Cinema squeeze

The day before Laemmle Theatres closed its Sunset 5 last month, patrons and filmmakers showed up at the West Hollywood movie house to share their memories of one of L.A.'s most popular art house cinemas.

Since opening nearly 20 years ago, the Sunset 5 had been the go-to venue where indie directors such as Bill Condon (“Gods and Monsters”) and Lisa Cholodenko (“High Art”) screened their movies to sold-out crowds.

Art house theaters used to have the indie cinema market to themselves. Recently, however, major circuits, including Cinemark and AMC, have booked more art house or specialty films, such as Oscar-winners “Black Swan” and “The King’s Speech.” Veteran independent cinemas like Sunset 5 also have faced competition from new, higher-end movie houses -- especially the ArcLight in Hollywood, Pacific Theatres at the Grove and Landmark Theatres on Pico Boulevard.

“Studios are going to play the movie where they think it’s going to do the most business,” said Laemmle Theatres President Greg Laemmle. “You just become a second choice.”


The Sunset 5 is the latest casualty in L.A.'s increasingly competitive art house cinema industry. Traditional players such as Laemmle, a fixture in L.A. since 1938, have been forced to close older theaters while relative newcomers, including ArcLight and Landmark, have grabbed market share by offering a mix of commercial, art house, and specialty movies along with premium services and ticket prices $2 to $4 above the competition.

Fewer than 5% of the 2,245 screens in the greater L.A. area are devoted to independent, foreign language or specialty films, but that is expected to grow as new companies enter the market.

Robert Redford’s company Sundance Cinemas -- which operates high-end theaters in Houston, Madison, Wis., and San Francisco, and plans to begin operating in several other U.S. cities -- is taking over the lease of Sunset 5. Like ArcLight, Sundance Cinemas offers reserved seating, gourmet food and a range of alternative programming, drawing on Redford’s annual Sundance Film Festival in Park City, Utah. After renovations, the new theater will open in the spring.

Alamo Drafthouse, the quirky 11-theater chain based in Austin, Texas, also has designs on L.A. Alamo pioneered the concept of serving food and drink in theaters, in which seating is arranged in rows of cabaret-style tables. Alamo programs a variety of art, foreign and horror films, often with interactive shows, including one in which food is served to match recipes in films such as “Like Water for Chocolate.” The company plans to open theaters next year, in New York, San Francisco, Washington and L.A.

“L.A. is the film capital of the world and there is still a lot of room for us to enter the market and offer new possibilities for watching movies,” said Tim League, founder and chief executive of Alamo, which recently launched a film distribution company.

Alamo Drafthouse will face stiff competition from ArcLight, which has a growing presence in Southern California.

Pacific Theatres opened its first ArcLight Cinemas in Hollywood in 2002 in the Westfield UTC Mall, soon added theaters in Sherman Oaks, Pasadena, and El Segundo and in September announced plans to open a 14-screen multiplex in San Diego next year. ArcLight aims to expand in San Francisco, Chicago, New York and Dallas.

The locations offer extra-wide reserved seating and lounges in which patrons can drink beer, wine and cocktails.


At a time when overall box-office revenue has fallen, ArcLight’s revenue will have grown an estimated 10% this year over 2010, said Gretchen McCourt, executive vice president of ArcLight Cinemas.

“We feel that the more you can give moviegoers a great experience, the more they will come out of their home,” said McCourt, who thinks the L.A. market can support newcomers such as Sundance and Alamo. “There is ample opportunity for other circuits to do similar things.”

Indeed, Landmark’s 12-screen multiplex in Westwood, which opened in 2007 after a $20-million investment by owners Todd Wagner and Mark Cuban, offers many similar services to ArcLight and has built a loyal following, often selling out on weekends.

“It’s the most successful theater in the country for us,” said Ted Mundorff, chief executive for Landmark Theatres, which has 61 outlets.


The heightened competition, however, has already killed some venerable independent theaters. The Majestic Crest in Westwood shut down indefinitely in October, only a year after Venice-based Bigfoot Entertainment paid $4 million to acquire it.

In the last five years, in addition to the Sunset 5, Laemmle has closed the Laemmle Grande 4-Plex in downtown L.A., the historic Fairfax Theatre at Beverly Boulevard and Fairfax Avenue and the One Colorado in Pasadena (later taken over by Village Roadshow’s Gold Class Cinemas).

The company’s revenue is estimated to fall to about $15 million this year from nearly $20 million in 2007, but Laemmle remains profitable and is adapting to the heightened competition by expanding into less competitive regions. The company has invested $7.5 million to build an all-digital theater called NoHo7 on Lankershim Boulevard in North Hollywood. To avoid unforeseen rent hikes, Laemmle said, the company acquired the building.

The circuit also plans to open in a theater in Glendale and recently sold its first franchise in Lancaster. Greg Laemmle said he wants to renovate older theaters such as the Monica 4 on 2nd Street in Santa Monica. But he heard a new multiplex might be opening on 4th Street.


“How can you invest to rehab an older theater when you have that kind of uncertainty?” he said.