Grauman's on the block as value peaks
Warner Bros. and Viacom selling several L.A. theatersAmid seismic shifts in local exhibition, Warner Bros. and Viacom are stepping up efforts to unload L.A.-area movie theaters piecemeal, including the iconic Grauman's Chinese in Hollywood. Such an exit would conclude an initially profitable but more recently tedious tenure of ownership for the studio companies.
Execs at Cinemerica -- the co-venture of Warners and Paramount-parent Viacom that operates Mann Theatres -- believe the timing is right to make a concerted run at selling one or more of its Mann venues. Two are considered especially attractive: the fabled Grauman's on Hollywood Boulevard and the Criterion Theatre on Santa Monica's Third Street Promenade.
"Grauman's and the Criterion are kind of the diamonds in the circuit," Cinemerica topper Millard Ochs said.
Mann let leases expire in Westwood Village's now-closed National and Festival theaters and will vacate the classic Bruin and Village spaces in March unless late-breaking negotiations result in an extension to those leases.
Ochs, who also is president of Warner Bros. International Cinemas, said a collapse of the Westwood exhibition market is tied to several factors.
The refurbishment of AMC and Landmark multiplexes just south of the neighborhood and a couple of new Pacific openings to the east have drawn moviegoers away from traditional Westwood haunts. As a mere leasee in its Westwood properties, Mann has been unable to push through its own conversions to stadium seating and other modern amenities. Declining traffic and limited parking in an aging retail district, combined with inherently bad economics of single-screen venues, exacerbated difficulties.
"You can't make a profit on a single-screen theater," a top industryite mused. "It's just not possible."
Indeed, Westwood's independently operated Crest Theater -- another struggling monoscreen -- is also up for sale.
Mann's Beverly Center multiplex in West Hollywood has been closed for months for renovations and soon will reopen under new management.
The chain also operates a half-dozen suburban theaters: a 16-plex in Van Nuys; nine-screeners in suburban Thousand Oaks and Granada Hills; an eight-plex in Westlake Village; and 10-screen and four-screen venues in Glendale. At most, such properties might now fetch a sale price equal to five or six times theater cash flow.
Grauman's is a special case. Combined with a six-plex in the adjacent -- and finally flourishing -- Hollywood & Highland complex, it could fetch as much as the rest of the circuit combined.
The recent opening of a Madame Tussauds wax museum next door also will benefit Grauman's, perhaps the only theater Cinemerica operates that has appreciated in recent years. Cinemerica owns the buildings but not the land at Grauman's and the Mann Westlake and leases the rest of its theaters.
Opened by Sid Grauman in 1927, the storied Chinese -- whose famous footprints out front increase, uh, foot traffic at the site -- was sold in 1973 to the late Ted Mann, originally an exhibitor in Minnesota. For years, the site operated as Mann's Chinese but returned to its Grauman's moniker in 2001.
Ochs has lots of experience operating and then off-loading theaters in challenging markets around the world. That's in line with Warners' philosophy of expanding exhibition into developing markets before selling out and moving on.
He believes Cinemerica will eventually find appropriate buyers for many of the Mann theaters now that the decision has been made to sell the properties piecemeal.
"We had just started that last August, and then in September all hell broke loose in the commercial market," Ochs recalled with a rueful chuckle. "So we're just trying to get our momentum."
This is not the first time Warners and Viacom have tried to offload the once-lucrative circuit with a decades-old history under the studio companies. Then Paramount parent Gulf & Western brought in Warners as a partner to operate the regional Mann Theatres circuit in the mid-'80s after federal prohibitions against studios' owning theaters were lifted.
"Warners came in a month after our acquisition from Ted Mann," former Paramount topper Frank Mancuso recalled Monday.
Seeking to exit those operations earlier this decade, the partners met with little success in selling the entire circuit due to woes with properties in Westwood.
Prospective strategic buyers, or those operating other movie theaters, were put off by an insistence on selling all the Mann properties as a block, and financially motivated bidders were discouraged by the circuit's notoriously costly lease arrangements.
A year ago, Cinemerica decided to let interested parties bid on individual theaters. But within a month, the collapse of money markets made the renewed sales efforts futile.
For the Westwood theaters, fall will bring yet another indignity as time -- and local exhibition -- marches onward. Regal Cinemas in October expects to open a 14-plex at Anschutz Entertainment's sprawling L.A. Live downtown retail complex, and a big push is expected for glitzy movie premieres of the sort once common in Westwood.
Hollywood will have moved its red carpet from one end of Wilshire Boulevard to the other.