Why the closing of 18 Arclight and Pacific theaters is such a big deal

13 April 2021 | Tom Brueggemann | Indiewire (original link)

The closing of 18 theaters is equivalent to 153 McDonald’s or three Apple stores.

The 18 Arclight and Pacific Theaters represented about one percent of the North American box-office gross, but the April 13 announcement of their permanent closure by parent company Decurion inspired front-page stories and social-media outpourings of grief. What other industry would generate that response?

In sheer numbers, it’s the equivalent of McDonald’s closing 153 outlets, or Apple closing maybe three of its stores — items that would generate notice and, depending on the day, a lead business story in the New York Times. It certainly wouldn’t inspire director Edgar Wright to say, “My first thought was, what can be done to help?” or, as Barry Jenkins put it more succinctly, “FUCK.”

Of course, these theaters meant much more than their receipts. In Los Angeles, the presumption was Arclight was a theater too good to close. For a company town, this is like a Mormon Temple failing in Utah, or a car dealership closing in Detroit. The economic damage may be overstated, but the symbolism is terrible.

The ArcLight Hollywood
Chris Pizzello/Invision/AP

With 14 theaters in the Los Angeles region, led by the Arclight Hollywood and the Pacific Grove, as well as locations in the Chicago, Boston, and D.C. markets, the Decurion circuits were a tiny player compared to AMC, Regal, and Cinemark. Unlike those competitors, Decurion is a private holding company that includes commercial real estate agency the Robertson Properties Group. Among its holdings are the Cinerama Dome and the Hollywood Arclight.

That’s what made this exit so dramatic: People who are looking to sell their businesses don’t shut their doors. “This was not the outcome anyone wanted, but despite a huge effort that exhausted all potential options, the company does not have a viable way forward,” Decurion said in a statement.

Some have said this represented a negotiating tactic — but at a minimum they might have gone back to basics and continued to operate the Arclight Hollywood and the Cinerama Dome. The statement makes no mention of bankruptcy protection and reorganization, or selling its buildings and leases, or even blame. We’re out of the exhibition business, full stop.

That doesn’t mean the theaters will never reopen — or rather, they can only reopen as theaters. Tearing down the property isn’t a viable solution; nor is repurposing the building. (Another megachurch?) Most theaters that hold leases are located in shopping malls, and are intended as draws for the public to benefit other tenants.

Theater landlords will seek new operators, even if they’re only management deals (that is, without the burden of a lease and less risk to the exhibitor). The original Arclight, in Hollywood, opened in 2002 and by early 2020, there were 10 more locations — and 10 leases. it’s understood that the terms were tough; Culver City had a rent of $2.2 million annually.

Decurion’s Los Angeles-area theaters provided about 10 percent of the region’s 2019 gross, with Hollywood Arclight and the Grove providing a huge share of the business in their core Los Angeles neighborhoods. Wouldn’t that appeal to a top chain? AMC and Regal are both struggling financially and might not want to take a risk. Cinemark is better off, but is historically risk averse.

Another factor is AMC already runs eight of the 12 largest theaters in Los Angeles. The Hollywood Arclight was #4 and the Grove was #12. Even with relaxed antitrust standards, operating two more could be a challenge.

Cinerama Dome/Hollywood Arclight were preeminent as one of the core four New York and Los Angeles locations for initial platform runs of limited films, studio and specialized. It became a go-to site for industry screenings, events, and high-profile in-person appearance. Its fate means more for “Parasite” or the next Wes Anderson film than for “F9” or “Godzilla vs. Kong.”

One thought is it is so elevated in stature that it might make sense for a deep-pocketed streamer — Netflix, Amazon, Apple — to make a deal with Decurion. This could involve a renaming, much like companies to sports arenas, with the added value of giving prime theatrical play for their own films, while also playing the role of hero.

As a fledgling film buyer in Chicago decades ago, my company had a single-screen theater in Hammond, Indiana. Our rival chain was a block away. I exulted when our competitor’s outlet closed. My boss said, “We all swim in the same waters.”

Our theater closed within a few months.


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