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Topic: Vancouver movie theater chain Cinetopia goes dark amid ‘restructuring’
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Harold Hallikainen
Jedi Master Film Handler
Posts: 906
From: Denver, CO, USA
Registered: Aug 2009
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posted 05-26-2019 08:39 PM
https://www.columbian.com/news/2019/may/22/vancouver-movie-theater-chain-cinetopia-goes-dark-amid-restructuring/
Vancouver movie theater chain Cinetopia goes dark amid ‘restructuring’
Indefinite closure comes at critical point in legal battle
By Anthony Macuk, Columbian business reporter
Published: May 22, 2019, 6:03 AM
Cinetopia, the luxury movie theater chain that started in Vancouver, appears to be undergoing an upheaval as its four locations were either closed this week or were prepared to close — with unclear indications of reopening.
Cinetopia’s Mill Plain location was closed Monday afternoon, with no visible staff inside and signs taped to the doors that read “Theater Closed until further notice.”
The Vancouver Mall location was open as of Tuesday. But according to the online movie ticket retailer Fandango, it was showing only two movies: “Detective Pikachu” and “John Wick 3” — and no show times were listed after Tuesday.
It was the same story at the Progress Ridge location in Beaverton, Ore. And a location near suburban Kansas City, Kan., closed Sunday, said a spokesperson for the location’s parent shopping mall, Prairiefire of Overland Park, Kan.
“All we know is that it is (closed) until further notice and they’re undergoing some possible renovation,” the spokesperson said.
Cinetopia resonates with Clark County moviegoers who witnessed the luxury theater’s growth from infancy. Its living room style theaters arguably set a standard for imitators who came years later. And coincidence or not, the abrupt shift in operations this week at the four theaters comes at a crucial time in Cinetopia’s year-old lawsuit against mega movie distributor AMC Entertainment Holdings, Inc., of Kansas City, Kan.
On Monday, signs in the windows at the Vancouver Mall location said food and beverage service was temporarily suspended due to “restructuring of Cinetopia.” Box office employees at the mall described the changes as a restructuring and declined to comment further. A representative who answered the phone at Cinetopia’s corporate office in Beaverton, Ore., described the operation as “a deep cleaning,” and declined to elaborate.
Battle over screening rights
In the lawsuit Cinetopia filed against AMC, the two sides agreed weeks ago to a Friday deadline to tell a federal judge in Kansas City, Kan. — AMC’s corporate hometown — the status of an out-of-court settlement the two companies were negotiating.
Cinetopia contends in the lawsuit that AMC is breaking antitrust law through a practice called “clearance,” in which a bigger theater chain refuses to screen new movies unless studio distributors agree to withhold the movie from nearby competing theaters during the initial few weeks after the release date.
In a 2014 interview with The Columbian, Cinetopia founder Rudyard Coltman said Cinetopia encountered the practice when it opened its first location in 2005. AMC used clearance again in 2014, Coltman said, when the Overland Park location opened — in close proximity to an AMC theater and about 3 miles south of AMC’s corporate headquarters.
Cinetopia filed its lawsuit in May 2018, saying AMC’s clearance practices had “torpedoed (the Overland Park location’s) debut as a destination theater, injured its reputation, and caused it to incur substantial operating losses.”
The lawsuit alleges that after the Overland Park Cinetopia opened in 2014, AMC immediately began using clearances to deny it access to summer blockbusters including “Godzilla,” “Captain America: The Winter Solider,” “Guardians of the Galaxy” and “Big Hero 6,” and that the practice continued in subsequent years.
“AMC’s conduct caused Cinetopia to lose millions of dollars in lost profits,” the suit says. “The clearances … created a downward spiral from which Cinetopia has yet to recover. The losses substantially exceeded the profits Cinetopia earned on its operations in the Portland, Oregon area.”
The suit said the losses scuttled Cinetopia’s plans to open theaters in new markets and delayed capital spending on theater improvements.
Back-and-forth over sale
Cinetopia’s lawsuit also alleged that AMC had engaged in bad-faith negotiations to purchase the four Cinetopia locations while simultaneously using the practice of clearances.
The complaint alleged that upon learning of the plans for the Cinetopia at Overland Park, AMC approached Cinetopia in 2013 with an offer to buy the facility, but then reneged on its initial suggested purchase price, prompting Cinetopia to reject the deal.
The lawsuit alleges AMC made a second offer to purchase the Cinetopia in February 2016. But AMC said the deal would not proceed until AMC completed its proposed acquisition of another theater company — Carmike Cinemas of Georgia.
The Carmike Cinemas deal closed in December 2016. The Cinetopia lawsuit alleges that AMC subsequently renewed its offer to purchase the Overland Park location, but at a lower price.
“AMC engaged in these bad-faith negotiations while continuing to assert clearances against Cinetopia Overland Park 18 in order to inflict further injury on Cinetopia,” Cinetopia says in its complaint.
And it says on May 9, 2017, AMC provided a letter of intent to buy the Cinetopia theaters.
“The purchase price was substantially lower than it had previously offered,” the lawsuit says, adding that AMC further reduced the offer later.
AMC at the time told Cinetopia it “could no longer complete the deal because its board had imposed (a) moratorium on transactions valued at over $5 million that might last up to two years,” the lawsuit says, adding that the two sides could not reach a sales agreement.
Of that failure, Cinetopia says in the lawsuit that, “AMC engaged in … bad-faith negotiations,” rooted in its use of clearances to damage the Overland Park Cinetopia and “eliminate a vigorous new competitor in AMC’s own backyard.”
But the legal tone changed in March. That’s when AMC and Cinetopia told a judge they were seeking a settlement in the case. In a recent filing, the two sides said they’d inform the court by Friday of a potential settlement.
It’s unclear whether the current Cinetopia closures are linked to the possible settlement. Coltman — Cinetopia’s founder — and the theater chain’s other leaders could not be reached for comment. Attorneys for Cinetopia and AMC did not return calls or emails seeking comment, nor did AMC’s corporate communication division.
Cinetopia changed the game
The original Cinetopia location off of Mill Plain Boulevard was heralded as a new kind of luxury movie theater when it debuted in 2005. The project, reported to have cost $9.5 million, updated the first-run multiplex formula with leather seating, high-definition digital projectors, a dining room and wine bar all under one roof.
The building included five traditional auditoriums and three smaller “living room” theaters with direct food and alcohol service.
Coltman made his move at a time when the industry was in the midst of a box office slump. In a July 2005 Columbian story, he pitched his creation as the solution to the problem, offering a moviegoing experience that audiences wouldn’t be able to replicate at home.
“We’re raising it to another level so people can get excited about going to the theater again,” Coltman said at the time.
It wasn’t Coltman’s first theater project. According to a 2004 Columbian story, he was part of a group that bought and restored a 1940 theater called the Eltrym in Baker City, Ore., in 1997. The project added a number of features that Coltman would later incorporate into the Cinetopia concept, such as luxury chairs and cutting-edge projectors and speakers.
Coltman operated the Eltrym for eight years, but he became embroiled in a dispute with the city in 2003 when building officials declared that the restoration project had triggered a requirement for a modern fire sprinkler system. Coltman said he couldn’t shoulder the estimated $130,000 cost of the retrofit, and the city shut down the theater in 2006 after the two sides were unable to reach a deal.
Coltman had already opened the first Cinetopia at that point. He reportedly moved to Portland in 2004 to pursue the project and settled on the Mill Plain site as the best Portland-area location. This time, he built the new theater from the ground up.
The second Cinetopia was announced in 2008 as the anchor for the future Progress Ridge shopping center in Beaverton, deploying the luxury cinema concept at a bigger scale – the new $15 million multiplex would include five “living room” theaters and seven auditoriums.
The next expansion was bigger still: the 23-screen, $18 million Cinetopia at Vancouver Mall, announced in 2010. The Progress Ridge location debuted in 2011 and the Vancouver Mall site opened its doors in 2012 after several months of construction delays. The Overland Park location was announced in 2011 and opened in 2014.
Reporter Allan Brettman contributed to this story.
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