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Sympathy for the Devil: You Can’t Blame the Theaters for Suing New Jersey

However misguided, theaters are in an impossible position. And even if they win in court, it could come at a very high cost.


Regal Cinemas

Regal Cinemas

Movie theater trade group NATO, along with the three top theater chains, are suing the state of New Jersey in federal court over reopening restrictions. The lawsuit contends that theaters, along with other entertainment venues, are unfairly treated when churches, malls, libraries, and museums are given permission to open under the First Amendment (freedom of speech). Instead, they are categorized under the same restrictions that face gyms, enclosed amusement parks, and live theater venues.

The move did not engender sympathy on social media.

Theaters are part of New Jersey’s Stage 3 loosening of COVID-19 restrictions, the date for which has not been determined. The other examples of public assembly are part of Stage 2, which went into effect on June 15. New Jersey, like New York, faced an initial hard hit by the pandemic; at this point, unlike much of the country, it has not seen a resurgence. However, the influx of bad news led to caution by state officials.

New Jersey represents only 3 percent of the U.S. population, but as studios assess whether to stick to their oft-delayed release dates for top films (currently August 12 for “Tenet” and August 21 for “Mulan”), every dollar counts.

To be fair: The movie theaters’ responses — however misguided — stem from concern about priorities. The lawsuit targets guidelines for only one state, but could set the kind of precedent that’s crucial in legal matters. And the core question — Why can’t theaters open, when churches can? — is a reasonable issue to adjudicate. And the comparison to churches is shrewd. Politically, it is tough for officials to keep them closed. If NATO can prove theaters should be judged similarly, it could strengthen their hand.

There’s another level as well: Ultimately, this is yet another instance of NATO and theaters reflecting their intense financial pressures after four months of closures. Debt is piling up, along with the very real concern that the studios have alternative platforms that risk becoming, at some level, standard. As publicly traded businesses, theater owners have a responsibility to make sure they defend their interests, even if it risks being regarded as irresponsible and reckless.



The unequal treatment argument is a risky one. New Jersey likely will claim its decision is based on reasons unique to theaters. The state could cite the religious freedom aspect of the First Amendment as an argument for the churches. Discovery could put on record the many challenges theaters will have in enforcing safety rules, which could be used against them in other legal battles. Even if the theaters won their suit, New Jersey might solve the problem by reimposing the same rules on entities now open, making the victory pyrrhic.

Even if theaters prevail in court, their destiny remains the same: Are studios willing to release major films, and is  enough of the public willing to turn up if they do? Many independent theaters (and some small chains) are easing into operation, with somewhere around 1,000 open this past weekend (and drive-ins continuing to shine). The total gross reported was around $9 million, but that included considerable duplicate reporting at outdoor theaters, where double features usually report numbers for two films. Most indoor theaters saw per-screen averages in the low hundreds, playing mostly library titles.

The 1984 “Ghostbusters” led with around $238,000 in 438 theaters. That’s $508 per screen. Among limited new releases also showing at home, IFC’s “The Relic” did best, boosted by ongoing drive-in support for new horror films. It took in $192,352 on 69 screens (a respectable $2,788 PTA). Screen Media’s streaming hit “The Outpost” (#1 on multiple platforms) saw little impact, grossing only $14,182 at 69 theaters for an anemic $209 PTA.

Overseas, where countries are faring better but most locations still lack fresh product, the U.K. would appear to typify problems ahead for U.S. theaters. With most major chains still closed (but some opening this Friday), Disney’s “Onward” was #1 — but it only took in $29,000 on 45 screens. That comes after it already has played VOD there.

Meanwhile, with a steady flow of original films gaining attention, streaming in the U.S. continues to thrive.

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