facing difficult times are in fact MORE likely to go see movies!

Even pretending you were right, people are going to cut back on seeing movies in theaters, but that means cutting back on the lesser films. For instance, if you're going to see ten movies in a summer, then you can afford to see American Pie 2 (which I thought was a very good movie), but if you're only going to see three, maybe you just make it Pearl Harbor, Rush Hour 2, and Shrek or something. The point is, the biggest movies, the biggest events, are not going to suffer because of difficult times. That is just not logical.

However, I see your point about ticket prices. At some point, they MUST stop raising them at this rate. Inflation is not 10% every two years, so why are ticket prices doing that? It has to stop sometime...

[Jedieb]

I'm telling you, a recession or hard times will effect ticket sales to some extent. I can tell you that most of the parents of my students are on tight budgets, even in good times. You throw in a recession and $10-$20 trips to the movies get cut back or dissappear altogether. Matinees and children's tickets may be cheaper, but the food and drinks parents have to spend money on still cost the same. Hard times will keep parents from taking Johnny to see AOTC 3 or 4 times during the summer. And for some families the movie may not be in the budget AT ALL. Money will still get spent on entertainment, but if parents have to choose between the cable bill and a couple of outings to the movie theater they will choose cable 99 times out of 100. Cable will keep the whole family entertained for the entire month. Most people who have to choose between cartoons, HBO, and a host of other cable channels to entertain the family versus a 2 trips to the movies will choose cable.

In the end, we're talking about a small number of ticket sales, but a recession or continued slowdown will cost AOTC a few tickets here and there.

[JonathanLB]

I doubt it would have any effect beyond a number that is simply insignificant. I think it would have more of an effect on merchandise sales than anything, not ticket sales...

If a kid wants to see a movie really badly, and odds are the parents like Star Wars too, they're going to go see it.

[Darth23]

But Star Wars is helped by multiple viewings. That's something that definitely would be reduced in a slower economic environment.

There's also the possibility of more people, espeically families, waitng for the 'dollar' theater run. I don't think the difference woudl be more than a few percentage points, 10 MAX, but probably less than that, but it is a consideration.

[Jedieb]

Jon's right, this isn't going to have a significant negative effect. The main point my fellow economic pessimists and I are making is that a slow economy won't HELP the box office.

I do wonder how all of these financial difficulties will effect AOTC and theater chains. A few theater managers grumbled about TPM's box office demands. A few theaters in NYC even refused to give in. Will they be in a position to pass up on gauranteed revenue this time? Or will they have to pass on AOTC because they need to put something on the screen that will put ticket money in their pockets? I would think that it would be difficult for theater owners to pass on AOTC business. Even if they have to fork over the first 2 week's gross they'll still benefit from the concession sales generated by AOTC. It will be interesting to see if Lucas makes the same demands he did the first time.

[Jedi Master Carr]

I think they will be forced to give in considered most of them are now bankrupted. As far as families waiting for dollar theaters they are going to have hard time doing that since there are hardly any left. I know there is not one near me for at least a hundred miles, maybe in Atlanta I am not sure. I doubt there are more than a couple of hundred left in North America. This is because they don't make any money and end up losing money. I heard this from the one that closed near me, he said that there is no money in dollar theaters any more. So that means families will either have to chose to see it in theaters or Cable. I agree with Jon and Jedieb here I think it will not hurt its overall gross too much, it might be a difference of 5-10 million at the most.

[Darth23]

I woudl guess thatthere are quite a few around. There's one in Tallahassee, it gets really crowded when a new movie comes to town. There's a lot of families and a few cash strapped college students who mostly go there.

[JonathanLB]

Well I have to agree with Carr here again, actually.

I went to dollar theaters (actually one dollar theater) to see TPM ten times of my fifty viewings, but shortly after that, or within maybe six months, it has been shut down and no longer plays any movies whatsoever. I'm not quite sure what they're doing with it. Temporarily, I think they were renting it out for bigger events, like the entire auditoriums at one time, but now I don't think they do anything.

There are a few dollar theaters left in Portland of course, but they are very far away. I think there was one around Mt. Hood, haha, which is like an hour away at least.

Even if they still exist, I believe their numbers are decreasing...

Certainly troubled times in the economy will not help AOTC. It is a negative factor, but it just isn't going to make a massive difference either.

I definitely think merchandise sales could see a hit, though. Collectors might be more selective if they're facing difficult times and especially if someone just lost their job, they might not have much money at all for collectibles, though they will definitely see the movie probably several times.

The merchandise sales for TPM were absolutely excellent, but the real problem was the overproduction, which cut into their profit margins. I mean, while you could still say they sold a lot of TPM T-shirts, they made about 20 different designs and that was far too much, so the overall apparel sales were not good for them whatsoever.

I hope this time the company's are more prepared to meet demand without exceeding it too much.

It gives a bad impression when you see TPM toys selling for a couple dollars now, especially when the toys were hugely successful for Hasbro and even retailers (though less so for them). Toys are the same as books, though, they don't all sell. 20 to 25% of books shipped to stores are sent back to the publisher unsold.

Ah well, can't wait until AOTC comes out :)

[Jedieb]

The thing about collectors is that they end up spending far more money on merchandise than movie tickets. It's just easier to drop into a store than to give up 3 hours (I'm including travel time) to see a movie. Especially if you have a job, family, friends, etc... Merchandising just makes your money disappear so much faster. You buy one Royal Starship and you've spent the equivalent of 12-14 movie tickets. If I had to guess the amount of money I spent in 99 on SW I'd say it was probably around $1,000. Here, let's see what Quicken has to say... $1,327. You can probably add $100 to that for things I bought and smuggled into the checking account so my wife wouldn't cry even harder than she already does. So that's where an economic slowdown will hit SW the hardest. That coupled with the struggles movie merchandise has been experiencing the last couple of years and you'll have fewer dollars being spent on AOTC. Fans are still going to spend money, but they just may not have the funds to spend as much as they previously have.

[JonathanLB]

Yeah, hehe.

I spent $1,003.08 on TPM the first day the merchandise was available. I wish I had that money back, though, because I'm not a toy collector. I don't know why I tried to get into that. Lol, it was fun though. At least the experience.

I guess it was probably worth it but I can think of much better collectibles I'd rather have now...

I probably spent about $3,000 on TPM merchandise in 1999. I got a ton of other stuff besides just the first day and I'm sure it was about that much, or maybe more.

You would have needed probably $20,000 to get everything, though, hehe, including promos and all of that stuff. You know there is too much merchandise if your annual income isn't enough to cover all of the year's collectibles!

[Jedieb]

That's the mistake that people make when they're first starting out or whenever a big SW marketing push comes around. You spend money on stuff and later on you realize it could have been better spent elsewhere. There's quite a few things from May 3rd that I ended up wishing I'd passed on. After awhile you become much more disciplined and focused and you spend your dollar better. I use to buy a lot of Galoob stuff back in 95, 96, & 97. After awhile I realized that I was getting it just to "have it." So now I just concentrate on figures, ships, and playsets. For AOTC I may narrow my focus even more and drop the playsets altogether. You can't buy EVERYTHING, it's impossible. And you really shouldn't even try. Let's face it, there's alot of crap that gets the SW label plastered on to it. I mean, does anyone really need to collect EP1 fruit chews? 10 years from now the damn things could end up radiating your house if your not careful. It would be an interesting exercise to try to track down what a price list of ALL SW/EP1 merchandise totaled up in 99. That $20,000 may be short by $50,000-$70,000 if you throw in some of the more exotic stuff like the EP1 Hummmer and the JCPenny Anakin statue.

Collect what you like and spend it on what makes you feel comfortable. A kid with 3 beat up figures on his nightstand has just as impressive a collection as I have in my SW room.