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‘Movie Theaters Are the Marketplace of Free Ideas’
John Fithian spent nearly three decades as the top lobbyist for movie theaters. He says their future is bright, despite the power of streaming.
By Nicole Sperling
He grappled with the transition from film projection to digital cinema and engaged in multiple battles over the studios’ desire to shorten the amount of time newly released movies can exclusively be shown in theaters amid the rise of streaming services. Yet it wasn’t until spring 2020, at the start of the pandemic, when Mr. Fithian actually wondered whether his business was going to survive.
Mr. Fithian said he was receiving calls “multiple times a day, from people saying, my third-, fourth-generation family business will be gone in a couple of months if you don’t get something for us,” he said with a nervous laugh. “That was when the crisis was very, very real to us.”
He helped secure more than $2 billion in tax relief for the industry, allowing most of the country’s theater chains to stay afloat. In the end, only 2,000 screens were closed down.
Mr. Fithian, 61, was raised in Washington, D.C., the son of former Representative Floyd Fithian of Indiana. He began his career as an outside counsel for clients that included the Major League Baseball players’ union and the theater owners’ association.
“Hearing theater owners talk about why they went into business or why their grandparents went into the business was completely inspiring,” he said. “It sounds silly, but movie theaters are the marketplace of free ideas.”
This interview, which was condensed and edited for clarity, was conducted during CinemaCon, an annual industry trade event, in Las Vegas.
When was the moment when you felt like the movie theater business was going to be OK?
About a month ago. (Laughs.) In 2022, we knew that people were coming back on a per-film basis at prepandemic rates so that kind of gave us the inkling that everything would be fine if the movies kept coming back. But, to be completely confident that this business will now grow to higher levels, that was only within the last few months, with pronouncements from the leaders of the major studios about their release slates going forward, by Amazon and Apple jumping into the theatrical business.
Do you now see some silver linings to the pandemic?
The so-called streaming wars that had started before the pandemic had the companies who owned streaming services, and Wall Street and its financial backers, believe that the only thing that mattered as a competitive business model was the number of subscribers to streaming services. We had heard from several studio leaders prepandemic that they really wanted to experiment with the elimination of a theatrical window.
Eliminate it completely?
“Some executives thought that. Others thought it should be dramatically shorter. There was a lot of pressure coming into the pandemic and during the pandemic. And release models totally changed. A lot of movies went only to streaming services. A lot of movies went simultaneously to theaters and streaming services. At the time, these were thought of as crisis moments for the creative community and for theater owners.
But what happened is that a whole bunch of data came out of the pandemic about these theories of the theatrical window. One, it was quite clear when you compare the movies during the pandemic, the ones that had an exclusive theatrical window did much better theatrically, but then also did better when it got to the home. Two, we learned that piracy is exacerbated by shrinking the theatrical window. If movies are only in cinemas, the only way you can pirate a movie is with a recording device. And the quality level is not great. When a movie gets released to the home, a pristine digital, easily replicable, easy-to-distribute-around-the-world copy becomes available. So you’re literally cannibalizing movie theater sales from the very first day.
Netflix is the last holdout when it comes to the theatrical space. Now that you have Amazon and Apple demonstrating a much greater interest in theatrical, does Netflix’s position matter as much?
I’m just stoked that one of my goals before retirement was to get two out of three of the streamers to go theatrical. We got two out of three. I just didn’t think those would be the two.
Do you believe you’ve permanently lost moviegoers because of changing habits developed during the pandemic?
We don’t think so. We were very nervous about that right when we started coming out of the pandemic, and there was data early in the reopening that suggested that two demographics, seniors and families with small children, weren’t prepared to come back to cinemas. Then it became a bit of a self-fulfilling prophecy, because studios wouldn’t theatrically distribute movies that appealed primarily to seniors, or to families with young children. Now the data is clear that movies released targeting those demographics are performing similar or better than they did in 2019, just like the movies targeted to other demographics. It was not a big surprise to us that the “Super Mario Bros. Movie” was going to do an extraordinary amount of business.
People love to criticize the moviegoing experience: It’s too loud, and people talk, use their phones, and you have to sit through 30 minutes of ads before the movie starts. Is there an awareness that there are issues with going to the movie theater?
We surveyed lots of theater owners about their plans coming out of the pandemic about adding premium large format screens, about replacing their sound systems, about adding alcohol service, about continuing to replace their seats. And the numbers are really strong. Now that the business is coming back, the theater owners have already started to continue to innovate and improve the experience so that it’s always better than the home.
In both Los Angeles and New York, quite a few prime theaters that catered to independent film have shut down. Do you think independent film is struggling for a home nowadays?
There’s a fascinating thing to me that I’ve noticed throughout my 30 years of representing theater owners, and that is what happens in Los Angeles or New York suggest to the creative community, the moviemakers, the reporters who cover our business, and the financial community, that is the movie experience. There’s a lot more out there. One company, Pacific Theaters, which ran the ArcLight, is the only company in the country who filed Chapter Seven bankruptcy. They went out of business entirely. There were a couple Chapter 11 reorganizations, but the only one that said, “Eh, I’m done” was Pacific. It does not mean that the art houses across the country closed down.
What is a misconception people have about the movie theater business that you’ve tried to correct but didn’t succeed?
Ticket prices. Even through all the innovations and improvements in the technology, and the sound systems and the premium screens — all the ways that we’ve improved the cinema experience over the last decade or two, it’s still the case that the average price of a ticket today on a cost-of-living basis is less than it was in the 1970s. And yet people always say movie tickets are too expensive.
What are the biggest challenges facing the theatrical exhibition business going forward?
I think the existential challenges — the pandemic, the streaming wars — are gone. I’m really the most optimistic I’ve been in 30 years about the future of the business. The biggest immediate challenge is it’s going to take a while to fix the balance sheets.
Long term, it’s still about two things: the creation and distribution of really good movies that appeal to all demographics in all different genres, with diverse casts and diverse themes, and really good operational experiences at theaters that also offer diversity and different value-based judgments. If the studio partners keep making really good movies that appeal to diverse audiences, and we keep innovating and upgrading cinema experiences, I’m very bullish on the long-term health of the industry.
Were you a movie lover before you took this job?
I like movies. But I was principally a First Amendment lover, and a First Amendment lawyer in Washington. Our members will play everything: the most radical, left-wing anarchist film, the most conservative religious film, and we get protests on both sides. To me it was always like, “Bring it on.” Movie theaters are the town halls of modern society. It’s where people go to experience something collectively, and then debate the issues of the day.
What is the thing you are going to miss the least?
I don’t know who I’m going to miss the least, the really aggressive know-it-alls in Hollywood or the really aggressive know-it-alls in Washington, D.C. A lot of these people are my really good friends, and I’ll have some lasting relationships with both creatives and studio executives, but, you know, sometimes just because you run a big studio or you’re a United States senator doesn’t mean you know everything. I will not miss that.
‘Movie Theaters Are the Marketplace of Free Ideas’
John Fithian spent nearly three decades as the top lobbyist for movie theaters. He says their future is bright, despite the power of streaming.
By Nicole Sperling
- May 19, 2023
He grappled with the transition from film projection to digital cinema and engaged in multiple battles over the studios’ desire to shorten the amount of time newly released movies can exclusively be shown in theaters amid the rise of streaming services. Yet it wasn’t until spring 2020, at the start of the pandemic, when Mr. Fithian actually wondered whether his business was going to survive.
Mr. Fithian said he was receiving calls “multiple times a day, from people saying, my third-, fourth-generation family business will be gone in a couple of months if you don’t get something for us,” he said with a nervous laugh. “That was when the crisis was very, very real to us.”
He helped secure more than $2 billion in tax relief for the industry, allowing most of the country’s theater chains to stay afloat. In the end, only 2,000 screens were closed down.
Mr. Fithian, 61, was raised in Washington, D.C., the son of former Representative Floyd Fithian of Indiana. He began his career as an outside counsel for clients that included the Major League Baseball players’ union and the theater owners’ association.
“Hearing theater owners talk about why they went into business or why their grandparents went into the business was completely inspiring,” he said. “It sounds silly, but movie theaters are the marketplace of free ideas.”
This interview, which was condensed and edited for clarity, was conducted during CinemaCon, an annual industry trade event, in Las Vegas.
When was the moment when you felt like the movie theater business was going to be OK?
About a month ago. (Laughs.) In 2022, we knew that people were coming back on a per-film basis at prepandemic rates so that kind of gave us the inkling that everything would be fine if the movies kept coming back. But, to be completely confident that this business will now grow to higher levels, that was only within the last few months, with pronouncements from the leaders of the major studios about their release slates going forward, by Amazon and Apple jumping into the theatrical business.
Do you now see some silver linings to the pandemic?
The so-called streaming wars that had started before the pandemic had the companies who owned streaming services, and Wall Street and its financial backers, believe that the only thing that mattered as a competitive business model was the number of subscribers to streaming services. We had heard from several studio leaders prepandemic that they really wanted to experiment with the elimination of a theatrical window.
Eliminate it completely?
“Some executives thought that. Others thought it should be dramatically shorter. There was a lot of pressure coming into the pandemic and during the pandemic. And release models totally changed. A lot of movies went only to streaming services. A lot of movies went simultaneously to theaters and streaming services. At the time, these were thought of as crisis moments for the creative community and for theater owners.
But what happened is that a whole bunch of data came out of the pandemic about these theories of the theatrical window. One, it was quite clear when you compare the movies during the pandemic, the ones that had an exclusive theatrical window did much better theatrically, but then also did better when it got to the home. Two, we learned that piracy is exacerbated by shrinking the theatrical window. If movies are only in cinemas, the only way you can pirate a movie is with a recording device. And the quality level is not great. When a movie gets released to the home, a pristine digital, easily replicable, easy-to-distribute-around-the-world copy becomes available. So you’re literally cannibalizing movie theater sales from the very first day.
Netflix is the last holdout when it comes to the theatrical space. Now that you have Amazon and Apple demonstrating a much greater interest in theatrical, does Netflix’s position matter as much?
I’m just stoked that one of my goals before retirement was to get two out of three of the streamers to go theatrical. We got two out of three. I just didn’t think those would be the two.
Do you believe you’ve permanently lost moviegoers because of changing habits developed during the pandemic?
We don’t think so. We were very nervous about that right when we started coming out of the pandemic, and there was data early in the reopening that suggested that two demographics, seniors and families with small children, weren’t prepared to come back to cinemas. Then it became a bit of a self-fulfilling prophecy, because studios wouldn’t theatrically distribute movies that appealed primarily to seniors, or to families with young children. Now the data is clear that movies released targeting those demographics are performing similar or better than they did in 2019, just like the movies targeted to other demographics. It was not a big surprise to us that the “Super Mario Bros. Movie” was going to do an extraordinary amount of business.
People love to criticize the moviegoing experience: It’s too loud, and people talk, use their phones, and you have to sit through 30 minutes of ads before the movie starts. Is there an awareness that there are issues with going to the movie theater?
We surveyed lots of theater owners about their plans coming out of the pandemic about adding premium large format screens, about replacing their sound systems, about adding alcohol service, about continuing to replace their seats. And the numbers are really strong. Now that the business is coming back, the theater owners have already started to continue to innovate and improve the experience so that it’s always better than the home.
In both Los Angeles and New York, quite a few prime theaters that catered to independent film have shut down. Do you think independent film is struggling for a home nowadays?
There’s a fascinating thing to me that I’ve noticed throughout my 30 years of representing theater owners, and that is what happens in Los Angeles or New York suggest to the creative community, the moviemakers, the reporters who cover our business, and the financial community, that is the movie experience. There’s a lot more out there. One company, Pacific Theaters, which ran the ArcLight, is the only company in the country who filed Chapter Seven bankruptcy. They went out of business entirely. There were a couple Chapter 11 reorganizations, but the only one that said, “Eh, I’m done” was Pacific. It does not mean that the art houses across the country closed down.
What is a misconception people have about the movie theater business that you’ve tried to correct but didn’t succeed?
Ticket prices. Even through all the innovations and improvements in the technology, and the sound systems and the premium screens — all the ways that we’ve improved the cinema experience over the last decade or two, it’s still the case that the average price of a ticket today on a cost-of-living basis is less than it was in the 1970s. And yet people always say movie tickets are too expensive.
What are the biggest challenges facing the theatrical exhibition business going forward?
I think the existential challenges — the pandemic, the streaming wars — are gone. I’m really the most optimistic I’ve been in 30 years about the future of the business. The biggest immediate challenge is it’s going to take a while to fix the balance sheets.
Long term, it’s still about two things: the creation and distribution of really good movies that appeal to all demographics in all different genres, with diverse casts and diverse themes, and really good operational experiences at theaters that also offer diversity and different value-based judgments. If the studio partners keep making really good movies that appeal to diverse audiences, and we keep innovating and upgrading cinema experiences, I’m very bullish on the long-term health of the industry.
Were you a movie lover before you took this job?
I like movies. But I was principally a First Amendment lover, and a First Amendment lawyer in Washington. Our members will play everything: the most radical, left-wing anarchist film, the most conservative religious film, and we get protests on both sides. To me it was always like, “Bring it on.” Movie theaters are the town halls of modern society. It’s where people go to experience something collectively, and then debate the issues of the day.
What is the thing you are going to miss the least?
I don’t know who I’m going to miss the least, the really aggressive know-it-alls in Hollywood or the really aggressive know-it-alls in Washington, D.C. A lot of these people are my really good friends, and I’ll have some lasting relationships with both creatives and studio executives, but, you know, sometimes just because you run a big studio or you’re a United States senator doesn’t mean you know everything. I will not miss that.