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A Conversation With Santikos' COO On The State Of Movie Theaters

Nathan Cone
Santikos Northwest stands empty.

According to the National Association of Theatre Owners (NATO), there were over 41,172 movie screens in operation across the United States at the end of 2019. But the coronavirus pandemic has shuttered the majority of theaters, leaving the movie industry decimated.

The delay of such major theatrical tentpoles as Christopher Nolan’s thriller “Tenet” has left theaters without a summer box office to bouy operations. And this week, Disney announced the much-anticipated live action remake of “Mulan” will premiere — for an extra fee — on its Disney+ streaming service.

Locally-owned Santikos Entertainment was among the first chains to reopen in the country, on May 2. As a result, the industry has been watching South Texas with great interest.

“Everybody keeps looking at our grosses, saying ‘OK, how did Santikos do this week?’” said Rob Lehman, the company’s Chief Operating Officer, in a phone call with Texas Public Radio. Lehman added Hollywood studios and other chains are studying Santikos “to determine how well their features might play when we get back to some type of normal movie release schedule.”

Normal isn’t a word that anyone is throwing around a lot, though. During a “normal” summer, 100,000 people would make their way through Santikos’ doors every two weeks. Since May 2, that’s how many people have visited the theaters total.

Still, those 100,000 people are helping Santikos keep employees on the payroll, and even though traffic is down Lehman said the chain is “financially sound.”

But Lehman also said Santikos sees the need for a healthy industry as a whole, which is why they’ve signed on with NATO to get the word out about #SaveYourCinema, a nationwide effort to raise awareness of the RESTART Act, a bill in congress that would give certain businesses, including movie theaters, access to partially forgivable loans that would cover expenses for six months. Without these loans, NATO said, many smaller chains and independent theaters may be in danger of shutting down for good.

“I know of three theater chains that have basically said that they're not going to reopen up their doors, across the United States,” Lehman said. “And… they're bigger than us. There's a 20-theater chain that is getting ready to file for bankruptcy.”

In the wide-ranging conversation below, Rob Lehman talks to TPR’s Nathan Cone about current operations at Santikos, the future of the company’s smaller theaters, like the Bijou (don’t worry), and the state of the movie industry in general.

This interview has been edited for length and clarity.

The Santikos Palladium on May 14, 2020.
Credit Nathan Cone | Texas Public Radio
The Santikos Palladium has been open since May 2.


Nathan Cone: Well, first of all, I wanted to ask just a little bit about general Santikos operations. Y'all have been open since the beginning of May, and I'm just curious how traffic and business is at your theaters that are open?

Rob Lehman: Well, we've been open 90 days now, and who would have thought 90 days later we're still waiting for "Tenet" and a few other Hollywood releases. You know, the numbers have been decent. We've had over 100,000 people walk through our doors since May 2. That includes the Mayan and the Embassy when we opened those two theaters later on, but 100,000 in 13 weeks, compared to some of the (summer) box office weekends…. we would do that in two weeks! It's been a slow process, that's for sure, Nathan. We've had so many different films. I think at one time we had… 56 screens, and we had 46 different movies. It’s unheard of. We've been throwing everything at the wall that the studios will provide us and tried to get movies that covered every age group possible. So our booking department has been very overwhelmed, when they book maybe four movies every week, during normal circumstances. And they're booking 40 movies every week. So it's been a challenge.

Obviously the "Tenets" and the "Mulans" and the giant tentpole films are the ones that a lot of people in the industry were really hoping would still come out this summer and raise attendance. But barring those, are any of the new pictures doing anything for you guys at all?

Actually, Nathan, they are. A perfect example, this past week, "The Rental" is a horror movie that's been released on demand (as well as in theaters). And it was our number one movie at four of our five theaters. We had another horror movie last week, "Becky," that did very well for us two weeks ago. That was our number one movie. And we had a movie called "The Outpost," a movie that is about the Afghanistan war. And that was our number one movie for a couple of weeks. You know, the people of San Antonio are craving new movies.

As the theater that opened first in the U.S., there's been more attention on Santikos, probably from Hollywood and distribution, because everybody keeps looking at our grosses saying, "OK, well, how did Santikos do this week? Let's look at their numbers," and determine how well their features might play when we get back to some type of normal movie release schedule.

Yeah. I got to say, it's been kind of a kick to see Santikos and San Antonio mentioned several times in Variety and The Hollywood Reporter over the past couple of months.

[laughs] Well, for that first weekend, we were 57% of the box office in the United States! So, AMC, Regal and Cinemark will never be able to ever say that, (even) with all their screens. (That percentage has) gone down, of course. But right now… (there are) just over 900 screens (in operation) across the United States. So we really want the other theater chains to start opening and getting Hollywood to say, you know what, let's go ahead and start releasing these movies.

Well, that's a good segue way to talk about the #SaveYourCinema initiative. This is this is all an effort to build awareness for, and ask Congress to support the RESTART Act, which is a Senate bill authored by Michael Bennet, a Democrat from Colorado, and in the House by Jared Golden, a Democrat from Maine. But it's got bipartisan support. I was looking at all the co-signers on there. And you, Santikos, are looking to get the public's awareness up about this particular bill, along with other theater owners in the United States through the NATO. Is that correct?

We're ready to go. We just need Hollywood to say, 'OK.' —Rob Lehman, Santikos COO

That's correct. You know, NATO, has been working very hard since we've shut down. And when the government started coming out with some of the stimulus packages, unfortunately, movie theaters were not part of that, and it's really hurt our industry. There are independent operators out there that are shattered right now. Their doors aren't open. They're trying to do curbside popcorn. They're throwing everything that they possibly can. But they have staff, they have rent, they have costs. You know, the biggest thing we've noticed is you can't shut down your buildings completely. You've gotta keep the HVAC units (at) 78, 80 degrees when it's completely shut down because mold could probably start growing in places that you don't want. So these operators still have these expenses.

So when NATO started coming up with this campaign... Santikos is financially strong. We definitely want to support it (the bill). We would love to have the AMCs and the Cinemarks and the Regals and the Flix Brewhouses.... our competition here, to reopen all those theaters. Now they can reopen in San Antonio later, that'd be fine with us! But, you know, get their other theaters definitely open across the United States and help Hollywood feel like, "OK, we can go ahead and start releasing these movies."

So the bill would, as I understand it, provide some loans to cover six months of expenses for theater operators. And it also says that its seven-year loans that are partially forgivable. What exactly does that mean?

Well, you got to really get into the bill's statements. Santikos CEO Tim Handren and I have talked about some of these. Do we take advantage of these or not? The smaller independents, I could … see a lot of them going ahead and trying to do this. But NATO has really been working hard to get this at least on some people's docket in Congress. Because right now, I know of three theater chains that have basically said that they're not going to reopen up their doors, across the United States. And you know, they're bigger than us. There's a 20-theater chain that is getting ready to file for bankruptcy. There is one already, that filed right after they started shutting down the doors, and a third one that has basically started the negotiations to file for bankruptcy protection.

Well, I'm glad you mentioned that Santikos is financially stable. The email (from Santikos) that went out said that "Santikos will be supremely challenged to survive." Is there any sort of, you know, maybe "imminent" is not the right word, but danger for our local theaters as well?

I think the danger lies in if Hollywood does not start releasing features. Every day the news changes, but if something happens where Warner Brothers decides that "Tenet" (won’t play in America) due to spikes of COVID19, or state governments start shutting down theaters again, and they just take that movie off the calendar. What’s happened over the last 60, 90 days is the domino effect. So "Tenet" moves, then "Mulan" comes off the schedule then "Unhinged" moves. And now the biggest concern with the industry is if we don't get these movies opened, if we don't show another new movie for the rest of the year, then I think every theater across the United States is in some type of trouble. So I'm hoping, (Warner Bros. will) hold "Tenet" and let us show people what we can do. I mean, the numbers show how well we've done with "The Outpost," "The Rental," "Becky," so we're ready to go. We just need Hollywood to say, "OK."

Well, people can read up more on the #SaveYourCinema” campaign on the NATO website, where it will basically auto generate a letter to Congress to encourage them to look at this bill, right?

Yes, exactly. That's all we're asking. And we sent it out to our loyalty members just to make them aware of...(how) we need the other theater chains across the United States to open, to help Santikos, to help these studios feel more comfortable releasing their first-run movies.

Yeah, and there's like lots of small theaters, lots of nonprofits like Film Forum in New York, or the Siskel Center in Chicago, or even the Paramount up in Austin.

Nathan, I'm on the NATO reopening group… some of the leaders across the industry have gotten on this group to help other theater chains across the world, actually, to (learn) how we are doing certain processes and how we are handling mask wearing and signage and all that. And I've gotten so many emails... I've been communicating with a gentleman from India who's trying to get his theaters open. I probably get an email a week from him. I got one from a two-screen theater in Washington who was asking me some questions. These theater owners want to know, “How are your movies doing? What's your attendance? How's your concession?” You know, that's been a big one. Are you doing a limited menu, are you doing a full menu? And how are you handling touch points? Five days after we closed down in March, I directed our operations team: "OK, tell me how fast we can reopen these theaters." And so when Tim said, “Well, the governor's gonna let us open. Can we do it?” And I'm like, "OK, we can do it in three days." It took us four days.

So I got a couple of quick questions just about y'all's operations before I close out here. I'm just curious, what about previously announced plans for constructing theaters in Leon Springs and in north San Antonio? Are they on hold?

Yeah, right now they're on hold. We've talked to the land owners, and we put out some delays to look at that. A lot of it, we just got to see how the how the industry shakes out. We really like those sites. But… it's going to take a while for the whole industry to come back, and to decide to build new theaters right now is probably a decision that we’ll push down the road a little bit. It's all about the numbers.

And how about your other locations? Northwest, Galaxy, Bijou?

Credit Nathan Cone / TPR
The Santikos Northwest theater is one of four locations that remain closed.

Tim and I are having this conversation every other day. What do we do about Northwest and Galaxy? And we're gonna see (which other chains) reopen and make a determination if we want to open for "Tenet" or do we wait a week or two after "Tenet" and then reopen those theaters? Because there's just going to be so many screens of "Tenet," "Unhinged" and the movies following that.

And then Silverado, you know, I think we made an announcement that we're going to do a remodel there. But of course, when COVID hit, we stopped all unnecessary expenses. Silverado is about 16, 18 years old… It's got stadium seating. And so we're going to make a decision on Silverado once we get back to where we start getting some normal movies and make a determination — do we reopen it as is, or do we go ahead and say, "OK, let's go and do a remodel" and put in recliners? And Bijou, we're gonna kind of look and see how the movies play out. Right now, if "Tenet" opens, there's only gonna be four other movies that would open in September. So once again, you know, a six-screen theater could be... the choices are going to be pretty limited on films. So we've got to figure out what we want to do with Bijou and when we want to reopen. There's going to be so many screens available.

Since the Bijou is the one theater y’all don't own the real estate in — because it's in the Wonderland Mall — is there a danger that it might not reopen?

No. There won't be a danger of that, and we've been paying rent since the day it closed! So, we're losing every month that we're not open there. If you've seen what's happened in the industry, there's not a lot of art films, or if they are, the Netflix, the Apple TVs, the HBO Maxes are starting to buy up films. Tom Hanks's "Greyhound" is a perfect example. It was a $50 million movie....Well, (the studio) sold it for $70 million to AppleTV. And so we can't show that in the movie theaters. So, in talking to our booking service and others in the industry (we believe) that some of these smaller art films are probably going to get bought up by the Netflixes of the world because they can throw more money at it.

I understand the studio selling "Greyhound" because if you think about, you delay the movie, 50 million and you know, most of the advertising, they probably are going to probably pour in 20 to 30 million for marketing. And probably that studio needed a 70 million hit to their bottom line. It's a very good movie, by the way. I watched it at home, but it wasn't the same because you miss the big picture. You miss the sound. There were a lot of night scenes in that movie, so you had to shut your lights off in your house. I would've loved to see it on the big screen with our digital sound and that whole experience. And I think that's what people are missing right now is that experience.