A Bailout for Theaters at $0 to Taxpayers

A Bailout for Theaters at $0 to Taxpayers

Sonny Bunch at The Bulwark’s media newsletter “Screen Time” (which I encourage readers to subscribe to) had an interesting article about how movie studios are continuing to leverage their power against movie theaters at a time when the latter are in desperate need of help:

I’d like to focus on another angle: the partnership between studios and exhibitors and the inability—or unwillingness—of studios to act like good partners over the last few months. 

Consider, first, the terms that Warner Bros. asked for when allowing Tenet to be shown in theaters: 

Because Warner Bros. will have to make money gradually from “Tenet” amid theater attendance caps and a slower pace of ticket sales, the studio is requiring multiplexes to show the movie for up to 12 weeks, a considerable increase from the standard commitment. That is on top of charging cinemas nearly 65 percent of ticket sales to show the film, instead of closer to the widely accepted 50/50 split, according to a person familiar with the deal terms…

[T]hat revenue split is kind of a big deal. It’s onerous—a friend in the exhibition business described it as “Star Wars money,” referencing Disney’s notoriously stingy dealings with theaters for space-based tentpoles—just one more blow to theaters already suffering from caps on attendance that keep screens from playing in front of full, or even half-full, auditoriums. While it’s understandable that Warner Bros. would ask for that kind of revenue split—they’re holding all the cards—it’s deeply harmful for the theaters themselves. 

One of the reasons moviegoers need to take out a second mortgage to patronize the concession stand is the large cut movie studios demand from theaters. Hard numbers are difficult to come by since these are private arrangements, but 50 percent of revenue is a significant chunk of change to turn over.

But what if movie theaters had to pay 0 percent because the films they screened were in the public domain? Bunch alludes to screening older films which have more favorable splits in favor of theaters, but he’s somewhat bearish on that option:

More harmful than that is the simple lack of product. Studios aren’t giving theaters anything to show other than repertory product (classics like Empire Strikes Back as well as “classics” like Hocus Pocus). And while my sources suggest that studios are being much more generous on the revenue splits for those older films, it doesn’t really matter: you can’t keep theaters open with 40-year-old classics and nostalgia traps for xennials who lack taste.

He’s identifying two problems. Lack of demand to see older films in theaters is tough to get around, but the fact that studios aren’t allowing theaters to show older films is made possible due to copyright protection. Below is a graph of how many of the AFI’s top 100 films would be in the public domain under various copyright terms (for works for hire).

I’m not holding my breath on cutting copyright terms. Anything close to the optimal term would put us in violation of the Berne Convention and retroactive term cuts would likely raise some constitutional questions related to the Takings Clause.

Still, I think it’s worthwhile to consider what a boon it could be if we expanded what movie theaters could show without having to pay or get the permission of major studios who control works for far longer than the founders intended.

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By |2020-10-21T21:54:36-07:00October 21st, 2020|Blog, Intellectual Property|