Arclight and Pacific Theaters got everyone’s attention with parent company Decurion’s April 12 announcement that the exhibitors would close their doors, effective immediately. Some of the most desirable theaters in Southern California, including the beloved Arclight Hollywood 15 screen complex and its Cinerama Dome, gone. Decisive, shocking, over and out.
But what if that’s not exactly true? Already, Pacific Theaters’ Vineland Drive-In remains open and distributors have been told that it’s expected to remain a going concern. Beyond that, while the Arclight and Pacific chains aren’t expected to make a comeback, multiple parties have incentive to keep the locations alive.
Of the greatest concern is Arclight Hollywood, which alone provided one percent of the total North American gross for edgy and acclaimed titles like “Once Upon a Time in Hollywood” and “Parasite.” Patrons and filmmakers have posted passionate pleas for its return, while inside the industry specialized distributors pray fervently for a resurrection. Pacific had a lease at The Grove, located in the Fairfax district in mid-Los Angele, which grossed over $12 million in 2019. That location, and Arclight Sherman Oaks, are distributor must-haves; their areas leave few alternatives.
Those thoughts and prayers may come to pass. Here’s how sources believe reopenings could happen.
Many of Arclight and Pacific’s 18 locations operated under leases, with different landlords. (Arclight Hollywood is an exception, which is owned by Decurion.) Landlords could take legal action, which would slow reopenings, but nearly all have incentives to find exhibitors to operate their theaters. The buildings have few alternative uses and often serve as a daily draw to support retail centers. That means deals must be made even if the terms aren’t great.
Management deals, in which an exhibitor operates the theater for a fee and the landlord keeps the revenues, are one option. A portfolio that contains a desirable theater is a property-owner plus, whatever the financial arrangement might be.
Among the top domestic exhibitors, Cinemark is considered the most likely to be interested. The publicly traded company has more solid financials than AMC and Regal, and Cinemark is underrepresented in Southern California. AMC also has eight of the top 12 grossing theaters in Southern California; any more risks anti-trust issues. Regal has fewer theaters in the Los Angeles area, but it’s been conservative in the nationwide reopening of the theaters it already operates.
There’s also the Arizona-based Harkins Theaters, which appears to have more solid fundamentals. The Mexico-based luxury theater chain Cinepolis has already made initial moves into the Southern California market. (Among the unlikely: Alamo, which is in Chapter 11 bankruptcy, and Landmark.) It’s also possible outside investors could step in under the right circumstances and a reduced price.
The same options hold true for the Arclight Hollywood/Cinerama Dome, which is owned by Decurion’s Robertson Properties Group. It faces the same dilemma as other landlords: It’s an expensive property that needs to earn income and has few other options; it also offers a real upside in value and is considered critical for specialized films, those with awards profile, and the adult-audience sector.
The most aggressive speculation surrounds the idea that Netflix, Amazon, or Apple might come to the rescue. Playing the hero, possibly branding this location, and guaranteeing a showcase for awards contenders (and for their competitors’, under current booking policies), might have sufficient appeal. But at this point it’s speculation.
As for Arclight and Pacific’s publicly traded competitors, their stock prices fell the day after the news, but since then have rebounded higher. The bet is worst-case scenarios of never reopening is unlikely — but it may take a while for things to sort themselves out.