The goal is the first black-owned nationwide theater chain. But now the flagship complex in Baldwin Hills has been quietly put up for sale. : Flickering Dream

Since its opening in 1981, the Baldwin Hills Theater in Los Angeles has stood as a symbol of pride to its mostly black patrons and a reminder to the nearby Hollywood entertainment community that black neighborhoods, traditionally under-served by major chains, will support top quality theaters showing first-run films.

Now, however, the Baldwin--one of the nation’s few black-owned movie theaters--has quietly been put up for sale after a series of financial and legal setbacks that threatened the owners’ dream of bringing more such theaters to the black community.

Although hit movies such as “The Color Purple,” “Purple Rain” and “School Daze,” drew sizable audiences to the theater complex at 3741 S. La Brea Ave., the lingering financial fallout from a bitter 1981 lawsuit and a costly lease arrangement proved to be too big a burden to shoulder, according to owners Ernest E. Simms, 40, and Nelson Bennett, 38. The theater has also been hurt by a lackluster 1988 film season and rising film rental costs.

“Ernest and myself have done everything that two people can possibly do to try to provide first-run quality product for the Baldwin Hills entertainment complex,” said Bennett, who worked his way up from movie usher to various theater management posts before becoming vice president of Royal Entertainment Inc., the concern that operates the Baldwin. “It has been increasingly difficult to do that. . . . We’re not the big boys on the block; we’re the new kids on the block and we’re independents.”

While there are a handful of black-owned theaters around the country, the Baldwin is the only such theater that shows first-run films, according to Bennett. And it has been the focus of intense interest from both the powerful community of Southern California theater owners as well as the largely black, middle class Baldwin Hills area that supported Simms’ and Nelson’s efforts to renovate what was a dilapidated, 39-year-old movie house and turn it into a first-class facility.

“I support their attempt to become movie theater entrepreneurs,” said David B. Humdy, a Walt Disney Co. executive who is also president of the Black Media & Entertainment Assn., a Los Angeles-based organization of entertainment industry professionals. “When you are in a market where you are competing against the major studios, it’s very difficult. But we need black theaters, and we need places so that we can exhibit (black films). We (blacks) owned more theaters in the ‘30s and ‘40s than we own today.”

Bennett and Simms say they are weighing several offers--including one from an unidentified black buyer--to purchase the theater. They say they hope to sell the complex in the next few months and start over at another location with new financial backers.

Suit Brought Debt

The decision to sell the Baldwin Theater came after a futile 18-month-long search for a lender willing to provide additional funds to help reduce debt at the three-screen, 970-seat movie house as well as finance their ambitious plan to acquire and manage theaters in other black neighborhoods.

The theater’s problems began in 1981 when Simms and Bennett filed a suit against the Mann Theater chain and Warner Bros., complaining that they unfairly restrained trade by barring film distributors from playing a film at the Baldwin if Mann had booked the movie in one of its big Westwood theaters nine miles away. The suit was settled out of court in 1984. Baldwin now gets an equal crack at first-run films. But the lawsuit, Simms said, “cost us more than $500,000 in legal fees. It buried us in debt.”

Rising film rental fees and the lackluster films produced in the wake of the Hollywood writers strike have also hurt business. Simms would not disclose how much costs have risen but said that it would take at least three additional screens at the Baldwin to make the theater cost-effective. A greater variety of films playing at one site increases the likelihood that theaters will attract more moviegoers, he said.

Although investors expressed interest in helping Simms and Bennett expand to other sites, no one wanted to bail out the Baldwin after examining its books and lease arrangement. And it remains to be seen whether the pair can establish a successful new theater chain and theater consulting business in an industry increasingly dominated by a handful of large, corporate players.

“There’s no question there’s a market for good films written with black themes that would appeal to the black community,” said Bernard Anderson, managing partner of the Urban Affairs Partnership, a privately held urban development consulting firm in Philadelphia. “But I don’t see any market out there for management or consulting services to theater owners. The margin of profit on these places is very small, and most owners would think, ‘Why get somebody else to manage it when I can do it myself?’ ”

Only a year ago, Simms and Bennett reported doing record business at the Baldwin when, for the first time in its history, their movie house opened a black-oriented, big-studio picture on each of its three screens.

The owners did not disclose how much business was generated by the three films--Disney’s “Shoot to Kill,” Columbia’s “School Daze,” and Lorimar’s “Action Jackson.” But in a deposition taken in a 1987 lawsuit against the theater, Bennett estimated that the Baldwin Theater complex would earn total gross profit of more than $80,000 a month after it added a third theater in 1986.

Much of the money has been eaten up in legal fees, higher rental fees and a costly lease arrangement under which the landlord of the Baldwin Theater is paid a percentage of ticket sales, Simms said. Such lease arrangements were once rare, experts say, but they have become more common recently with the rise of smaller multiplex theater facilities, which take up less space but can generate more revenue than one big movie house.

“These guys have gone through the full gamut seeking out investors and venture capital firms . . . but they just haven’t been able to secure any interest in” an expansion deal that would allow them to hold on to the Baldwin, said Kenneth T. Lombard, senior vice president at ERC Capital Fund, a venture capital firm in Lynwood that helped finance the Baldwin when it first opened in 1981.

“It’s not like we have a wealth of resources out there available to us,” explained Simms, a soft-spoken entrepreneur who has a masters degree in business administration from Harvard. “We have to make our own way. And we’ve been told that this is the best way to do it--for the financial community to feel comfortable in giving us the kind of dollars we are talking about. The only major asset we both own, since we are not independently wealthy, is the theater.”