Hollywood Box Office News Is Boffo

In the days and weeks following the Sept. 11 terrorist attacks, experts predicted that Americans would stay “cocooned” at home in front of their television sets and watch scores of videos.

But so many people kept going to the movies that Hollywood is now poised to set a box office record of more than $8 billion in annual ticket sales.

Despite ongoing terrorist and anthrax scares and a marked downturn in the economy, moviegoing has been up each weekend since the attacks except one.

Movie admissions, which have remained relatively flat over the last decade, could finish at levels not seen since the 1940s, an era that lacked today’s competition from broadcast and cable television, satellite dishes and home video viewing.

To date, box office revenue is up 9.6% from last year to $6.57 billion, with less than half that increase caused by ticket price hikes.

Hollywood is banking on a blockbuster holiday season--kicked off by last weekend’s record debut of the Pixar/Walt Disney Co. animated hit “Monsters, Inc.” and an expected windfall next weekend from Warner Bros.’ “Harry Potter and the Sorcerer’s Stone”--to shatter last year’s record of $7.7 billion.

“The record box office reflects the fact that the movies this year really clicked with audiences,” said Paramount Pictures Chairwoman Sherry Lansing. “Once you have a satisfying experience with a movie, it only increases your appetite to see another one, and that’s what caused people to go again and again and again.”

A record year would be a big shot in the arm for the nation’s financially beleaguered theater chains, a dozen of which have been mired in bankruptcy proceedings.

Their problems were largely caused by overbuilding multiplexes while losing business at their aging, less profitable theaters. Increased attendance is the key to turning around the theaters, which split ticket sales with the studios but reap all the profit from sales of popcorn, candy and soft drinks.

Still, the attacks did alter Hollywood’s movie slate and affect box office receipts. Three films scheduled for release this year with terrorist-related themes--the Warner Bros. movie “Collateral Damage” and Walt Disney Co.’s “Bad Company” and “Big Trouble”--were bumped into 2002 out of concern that it would be inappropriate to release them so soon after the tragedy. The movies represent a total of more than $200 million invested in production and marketing.

In the days after the Sept. 11 attacks, many pundits predicted that people would be terrified to venture out of their homes, even to go to their local theaters. As trend guru Faith Popcorn, who coined the term cocooning, put it: “People are holing up.”

But that hasn’t been the case. Last weekend saw the biggest gold rush when “Monsters, Inc.” grossed $63 million--a record for the debut of an animated film.

Studio executives and theater owners say the last two months show that the industry’s age-old rules still apply: Movies are appealing because they are a relatively inexpensive form of entertainment, provide a convenient place for young people to date and, most important, customers will keep turning out to see popular films.

The turnout also reflects continued moviegoing by teenagers, who are less likely than adults to stay home because of news events.

“I always said that, after the sensitivity wore off, people were not going to stay umbilically connected to some box in their living room,” said Motion Picture Assn. of America President Jack Valenti.

Tom Borys, president of the AC Nielsen/EDI box office tracking service, predicts that if the current pace continues, the nation’s box office will soar at least 10% to a record $8.2 billion by year’s end. In addition, admissions could hit 1.5 billion, a level not seen in decades.

Attendance previously peaked at more than 1.5 billion in pretelevision 1944. That year, Hollywood released more than 1,500 films to a war-weary public eager for escape, including such classics as the Oscar-winning “Going My Way” with Bing Crosby, “Double Indemnity” starring Barbara Stanwyck and the Judy Garland musical “Meet Me in St. Louis.”

Still, big box office isn’t always synonymous with quality. This year, movie critics panned some of the biggest hits, including “Planet of the Apes” and “Pearl Harbor.”

The estimates for 2001 could turn out to be conservative, Borys said, with one of the biggest films in years lurking in “Harry Potter.” The movie is scheduled to open Friday as the widest release ever on almost 8,000 screens in more than 3,500 theaters across the nation.

The November-December holiday season is the second most lucrative moviegoing period of the year after summer. Holiday receipts generally represent from 20% to 25% of the year’s revenues, compared with 35% to 40% for the summer months.

Hollywood is confident that this holiday season will be particularly buoyant. Other top prospects include “Ali” starring Will Smith; “Ocean’s Eleven,” a remake with George Clooney, Brad Pitt and Julia Roberts; the first in the “Lord of the Rings” trilogy; the animated feature “Jimmy Neutron: Boy Genius” and “The Majestic,” starring Jim Carrey.

Of the six largest studios, Universal is the leader this year with $834.8 million at the domestic box office through Nov. 4, according to AC Nielsen/EDI. The studio has enjoyed such hits as “Fast and the Furious,” “The Mummy Returns,” “Jurassic Park III” and “American Pie 2.”

Sony Pictures, which had such bombs as “Final Fantasy,” trails the pack with $626.6 million. But Warner Bros., now in third place, may well vault into first with expectations high for “Harry Potter,” “The Majestic” and “Ocean’s Eleven.”

For the studios, box office success doesn’t necessarily translate into profits, given their ever-rising costs to make and market movies.

Last year alone, the cost to produce and sell a movie jumped 6.5% to an average $82.1 million, according to Motion Picture Assn. of America figures. Of that amount, $54.8 million on average went toward making them, with $27.3 million spent on marketing. But analysts say recent cost controls will help boost the bottom line.

“I think profitability overall will be up,” said Larry Gerbrandt, a senior entertainment analyst with Kagen World Media. “On a studio-by-studio basis, it depends on the proportion of hits and how good a job they did controlling production and marketing costs.”

Movie executives say the softening economy this year may actually be helping moviegoing because price increases among other forms of entertainment have soared comparatively in recent years.

According to the National Assn. of Theatre Owners, ticket prices in the last decade have increased 28%. That compares with such price increases as 140% for NBA games, 122% for rock concerts and 40% for Broadway shows.

“Moviegoing remains the most affordable out-of-home entertainment,” Theatre Owners President John Fithian said. He and studio executives said moviegoers are being drawn as an escape from anxiety-filled news reports.

“We’re all mindful that people need a break, and movies provide a release from the strains of the world,” Fithian said.

Indeed, in 32 weeks this year, box office numbers were up over the same period in 2000. In only 12 weeks did they fall short. The numbers may have been slightly depressed last year by competition from the Summer Olympics.

The main reason for the increase appears to be strong performances by such big-event films as “Shrek,” “Planet of the Apes,” “Jurassic Park III,” “Rush Hour 2,” “Pearl Harbor” and “Hannibal.”

Dick Cook, chairman of Disney’s motion picture group, said a strong holiday season benefits not only studios but also theaters--where concession sales represent about 30% of overall business.

Regal Cinemas spokesman Dick Westerling added: “The box office success that we have enjoyed over the past year is helping us greatly in the recovery process.” The nation’s largest theater chain, with 3,664 screens, the Knoxville, Tenn.-based Regal filed for Chapter 11 bankruptcy protection last month.

Total box office receipts are split between studios and theater owners on a sliding scale. Studios get a bigger chunk initially to help defray their marketing costs, with the number eventually moving toward an even split. When films play longer, theaters get more money.

This summer saw an unusually large number of movies such as “Jurassic Park III” and “Planet of the Apes” that opened to spectacular box office numbers, then plunged when the next big film opened a week or two later, resulting in fewer dollars for exhibitors.

Exhibitors hope the holiday movies will have “legs,” meaning they continue to draw crowds for weeks, even months,

Kurt C. Hall, president and chief executive of Denver-based United Artists Theater Co., which emerged from bankruptcy in March, suggested that “the wave of momentum” created by movies such as “Monsters, Inc.” benefits theaters most.

“What really makes this business fly is getting the infrequent moviegoers out,” Hall said.

A good year also significantly affects the smaller “mom and pop” theaters across America, which in down periods often struggle to make ends meet.

“If it’s an average or below-average year, we are just paying the expenses,” said Ayron Pickerill, who with her husband, Howard, owns the 18-screen Polson Theaters chain of Polson, Mont.

Pickerill said the terrorist attacks did not affect business at their theaters in Montana and Idaho: “People didn’t feel unsafe leaving their homes.”

Ron Krueger II of St. Louis-based Wehrenberg Theaters, the nation’s oldest family-owned and operated theater chain, said he expects a great holiday season to bring healthy profits to his 199-screen circuit, which filed for bankruptcy protection in January.

Rick King, a spokesman for AMC Entertainment, said he expects the Kansas City, Mo.-based theater chain to continue drawing huge crowds through Thanksgiving and Christmas.

“The box office year we’ve had is better than last year without even hitting our peak film: ‘Harry Potter,’ ” said King, noting that fears about a drop-off in attendance after the attacks “have not panned out at all.” AMC officials plotted business activity for 30 days after Sept. 11 and found that only nine days were less busy than the same period a year earlier.

Stuart Fischoff, a media psychologist at Cal State Los Angeles, said much of the hand-wringing after Sept. 11 was unfounded.

“What people forget is that movies were hugely attended during World War II and after Pearl Harbor,” he said. “In hard times, people run to the movies for escapism.”