THEATERS—No Escape From Heat

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THEATER OWNERS RAISING TICKET PRICES TO HELP OFFSET HIGHER POWER COSTS

Catching the latest blockbuster at the multiplex may cost film buffs more this summer, as local movie theaters, many already in deep financial trouble, face a double feature of summer woes: rising energy prices and the possibility of rolling blackouts.

Summer is a crucial moneymaking season for the movie house industry. Students are on vacation looking for ways to be entertained. Blistering hot summer afternoons and evenings push people out of their houses in search of a cool place to relax. And film studios are pumping out a lineup of blockbusters designed to pack theaters.

But energy is the summer’s No. 1 challenge, leaving theater owners scrambling to make ends meet in a business heavily reliant on electricity to run projectors, popcorn machines and frosty air conditioners.

Industry analysts said few options remain but to raise ticket prices.

While theater owners are circumspect about that answer, they aren’t ruling it out. Some have already instituted price increases.

“We just had a semiannual price adjustment last week,” said Rick King, a spokesman for AMC Entertainment Inc. in Kansas City, Mo., which operates 27 complexes with 437 screens in California. Ticket prices, he said, went up 50 cents to 75 cents, raising adult ticket prices to anywhere from $7.50 to $9, depending on the location.

“I would hate to say we weren’t going to raise prices,” said Dale Davison, director of corporate development for Redondo Beach-based Krikorian Premiere Theatres, which operates four locations with 42 screens. Adult movie tickets at most Krikorian Theatres are $8 to $8.50.

“We always evaluate our pricing based on general market conditions,” said Kevin Frabotta, vice president of theater operations at Edwards Theatres Circuit Inc, which filed for Chapter 11 bankruptcy protection last year. “It’s too early to say because we are unsure of any future rate increases in energy.”

On May 4, Edwards (the largest theater operator in California) increased its ticket prices by 25 cents to 50 cents at one-third of its theaters, bringing them in line with the rest of its theaters.


Closing in on $10

Most adult tickets in L.A. now sell for $8 to $8.50. In areas such as Century City and Rolling Hills Estates, they are going for $9 a ticket. But with movie tickets fetching $10 a pop in Manhattan, it’s only a matter of time before L.A. follows suit.

“I do think we will see exhibitors try to make some sort of price increase as we head into the summer months,” said Kevin Skislock, a founding partner and entertainment analyst with Laguna Research Partners in Irvine. “If you are going to raise prices, this is the time to do it before the peak summer months when kids are out of school.”

Increased ticket prices helped exhibitors to boost their revenues to a record $7.7 billion nationwide last year, a 3 percent increase over 1999 despite attendance dropping by 3.5 percent. Ticket prices have edged upward every year since 1993.

But price increases alone have not been able to pull movie theaters from a nationwide fiscal malaise. Theater operators have been having a tough time due to overbuilding of massive megaplexes during the mid- to late-1990s. Companies put up lavish megaplexes with stadium seating, neon lighting and fancy concessions. But with movie screens increasing by 56 percent during the 1990s, there were a lot of empty seats to fill. In the past year and a half, nine movie chains have filed for Chapter 11 bankruptcy protection.


Conservation measures

Now these troubled megaplexes are faced with an unstable supply of electricity.

So theater owners have been diligently figuring out ways to conserve energy and train their staffs to cope with blackouts this summer.

Executives at General Cinemas Theatres, which has seven locations in the Los Angeles area, said they might raise their air conditioning thermostat a degree or two to save money. “As long as it is comfortable for our guests,” said Brian Callaghan, a spokesman for General Cinemas, based in Chestnut Hill, Mass.

For its part, Edwards Theatres has been waiting until later in the evening to turn on its exterior lights and switching them off a few hours earlier at night.

“In some cases we have rewired circuits in our buildings,” Frabotta said. “Before, you turned on a switch and you turned on the lights to half the building. So we have electricians looking at the buildings to see if we can turn on fewer lights at a time.”

Also theater owners have been holding training sessions for their employees to deal with blackouts.

If the lights go out, theaters have an emergency energy supply that automatically switches on, providing enough light for customers to get out of the building.

And several theater operators stressed that “rain checks” would be given to patrons in such an event, so they could to return at a later date.

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