Movie Theaters: They're Lining Up For Flicks In The 'Hood
It's Saturday night, and the new theater is jumping. Movie patrons mingle in the spacious Art Deco lobby. The concession stand does a brisk business in popcorn, spicy hot dogs, and fruit juice. Customers duck inside one of the 14 auditoriums. Sinking into extra-wide stadium seats, they listen to rhythm-and-blues jams as they wait for first-run flicks to start.
A suburban multiplex? Try again. This is moviegoing inner-city style, on Chicago's South Side. Theater companies are heading into the 'hood to build giant multiplexes targeting the African-American community. Sony Corp. already has a deal with basketball great Magic Johnson, running theaters in Atlanta, Houston, and Los Angeles. National Amusements Inc. is building a big cinema in Brooklyn. And one of the most ambitious efforts so far is ICE Theaters, a venture of Inner City Entertainment Inc. and Toronto's Cineplex Odeon Corp. Last fall, ICE opened three theaters in Chicago alone, with plans to open in four more cities in 1999. "I want to be the first black-owned theater chain," says Donzell Starks, Inner City's ceo. "No ifs, ands, or buts."
His timing may just be right. Areas such as Chicago's South Side haven't seen a major movie theater built in decades: Theater developers seeking to expand followed the boom of suburban shopping malls. But with little room for more screens in that crowded market, chains are looking elsewhere for growth. And what they have found is a surge in moviegoing by African Americans. Since 1993, blacks' movie-ticket sales have leaped 49%, to $575 million a year, reports Target Market News. Ticket sales overall during that time grew just 20%, to $5.8 billion.
"DEAL JUNKIE." Those numbers have the big chains revisiting urban sites. Cineplex Odeon, whose 310-theater chain is No.3 in North America, started researching neighborhoods in Chicago two years ago. But to plunge into the new project, ceo Allen Karp wanted a partner. "We're not trodding upon someone else's pattern that's proven," he says.
Enter Donzell and Alisa Starks, a husband-and-wife team hoping to parlay their backgrounds in investment banking and marketing into building their own business. Donzell, a self-described "deal junkie," had spent several years managing the Bank of Montreal's Southern California office. Alisa, a marketing veteran, headed the African-American division of bds Marketing, creating black-oriented promotions for companies such as McDonald's Corp. and rjr Nabisco. Inspired by the success of Los Angeles' Baldwin Theater, a one-screen house, they focused on the theater business. And recalling their own experiences watching theaters in black neighborhoods close, they targeted the inner city. "We want to see Forrest Gump, too," says Don Starks.
The Starkses proposed teaming with Cineplex. They would develop the $45 million project, overseeing the financing, construction, and marketing of three giant theaters, while Cineplex Odeon would operate their 34 screens. Cash was raised from GE Capital Corp. and Chicago's South Shore Bank, with help from D.H. Brush & Associates, a Chicago investment bank where Don Starks once worked. New sites are in the works. Next year, ICE plans theaters in Baltimore; Charlotte, N.C.; Dallas; and Gary, Ind.
It is crucial, say the Starkses, not only to build in the right neighborhoods but also to market to the local African-American community. The Starkses persuaded Cineplex to give the ICE logo prominence on theater marquees, for example, telegraphing to moviegoers that their theaters are special. Other details include using urban radio stations to promote films and featuring Southern favorites such as Louisiana hot links at concession stands.
But the most high-profile marketing efforts are the ones ICE has arranged with prominent African-Americans in Hollywood. For the grand opening of one ice theater last November, the Starkses and Cineplex officials wanted to give a special screening of Amistad, Steven Spielberg's film about a group of slaves' fight for freedom. To get a commitment from DreamWorks SKG, the movie's studio, Alisa Starks sent a letter explaining that the black-owned theaters were serving the African-American community. "As soon as I saw the letter, I knew that it was the right thing to do," says Debbie Allen, the film's executive producer. "I said `Child, when is it? I'll be there."' The film played to a packed house.
HOOP HOOPLA. Such star power has helped the Starkses hit pay dirt. Their biggest site, a 14-screen theater in Chicago's Chatham neighborhood, is among the top three highest-grossing locations of Cineplex' 47 Chicago outlets. ice officials say their theaters rank in the top 25% of ticket sales for Cineplex' 1,600 U.S. screens.
Success is also attracting a level of attention from national marketers that few theaters can boast. Big-name corporations are clamoring to sponsor events. For a screening of Spike Lee's hoops drama, He Got Game, Nike Inc. came to an ICE theater and set up a panel discussion including Lee and a group of Chicago basketball legends. It was "a match made in heaven," says Marva Mack, Nike's regional brand manager. "We could've had it anywhere, but we were trying to be more a part of the community."
The question is, how many communities can black-owned theaters serve? Competitor Magic Johnson Theaters (MJT) has shown the expansion road is not always smooth. The rollout of new theaters has not gone as quickly as planned. MJT officials cite difficulties in finding real estate that fits the cost parameters set with partner Sony Corp., which controls 50% of the venture. ICE hopes to avoid similar blocks by owning its land and equipment; it simply contracts out the operating rights to Cineplex.
Another potential obstacle is brewing in the headquarters of the corporate partners of both ventures. Cineplex is in the midst of a merger with Sony's Loews theaters. Would the merged chain support both ICE and MJT? Neither chain will say for sure. But the Starkses have prepared for the possibility: They have financing to build the next four sites without Cineplex if necessary, although it would mean securing a new partner to operate the screens.
Industry watchers say if they build it, movie fans will come. "The urban markets are under-screened," says Alan S. Gould, an analyst at Gerard Klauer Mattison & Co. Meanwhile, the handful out there will continue serving up first-run movies. With a touch of soul.