Mann Theatres is about to undertake a large-scale withdrawal from Westwood Village, where it has maintained a stronghold for decades.
Within the next few weeks, Mann’s four-screen Westwood Theatre complex will be shut down and eventually replaced with a Whole Foods Market, confirmed Doug Brown, co-managing partner of Regent Properties Inc., which owns the Gayley Avenue site. In addition, the movie exhibitor is expected to soon close at least two other Westwood Village theaters, the Regent and the Plaza.
Brown confirmed that Regent Properties has elected not to renew Mann’s long-term lease on the Regent Theatre building, which expires in September. He said a replacement tenant is being sought.
Mann is expected to hold onto its three premiere screens the Village, the Bruin and the National as well as the smaller Festival. The closing of the other Mann venues will reduce by 2,100 the number of movie theater seats in Westwood Village, once a premiere destination point for moviegoers all over Los Angeles. In addition to Mann, Pacific Theatres’ Crest is expected to shut down next year and a nearby United Artists’ multiplex is also closing.
But the Mann closings are the most striking, considering how the chain almost single-handedly transformed the once-sleepy Village into a world stage for movie premieres as well as the inevitable lines of moviegoers waiting to catch “Midnight Cowboy” or the latest Woody Allen comedy. The imminent theater shutdowns are the latest in an aggressive divestiture undertaken by WF Cinema Holdings since it bought the 351-screen Mann chain out of bankruptcy for $91 million in January 2000. Today, the chain has been whittled to 162 screens, even before the Westwood shutdowns.
Officials with WF Cinema, an Encino-based partnership of Paramount Pictures and Warner Bros., declined to comment last week. However, a high-level Warner Bros. official, who asked not to be named, said the fate of the chain is still up in the air.
“We’re still evaluating the long-term strategy for Mann,” the official said. “We’re operating it and we’re reasonably optimistic about the business and, together with Viacom, we’re evaluating all our options.”
The official added that there remains a slight chance that the Regent and Plaza might not close.
“We’re still in discussion with those landlords,” he said. “It’s premature to believe that there won’t be a deal reached on various sites in Westwood just because those leases are expiring.”
Most likely, though, the chain will continue to shrink. And if WF Cinema decides to sell the Mann chain outright, as some are beginning to speculate, among the likely buyers would be Kansas City, Mo.-based AMC Entertainment Inc., which has managed to set its own house in order and is bidding to purchase General Cinemas Inc. out of bankruptcy.
“This is a time of consolidation and we are interested in pursuing acquisitions that are compatible with the quality of theaters we operate,” said AMC spokesman Richard King. “But right now, it would be speculation to talk about AMC buying Mann.”
Curious moves
On its surface, WF Cinema’s actions may seem curious spending almost $100 million for a theater chain last year only to then dismantle it. But sources familiar with the situation said that the January 2000 acquisition was prompted by several considerations.
Among the most compelling was that Paramount and Warner remained on the hook for many of Mann’s theater leaseholds as a result of the two studios’ previous joint ownership of the theater chain.
The studios had owned the Mann chain from 1986 to 1998, under a partnership called Cineamerica. They sold it in 1998 at a colossal loss to WestStar Holdings, a partnership of Warburg Pincus Ventures and Pittsburgh theater owner Jeffrey Lewine.
As part of that deal, Cineamerica agreed to retain liability for many of the company’s leases. So, whether the Mann theaters operated on those sites or not, Cineamerica (Paramount and Warner) would be responsible for paying the rent.
“They had residual exposure, which is why they were a natural purchaser. They wanted to control that liability,” said Jeremy Richards, a bankruptcy attorney with Los Angeles-based Pachulski, Stang, Ziehl, Young & Jones who represented a group of creditors in the WestStar case.
Another consideration: the $91 million purchase price was a bargain compared with the $220 million that Paramount had paid for the chain in 1986 and the $166 million it and Warner sold the chain for in 1998.
Divestitures so far have involved Mann’s non-premiere theaters, not the chain’s handful of jewels favored by the studios as sites for premieres and other events. Among those are Grauman’s Chinese Theatre in Hollywood, the Fox Village and Bruin theaters in Westwood Village and the Criterion 6 in Santa Monica. The company also plans to open a new fourplex in the massive Hollywood & Highland project.
But substantial upgrades will need to be undertaken if WF Cinema hopes to remain competitive in a consolidating industry where stadium seating and top-of-the-line sound systems are becoming the norm.
Demanding moviegoers
“In this marketplace, audiences have become so sophisticated that they expect state-of-the-art theaters,” said Paul Dergarabedian, president of Exhibitor Relations Co., which tracks box-office results. “I can understand their caution (to upgrade), but things have freed up a little since last year. I think for them, it’s probably a good time to sell off the dead wood and move ahead.”
Meanwhile, Westwood-area stakeholders seemed relieved to learn that Mann’s deteriorating theaters are being shut down.
“The influx of movie theaters symbolized the shift away from a neighborhood-serving, university-serving village into an entertainment zone,” said Westside real estate consultant Steven Sann. He pointed out that the number of screens in Westwood increased from 3 in 1965 to the current 17. Today, Mann controls all 10 screens in Westwood Village.
“If you asked the neighbors and UCLA students would they rather have 18 movie theaters and zero supermarkets or two supermarkets and 10 theaters, nobody would tell you that they would rather have 18 theaters,” Sann said.
