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(from the archives)
December 2, 1996
by Mark Kass and Paul Holley
of The Business Journal - Serving Greater Milwaukee
Reprinted here with permission from the Saturday November 30th, 1996 issue of The Business Journal - Serving Greater Milwaukee
For years, The Marcus Corp. has dominated the Milwaukee-area movie market, controlling as much as 64 percent of the screens and owning more than 50 percent of the largest theaters.
But as a theater construction boom rolls across the country, several national movie theater chains are planning to open megaplexes or are searching for sites in the Milwaukee area.
The first -- and the biggest -- is AMC Entertainment Inc., Kansas City, the No. 2 theater company in the country. AMC beat out Marcus for the right to build a 24-screen theater at Mayfair Mall Shopping Center in Wauwatosa, which will be the largest movie theater in the state.
In addition, several other national chains, including Cineplex Odeon Corp., the No. 3 chain in the country, and Magic Johnson Theatres, Los Angeles, are looking for sites in the Milwaukee area.
The additional screens are expected to loosen Marcus's grip on the market and make it more competitive.
"There are no more sacred regions," said Patrick Artiaga, manager of customer relations for the THX division of Lucasfilms, San Rafael, Calif. "It used to be, if you mentioned Wisconsin, that was Marcus territory. Not anymore. There's competition and that's good for everybody."
For its part, Marcus isn't concerned about heightened interest in the local theater market by national chains, said Bruce Olson, president of Marcus Theatres Corp., a Marcus subsidiary.
"Until they open the doors, I'm not going to worry about it," he said. "We really seldom look at what our competition is doing. We plan to continue doing what we have been doing, which has made us very successful in Milwaukee."
Competition "is just part of business," he said.
Marcus, which owns 108 screens in the Milwaukee area, said it plans to expand several movie theaters and build a 12-screen theater in Menomonee Falls. It also proposed a 12-screen theater in Port Washington. Earlier this year, Marcus said it would build an 18- to 24-screen theater in West Allis, but those plans are on hold.
Next year, Marcus will convert five theaters to stadium seating, a new trend in the industry.
Over the last 10 years, Marcus has anticipated growth in many southeastern Wisconsin communities and strategically built theaters ahead of the boom.
In 1995, the company built an eight-screen theater near the busy intersection of Interstate 94 and Highway 83 in Delafield and an eight-screen theater at Interstate 43 and South Moorland Road in New Berlin. The New Berlin theater already is being expanded by four screens and the Delafield theater will get six additional screens in 1997.
"We've tried to increase our presence in Milwaukee," Olson said.
Room for competition
While Marcus plays down the competition, Milwaukee-area moviegoers will have several modern new theaters to choose from, dividing the entertainment dollar.
Cineplex Odeon, which unsuccessfully pursued the Mayfair project, continues looking for sites in the Milwaukee market to develop a project.
"We believe it is a good market in which one of our developments would do very well," said Kenneth Siegel, vice president-real estate for the Toronto-based theater operator.
The area's lack of state-of-the-art theaters leaves a lot of room for newcomers, he said. Marcus' hold on the market doesn't concern the company.
"We typically don't look at our competition; we try to look at the market and what makes sense," Siegel said.
Cineplex Odeon is on a tear nationally. The theater chain has 1,466 screens in 312 theaters in the United States and Canada and plans to add 500 screens in as many as 40 new theaters in the next two years.
AMC is also in the middle of an expansion. The company has 1,820 screens in 230 theaters and will add 300 screens in its current fiscal year, including a 30-screen theater in Ontario, Calif., making it the largest theater in the world.
The 24-screen project at Mayfair is expected to be completed by November 1997 and company officials are pursuing other Milwaukee locations, said Rick King, senior vice president of AMC's northeast division.
A national chain from Dallas, Cinemark USA Inc., built a 10-screen theater at Southgate Mall in Milwaukee in 1993, its first in the Milwaukee-area market, and recently announced plans to build a 16-screen theater at Southport Plaza in Kenosha.
Cinemark, the fourth-largest movie theater chain in the country, operates 1,472 screens in 179 theaters.
Randy Hester, Cinemark director of corporate development, could not be reached for comment.
Marcus responded to the recent Cinemark announcement by revealing plans for a 12-screen theater at Highway 50 and Interstate 94 in Kenosha, just four miles from the Cinemark project. The 45,000-square-foot, 2,500-seat Marcus theater will be part of the 50/94 Regional Retail Center being developed by Berwell Inc., Janesville.
Another national chain considering Milwaukee is Magic Johnson Theatres, headed by former professional basketball player Magic Johnson.
Earlier this year, theater executives met with Winmar Co. Inc., Seattle, owners of Capitol Court Shopping Center, about developing an entertainment complex at the northwest side mall.
Behind the boom
Today's construction boom is the result of theater chains moving out of their traditional geographic markets to stake out new territories, said Jae Kim, an analyst with Paul Kagan Associates, a Carmel, Calif., media research firm.
"A lot of exhibitors are tired of butting heads with each other in the big markets," he said.
In 1996, the U.S. and Canadian movie theater industries will add about 1,200 screens. All those new screens mean theater operators need to give moviegoers a reason to choose one cinema over another. And that's proved a boon to THX, an annual quality assurance program for theater auditoriums.
With 1,400 screens certified worldwide, THX is having its best year, adding 400 screens, said customer relations manager Artiaga. The company expects to certify another 700 screens in 1997.
The THX designation was applied to eight screens at a 20-screen Marcus complex that opened recently in Addison, Ill. Wisconsin has no THX designations, Artiaga said, but the certification is well understood by Chicago-area movie patrons.
"An industry analyst told me not long ago that the commodity of cinema is going to be like gasoline. They'll be selling it on every corner," he said.
More to watch
Hollywood has added to the construction boom by producing more films. In 1995, production started on 325 films; 354 were under production this year.
Exhibitors rent films based on a sliding scale, with the biggest percentage of the box office gross going to the distributor in the early weeks of release. Additional screens are needed to keep the product offerings fresh and to keep films in front of the public longer, so the exhibitor gets a larger cut and better profit potential.
"These days, anything over 16 screens is a megaplex, and we're seeing lots of them," analyst Kim said.
But the movie production cycle could always tank.
"The down side is, should Hollywood make good on its promise to produce fewer films, some of these guys will be left high and dry," Kim said.
Competition from the summer Olympics Games set back film release dates, but Hollywood studios and movie theaters still are having an incredible year. Twelve to 13 blockbusters, which gross more than $100 million in revenue, are expected in 1996, among them, "Independence Day," which generated $200 million and "Mission Impossible," which pulled in $174 million.
"The movie industry is going to sell more tickets this year than it has since the 1950s," said Jim Kozak of the National Association of Theater Owners, North Hollywood, Calif.
© 1996, The Business Journal
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