A group of business associates and I were traveling back from Atlanta this week. It is a long drive but the emerging greenery and the fresh spring air make it pleasant. Seated beside me in the front passenger seat was a 45 veteran of the theatrical exhibition business. He currently has a pretty good buying and booking service and I can always count on him to provide me sound and honest feedback on the state of the business and emerging trends. During the trip he received an email from a client who shared with him a copy of an article written by John Fithian, head of NATO discussing the ongoing struggle of shrinking windows.
The article has a section which chilled me and made me more than concerned about the ability of the independent theatres to have a strong advocate for their interest; I am including a transcript of the section here:
“In January 2016, the NATO Executive Board authorized the association’s chairman and president to meet with the major studios to encourage individual discussions on theatrical release windows between distributors and exhibitors.
Specifically, the Board asked that general concepts, but not any competitive details or terms, be addressed in those meetings, including:
• A sophisticated and comprehensive model for windowing be considered that would grow the pie for distributors and exhibitors;
• Such a model might provide for different windows for different categories of movies;
• Such a model might provide possible compensation to exhibitors for any risk undertaken; and
• Such a model would provide certainty in windowing for a fixed term of years.
• The Board made it clear that any negotiations would be undertaken company-by-company between individual distributors and individual exhibitors, in full compliance with applicable antitrust laws.
Finally, the Board made it clear that NATO could not and would not represent the position of any individual exhibitor. NATO’s president and chairman met with many different studio executives to express these general principles. Some studios indicated a willingness to meet with individual exhibitors. With that, NATO’s role in the process necessarily came to an end. “
The last sentence shocked me, scared. At one time it was the studios who had to be cautious about the anti-trust provisions of the law. I of course refer back to the Paramount decree as well as that profound body of work done by Marv Troutman and his associates in Pennsylvania. Now changes under the anti-trust laws were now being used to silence the single advocacy group for independent theatres in North America. With the inability of NATO to negotiate for the industry as a whole I ask myself the bitter question who does speak for the theatres. Unfortunately the answer is no one
I know some of the folks at NATO, they are strong, independent and intelligent people who really care for this business. This must have been a bitter, bitter pill to swallow. Now any negotiation that goes on with the studio will be undertaken by the often convoluted interests of the major chains. The cross ownership and intent of this companies due to their Wall Street financing makes their intent suspect. They have proven time and time again that they have little regards for the needs of the independent theatre. In fact to be blunt I think much of the recent problems in the exhibition industry rest on the shoulders of the studios and the independent studios.
I am going to throw out a chain of thought, because I think in putting out this article in many ways NATO on the subject of windows has hoisted a white flag. I can only imagine how hard that was for many in the NATO executive.
I am going to throw an at the readers of this weekly tirade. I think it’s time that another voice rose to speak specifically for the combined interests of the independent movie theatre and the drive-ins, a voice that could collectively challenge the influence of the studios and their march towards further media monopolization. I think true voices of free enterprises and small to medium sized business must be heard if America is to have a robust and stable economy.
What I am suggesting is some form of collective buying group outside the control and management of NATO. I am suggesting a group that can truly negotiation globally with content providers, concession and hardware manufacturers. I am suggesting a group that can and will level the playing field for free enterprise and to give a voice to the the now voiceless.
There is precedent for such a group, The National Cable Television Co-operative NCTC began as a business project of the Mid America Cable Association in 1984. Starting with twelve cable operators, NCTC has grown to serve over 850 cable companies across the United States. NCTC provides member cable companies access to programming networks and industry leading technology companies and products, and is a not-for-profit corporation.
Cable operators can save money on programming and hardware purchases. By aggregating volume discounts, operators can pass cost savings on to their subscribers. Programmers gain the efficiency of negotiating one contract with NCTC rather than individual contracts with over 850 member companies. In addition, NCTC pays the programmers each month with one check and provides full billing details for each member company and their cable customers.
This can happen for the movie exhibition industry. Due to the legal restrictions placed on it it has to happen outside their boundaries.
There are many who many the resurgence of the movie theatre, including directors like James Gunn (Guardian of the Galaxy) and companies like Amazon who intelligently understands the need for windows and the protection of the movie theatre as a key element in the revenue cycle of a movie. It would be with companies like Amazon that alliance would be built for both content and fulfillment services.
It is time for a new voice to arise, and a time for movie theatres to yell out “ we are here and we are vital” before it’s too late.
If you want to chat more about this, please contact me at firstname.lastname@example.org. This is an idea whose time has indeed come.