A Neighborhood Improvement Journal - Summer 2017

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JAZZ AGE TO DIGITAL AGE, THIS MONTANA THEATER BEATS THE ODDS

By Candace Brown

If you live in the vast landscape of Eastern Montana, and on some starry night you get the urge to go out to see a movie, you are in luck. Take the exit off of I-94 where the tiny town of Forsyth hugs the winding Yellowstone River. From Front Street, take 10th Avenue across the railroad tracks. On your left, at 981 Main Street, the word “Roxy” glows in big neon letters above each side of a vintage theater’s angled marquee. Inside, hot buttered popcorn waits to tempt you, made in exactly the same way as when first sold there in 1940. And by that year, the theater had already been around for a decade.

This charming venue honors its past, but it’s no museum. Adjusting to change has kept the Roxy Theatre going for over eight decades. When it opened in September of 1930, it brought “talkies” to Forsyth for the first time. The biggest change theaters have faced, since silent films gave way to sound, has been the conversion to digital cinema. True to its legacy, the Roxy has kept up with the times. Other small independent theaters face closure for not having done so.  

“When we converted to digital,” owner Mike Blakesley said in an interview, “the big thing we had going for us was the fact that we had a very low debt load at the time, so we were able to get a bank loan. I think our long track record helped too.”

Blakesley converted in 2010 after his film booker told him that if he wanted to stay in the business, he had no choice. “I explained to the bank that we were going to have to make this change or eventually we’d have to close,” he said. “This was a great example of how important it is in a small town to have a great relationship with the local banker.”

These days, when the words “The End” flash onto theater screens across America, they signal not only the end of the movie, but also end of an era. Although no firm date has been set, many in the industry predict that within the year 2013, major movie studios will stop film production altogether and go totally digital.

Why? In addition to the technical advantages and conveniences of making movies in a digital format—such as 3-D, instant previews, and special effects—a film print is huge and heavy (about 60 lbs. versus about 3 lbs. for a digital hard drive) and costs the studio about ten times more to produce and ship than a digital version. The End of the existence of some small independent, neighborhood theaters, often community treasures with rich histories, will result from the inability to afford the cost of conversion.

The cost to convert varies from one theater to another. For example, extensive upgrades to sound systems may be required before installing digital cinema. “Here, our cost was roughly $65,000 for the basic system,” Blakesley said. “I’ve seen quotes anywhere from $50,000 to $120,000 per screen. I can’t imagine how anyone could spend $120,000 unless they were buying the biggest and most top-of-the-line equipment that exists.”

Blakesley cares deeply about his theater and the community it serves. He purchased the Roxy in 1979 with his brother-in-law, Tom Clifford, as a partner. They had both worked as projectionists there. After taking ownership, they immediately went to work making improvements with the thought of selling the old theater at a profit. But Blakesley fell in love with the place. He bought out Clifford’s share in 1987 and continued to make major upgrades. Blakesley married in 2000, and his wife, Lynn, helps him run the business.

Closing the Roxy would have been a sad loss for the citizens of Forsyth. In a town with an area of 1.1 square miles and a population of under 2,000, an average of 325 people visit the theater each week, 55% of them adults. In addition to entertainment, the theater provides a place for families, friends, and neighbors to spend time together and a place for teenagers to work.

As sad as it might be to think of a small town’s historic independent theater closing forever, in some cases, procrastination is to blame.

When it comes to how other theaters owners who have not yet converted can save their businesses, here is how Blakesley sees the situation:

“They really needed to start planning about five or more years ago, when digital first began to gather steam. Too many guys were in denial, thinking film would always be there. That’s unfortunate. If you run a small theater, you have to keep in mind that the movie studios really don’t care about you—unless you owe them money. They make their decisions based on what the big city cinemas need. So once more than 50% of the country had converted to digital, the numbers of film prints started to decline quickly. According to our booker, it’s getting very hard to get film prints of a lot of titles these days.”

John Fithian, president of the National Association of Theatre Owners (NATO) believes the inevitable closures of some theaters could have been avoided. When asked to comment, he shared a note he had written to a public official concerned about small theaters and the conversion to digital (excerpts following) in which he pointed out that “The transition from film to digital cinema in our industry has been in the works for over a decade.”

From the beginning, NATO showed concern for smaller theaters and established a Cinema Buying Group for independent cinemas, “…to help them bring their buying power together and negotiate a cost sharing deal with the major studios to enable the transition,” Fithian wrote. “Many independent cinemas signed up for this group by the oft-stated deadlines. And we have helped more than 170 companies operating over 2700 independent movie screens make the conversion.”

Fithian noted a September 30, 2012 deadline for most cost-sharing plans “Unfortunately, some companies waited until it is almost too late to plan their future to the new technology,” his note continued. “At NATO we have explained for many, many years that this transition was real, and that film would end as a technology, but some folks just didn't listen.”

The Roxy rocks on into the future

The fact that Blakesley did listen is no surprise. After all, his whole history of ownership has been one of upgrades and improvements. Those have included a larger screen, Ultra Stereo sound added in 1992 and DTS Digital Sound in 1995, restoration of the 54-tube neon marquee, replacement of the projection booth windows, and new carpets and paint, more than once. The original stucco work on the walls and ceiling was revealed and restored. He added modern air conditioning, put on a new roof, changed the concessions area, replaced the seats, and more.

People ask Blakesley for his secret, how he can keep upgrading while other theaters of equivalent size continue to struggle. “I think the biggest thing is, I’ve always had a day job,” he said, “so I’ve been able to put a lot of the theater’s profits back into the business rather than try to live off of it. I’ve always worked here almost every night, rather than hire nightly managers, so people get a real ‘owner’s in the store’ feeling here.”

By its 80th birthday in 2010, the Roxy offered digital cinema with Dolby 3-D projection equipment. Blakesley showed their first 3-D movie, Toy Story 3, on June 18 of that year. He wrote on the Roxy’s website, “This new technology provides a brighter, steadier picture along with uncompressed digital sound, and will also allow related new developments in the coming years.”

 

Blakesley offered advice

 “If an exhibitor was starting from square one right now, he first has to look at his prices – both tickets and concessions – and determine how he stands with the current average market prices.” Blakesley believes that theater owners who realize their ticket prices are set too low should start an educational campaign. “First, I’d get an article into the local paper to let people know just how much the conversion will cost, and I would just lay it on the line with people, let them know that the prices are going up.” In this article, he would explain the necessity of buying this expensive new equipment and also explain the many advantages of digital.

Some of the advantages from the audience’s viewpoint are:

  • They can enjoy digitally produced special effects, steadiness, and better sound
  • A digital system can handle the latest technology in 3-D movies
  • A theater might have special events. Musical performances or sports competitions happening in distant places can be shown live to a hometown audience in their neighborhood theater (Example: the Petaluma, CA Little League team makes it to the Little League World Series Also, see Fathom Events – a company that provides local movie theaters with live limited-run or pre-recorded entertainment events
  • Supply and demand are more quickly and easily reconciled meaning less of a wait to have access to popular movies
  • Digital systems can adapt to even greater technological changes yet to come

A few of the advantages for theaters:

  • Ready access to movie trailers
  • Digital movies can be copied into the theater's server in about 20 minutes and quickly deleted 
  • No need to handle heavy film canisters
  • Presentations can be easily customized
  • Very little training is required to operate the equipment 
  • Digital projection equipment takes up far less room than film projectors
  • No concerns about film wear or damage


“I’ve never understood why small-town theater owners insist on keeping their prices so low,” Blakesley said. “Almost everything else in a small town, from gas to groceries, costs more than it does in the cities. So why are movies the exception? A small theater is showing the exact same product that the city theaters are offering, and hopefully the popcorn and presentation are better.” At the Roxy, an adult ticket costs $7.50, still lower than big city prices, but high enough to bring in a good profit.

Another thing is that we get the newest movies as soon as we possibly can while a lot of small exhibitors wait a few weeks for the rental prices to decrease,” he said. “This is a major mistake in my opinion.” The profit from his ticket prices helps him afford to acquire the latest movies more quickly. Unlike other theater owners who think the audience doesn’t care if they have to wait, Blakesley believes the opposite: “Nothing could be further from the truth. Small town people love the hot new movies as much as anyone, and especially in this age of social networking they love to brag to their big city friends that they’ve seen the big new movie too.”

“We have also always tried to have an excellent presentation, both picture and sound,” Blakesley stressed. From the beginning, he and his partner recognized their competition as the increasingly sophisticated home entertainment systems on the market. They kept upgrading as often as they could afford to do so, including an upgrade to more comfortable seats. “The result is that people know that they’ll get an excellent experience when they come to a movie at the Roxy,” Blakesley said. “Considering that at least 98% of our moviegoers are repeat customers, this last point could even be the most important.”

If all else fails…

Blakesley recognizes that in spite of good business practices, some theaters still might have trouble raising the funds for digital conversion. He suggested that theaters try discounting the price on certain nights, offering loyalty coupons, or value-added promotions with other businesses. If buying used equipment, he suggests theater owner seek the advice of a trusted technician.

Sometimes a theater can do everything right and still be in trouble. “That’s when it’s time to turn to the generosity of the community, or maybe start a foundation to operate the theater, or other ideas like that,” Blakesley said. “I think a lot of owners underestimate how important their movie theater is to the community.

He added: “I have found that people will always find a way to afford what they really want. The trick is to make people really want that big screen movie experience in their local theater. Then provide a good experience that will keep them coming back.”

Fithian stressed that time is running out: “There are approximately 39,900 movie screens in this country, and about 31,000 of them have already made the transition. The major studios will stop distributing movies in film as early as the Spring of 2013. Exhibitors who haven't converted by then are likely to go out of business. That is a harsh reality, but it is typical of any major technological revolution.”

He added, “We will do our best to help any exhibitor who still doesn't have a plan for the transition. But we have been trying to inform, instruct, train, and cajole exhibitors for years to get ready.”

Lynn and Mike

Thanks to the foresight and business savvy of Mike Blakesley, the Roxy is ready for many more decades of providing folks in Forsyth, Montana, a theater experience some of their big city friends might even envy. And the theater isn’t all that is ready. So is the popcorn, just like it was in 1940. You might get hungry on your fascinating trip both back in time and into the future, at the nostalgic, yet ever new, Roxy Theatre.


All photos courtesy of Mike Blakesley

 

 

Copyright 2012 Candace J. Brown

 

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