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US theaters need to cut capacity by 50% as General Cinema files for bankruptcy - Lord of the Rings news - J.R.R. Tolkien's The Lord of the Rings

October 12, 2000 at 12:33:09

In a move which broadens the industry-wide crisis for theatre chains in the United States, General Cinemas has filed for Chapter 11 Bankruptcy, according to Variety.

The latest bankruptcy, following those of Carmike Cinemas, United Artists Theater Co., Edwards Theater Circuit, Weststar Cinemas, and Silver Cinema earlier this year, is not attributed to overbuilding by General Cinemas, but rather to the competition resulting from overbuilding by its competitors.

Scott Davis of First Union Securities is quoted as saying the industry must cut current capacity by as much as 50% in order to restore its financial health.

General Cinemas is cutting back operations in the Southeastern United States, and some of its subsidiaries in the region are being forced to seek Chapter 7 liquidation.

The theater closings in the United States may have a significant impact on the initial ticket sales of new movies released here in coming years, although in many cases the closings are of older, smaller theaters. The industry has been building megaplexes with dozens of screens in recent years in order to become more competitive.

The film industry, pressured by fewer available domestic outlets and increasing technological leakage of their products via the Internet, is considering alternative distribution models, including releasing films over the Internet.