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Will there be fewer US screens on which to show LOTR film in 2001? - Lord of the Rings news - J.R.R. Tolkien's The Lord of the Rings

August 09, 2000 at 00:45:40

The United States' third largest theater chain has filed for Chapter 11 Bankruptcy protection. The move, one often taken by large corporations which find themselves in financial trouble, relieves the company of debt payment obligations while it seeks to reorganize its finances as a necessary step toward eventually paying off debts. And other theater chains may also be in financial difficulty.

Carmike Cinemas filed for bankruptcy protection, citing $84,100,000 in assets and $652,800,000 in debts. It was unable to make an $9,000,000 interest payment on outstanding bonds.

Moody's Investors Service, a corporate credit rating service whose upgrades or downgrades may substantially affect a corporation's stock price, downgraded five theater companies and is looking at a sixth company for possible downgrade.

The immediate implication of the bankruptcy is that Carmike will now be able to work on reorganizing its finances so it can eventually pay off its debts. There are no guarantees, however. The theater industry has increased its capacity by nearly half since 1991, adding thousands of new screens across the country, mostly in large megaplexes, theater complexes with more than 12 screens (some boasting more than 20 screens). The average cost of adding a theater room and screen is about $1,000,000.

The move may signal an industry shakeout, according to some observer. If that happens, there will be theater closures and asset sales to rival companies. The number of available screens may be reduced in the long process. Industries which overbuild capacity sometimes shrink to whatever capacity the markets will support.

Some theater chains have begun running advertisements, cutting down on showtimes, raising ticket prices, and/or showing sporting events and concerts through remote broadcasts. Some older theaters are also being closed, and building plans are being scaled back for the foreseeable future.

USA Today, among other news sources, has reported that the industry is in for some consolidation. The long-term effect on large film projects like Peter Jackson's "The Lord of the Rings" may be negligable, but with the film industry coming under increasing pressure to combat movie piracy on the Internet, expectations of a large-scale opening for "The Fellowship of the Ring" in America may exceed reality.

New Line Cinema has not announced its distribution plans, except to confirm that deals have been struck with distributors around the world to ensure that the first movie in the trilogy will open on December 14, 2001. Nonetheless, film distributors have gradually increased the number of theaters in which expensive films are opened in recent years to help offset their investments, in case the public decides not to keep watching the movies after the first few days.