Anyone who missed last week’s CJ Cinema Summit featuring guests David Keighley and Craig Dehmel from IMAX, have no fear, you can watch the session on demand here.
For those of us living in the United States, the past two months has been filled with countless political ads and endless media coverage of divisive campaigns leading up to Election Day on 8 November. One campaign making a lot of headlines is the Los Angeles mayoral race between Congresswoman Karen Bass and real estate magnate Rick Caruso. I can not argue the merits (or flaws) of either candidate, for which I have no expertise. What I can clarify though is why so many within the cinema industry, especially in Los Angeles, feel ill at ease with Caruso’s entry into politics, especially given the timing of his current campaign.
Most Angelenos have become quite familiar with Caruso over the past two decades as the developer behind some of the cities highest profile commercial projects including, The Grove at Farmers Market in Los Angeles, the American at Brand in Glendale, the Commons at Calabasas (where I happen to live) and the Palisades Village in Pacific Palisades. I picked these four retail properties on purpose, though I easily could have picked the Encino Marketplace, The Promenade at Westlake or half a dozen others. However the four I’ve chosen are those with cinemas as anchor tenants. Taking a closer look at how cinema operators have fared in Caruso’s properties explains the apprehension some feel about him becoming the next mayor of Los Angeles.
To provide some context, Caruso’s properties are picturesque representations of what Main Street USA might look like in a Frank Capra movie. They have been described as urban fantasylands where “Frank Sinatra music wafts through the air and the trolley never stops running. It even snows fake snow at Christmastime.” But as more than a few architecture critics have noted, most of Caruso’s Los Angeles properties look great from the inside while walling off the gritty reality of the outside world and providing little for the surrounding community to look at other than parking garages and blank stucco walls.
Even so, prior to the pandemic The Grove attracted 20 million visitors per year, more than the the Great Wall of China and Disneyland. That explains how Pacific Theatres built two of the highest grossing multiplexes in the nation; a 14 screen cinema at the Grove and an 18 screen theatre at the Americana. Meanwhile, the Regal Edwards Calabasas at the Commons was a six screen venue which, while a little outdated, attracted lots of senior industry professionals who lived in the nearby suburbs. Cinépolis USA opened the five screen its Pacific Palisades Bay Theatre in November 2018.
Even before COVID shut down movie theatres throughout Los Angeles County for over a year, at least two of these cinema locations were thorns in their operators’ sides. The Edwards in Calabasas was always “on the bubble” of being profitable. Cinépolis saw very quickly that operating the Bay Theatre amidst a neighborhood of A-list filmmakers and C-Suite studio executives was not going to work; after all, this demographic tends to live in mansions which come with their own private screening rooms. You see, with the high-end locations and surroundings for which Caruso’s properties are recognized, comes the exorbitant rent that the billionaire is well known for charging.
And as all these operators found out, both before, during and shortly after the pandemic, getting out of a lease with Caruso is impossible. The company’s leases are ironclad and Caruso has a reputation for not negotiating on any clause or deal point. This led many industry insiders to wonder how Cinépolis, Pacific Theatres and Regal would be able to reopen locations at Caruso properties after the pandemic. Would Caruso cut a deal with operators to pay off back rent over time? Would the company forgive rent or at least lower it for the months when exhibitors were unable to operate due to local health restrictions?
Turns out, the answer to all those questions was a resounding no; Caruso wanted to be repaid in full, ideally before each venue reopened. While this was not the only reason Pacific Theatres (and its sister company Arclight Cinemas) went out of business, it was definitely one of the straws that broke the proverbial camel’s back. (AMC later picked up both The Grove and The Americana at Brand.) Cinépolis managed to get Netflix to take over the lease so they could show their films to awards voters in a theatre close to home. Regal reopened its Edwards Calabasas location, though it is unclear if they paid any of the back rent. A week after Cineworld, Regals owner, filed for bankruptcy this past September, the location was one of a dozen permanently closed. The rent for the Calabasas facility is so onerous, especially given the number of movie theatres in the area, that rumor has it no operator wants to take it on.
With this well trafficked backstory it is not hard to see why, despite all his worthy philanthropic efforts and record of job creation, so many cinema industry veterans cringe a bit when they see Caruso’s advertisements about how he’ll clean up Los Angeles, fix homelessness, lower crime and bring jobs to the city. He very well may be able to accomplish all these goals, though if history is any guide, it might be done in a rigid fashion with very little empathy in hopes of achieving some idealistic vision of an urban utopia replete with crowd pleasing water features.
Though, I’ll admit, the trollies might be a nice touch, especially if they run on time.
Smart Solutions for the Best Performance
Dolby Auditorium Packages are engineered exclusively for the best cinema performance. Our products are quality tested in multiple configurations in our own engineering labs to ensure the highest quality and reliability.
Celluloid Junkie is the leading online resource dedicated to the global film and cinema business. The Marquee is our newsletter focused on motion picture exhibition; keeping industry professionals informed of important news, the latest trends and insightful analysis