Rural theaters feeling pinch from Disney over new 'Star Wars' movie

Disney is imposing a draconian set of conditions for theaters playing the new “Star Wars: The Last Jedi” movie this holiday season. Many in the film industry have dubbed the terms bad for local business, and the effects are even worse for theaters in rural states like Montana.

Theater representatives across the country, including in the Flathead Valley, say the studio is leveraging its market power to impose unprecedented terms on theaters that want to play the film, demanding a higher percentage of box office sales – as much as 70 percent – among other onerous commitments.

The terms dictate several requirements, including one that mandates theaters must show the film beginning opening night for four consecutive weeks, with every showing occurring in the largest show room a theater has available.

“By the time we get around all the rules, we pretty much just try to keep our head above water,” said Becky Dupuis, film purchaser for Polson Theaters, Inc., which operates theaters in Polson, Ronan and Whitefish, as well other locations throughout Montana and one in Idaho.

The film, set to release Dec. 14, is expected to gross close to $1 billion in the U.S. alone. Its early holiday release date is pushing other potentially high-traffic holiday specials out of small towns in Montana, where all but the largest cities sport theaters with only one or two showrooms.

Nationwide, theaters typically hand over between 50 and 60 percent of box office sales to the studio that produced the movie. Dupuis said that range is also representative of what their company pays back to studios on a regular basis.

It isn’t strange for studios to demand more for movies that are expected to be extraordinarily popular, but the 65 percent Disney is demanding for this film is unprecedented, Dupuis said. Disney also threatens to up that figure to 70 percent to any theater they discover is not adhering to their other stringent regulations.

“Any kind of big movie, whether it is Disney or not, is usually in the 60s somewhere,” Dupuis said. “65 [percent] is giving us all a heart attack.”

News of the terms also had an immediate negative impact on larger corporate theater chains, showing no player is immune to the effects of Disney’s profit-grab. Cinemark Holdings, which operates large theaters in Kalispell and Helena, saw a 2.6 percent fall in its share values on the New York Stock Exchange on the day the news broke in the Wall Street Journal. AMC Entertainment, which operates theaters in Butte, Great Falls and Missoula, saw a 4 percent dip.

Local Cinemark employees declined to comment and directed requests to their corporate office, which did not respond to requests for comment.

The Empire-esque regulations are bad for small business, but also bad for Montanans, Dupuis said. Any regular moviegoers in a small town are going to notice the impact this holiday season.

“The worst part is that if you are a regular moviegoer in a town that only has a twin theater, it’s going to play ‘Star Wars’ for four weeks,” Dupuis said. “It locks up that screen.”

Many small towns where the Polson-based company operates theaters, like Shelby and Cut Bank, rarely play a film for longer than two weeks. Dupuis said they simply run out of people to go see the movie by the third week because the populations of the towns rarely eclipse a few thousand people.

With “Star Wars” occupying a theater for four weeks, it means the theater is showing only one film in that showroom when it would otherwise show two or three in a four-week span. Regular moviegoers have fewer options, and the theater makes less money.

“The third week of ‘Star Wars’ is probably going to gross a quarter to a third of what a new movie in that spot would do, so it’s a big deal,” Dupuis said. “Especially by week four, it’s like why are we even wasting space? Why are we even turning the lights on in here?”

For other major films the portion of box office sales often starts high, but then declines with each successive week the film is out, Dupuis said. Small theaters could begin playing the film two weeks after its official release if they couldn’t afford the early terms.

It was common for Polson Theaters, Inc. to play a film for two weeks in Whitefish as soon as it came out, then stick it on the Empire Builder Amtrak line to Havre to play it for the next two weeks at the theater there. That way, they could mimic the audience sizes of larger cities and have four weeks of busy theaters while taking advantage of capturing higher box office returns when the film showed during the latter two weeks in Havre, Dupuis said.

Under Disney’s restrictions, if her company wants to play the movie in Whitefish and Havre within the first month after opening, they have to play it in both theaters for four full weeks without transferring it to a different location.

Small theaters in this instance are forced to try and compete in a market they have very little control over. The theater has little choice but to play a product it cannot get elsewhere. Dupuis said she expects her company will play the film when it comes out this winter, though they may not do so in every location. Boycotting simply isn’t an option when Disney is such a behemoth in the industry, she said.

Dupuis compares the situation to a clothing store. If Levi begins to charge exorbitant amounts for blue jeans, a clothing store can simply begin carrying other types of jeans. With production studios, the product they are selling cannot be obtained anywhere else.

“It’s a catch-22,” Dupuis said. “You either have to put up with their terms, or you don’t get it.”

Dupuis said one of the most frustrating things about the situation is the lack of tools they have at their disposal.

“If I called up Disney and told them that we weren’t going to play ‘Star Wars’ in any of our theaters, I’m pretty sure we wouldn’t get a call back,” Dupuis said. “It is very difficult for small theaters to negotiate any kinds of terms.”

The Walt Disney Company did not return requests for comment on this story.