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“If we had not sold the Egyptian to Netflix, given the pandemic, we would be out of business,” says Ken Scherer, the former CEO of the MPTF Foundation who in 2019 began consulting with the board of the American Cinematheque and now, The Hollywood Reporter can exclusively report, has been named its new executive director.
The Cinematheque, a Los Angeles-based nonprofit committed to screening movies in theaters and fostering conversations between filmmakers and moviegoers, had been in increasingly dire financial straits for several years. But back in May, Netflix and the Cinematheque struck a deal that provided both parties with things they needed. Netflix spent an undisclosed sum — reportedly in the tens of millions — to acquire from the Cinematheque the historic Egyptian Theatre on Hollywood Boulevard (which the streamer is currently renovating and will henceforth use as its home for Hollywood premieres). And the Cinematheque received a financial bailout, while retaining control of the Egyptian’s programming for Fridays, Saturdays and Sundays.
Longtime Angelenos may recall Filmex, an L.A.-area film festival created in 1971 by Gary Essert and Gary Abrahams. When the couple died of AIDS within weeks of each other in 1992, their close friend and collaborator Barbara Smith continued fighting for their dream of establishing a year-round cinematheque with a permanent home in town, realizing it with the 1998 acquisition of the Egyptian, which Sid Grauman had built in 1922, just a few years before his Chinese Theatre opened down the street. In 2005, the Cinematheque added another property, the Aero Theatre in Santa Monica. Smith retired in 2018.
Now, for the first time since the Netflix deal, the Cinematheque’s top brass — Scherer, board chairman Rick Nicita (formerly of CAA) and Gwen Deglise, a veteran Cinematheque programmer under Smith who was recently given the honorary title of Chevalier of the Order of Arts and Letters by her native France, and who Scherer is promoting to deputy executive director — are ready to discuss the deal and their plans for the future of an organization that has defied the odds for decades. Here is a lightly edited transcript of our conversation.
Rick, today you are announcing that Ken Scherer will officially succeed Barbara Smith. What led you to Ken and why is he the right person for this job?
RICK NICITA Well, first, Barbara is the reason that we’re still here. What she did when she started this long ago, when it went from Filmex to the Cinematheque, has been catalogued before and should be again. But Barbara said that, for personal reasons, she had to scale back her involvement and wasn’t going to be the executive director any longer, so we talked about who could possibly replace her, and Ken was brought up by several people almost at once. It was so obvious. Many of us knew him — I certainly did — from the Motion Picture Fund days, and it became unanimous just upon the suggestion. It wasn’t like we interviewed six people; nothing like that. “Ken? But of course, if he would do it!” So Ken served an interim time to get the feel of us, and us of him, just to see if it fit, and it fit easily. What made him the right guy? In no order, organizational skills; familiarity with how to run a nonprofit, because it’s different from running a so-called business; plus his love of and familiarity with movies. I don’t think we would have been as comfortable with someone who wasn’t a movie person.
KEN SCHERER And I’m affordable! (Laughs.)
NICITA That, too.
Ken, post-MPTF, what was the appeal of doing this?
SCHERER I came out to L.A. in 1986 to work at AFI just as Filmex and the Cinematheque were being established. So for me to come back to a true arts organization after being at the Motion Picture Fund for 22 years? It just seemed like a nice fit. And what started as a consulting gig evolved as I caught the passion of the mission. I only wanted to work with people who I cared about and whose mission I could support — I was spoiled for 22 years raising money for MPTF because I so believed in that mission, that we were really helping people, and we were. This is another kind of mission, but I’m quite excited about the opportunity.
Ken, you are announcing today that Gwen Deglise, who has served as the Cinematheque’s head programmer for more than a decade, is being promoted to a newly created position of deputy executive director. Longtime Cinematheque programmer Grant Moninger is also being elevated to creative director and will serve alongside Deglise as co-head of programming. What motivated that decision?
SCHERER Gwen is the heart and the soul of the organization. She’s not the only heart and soul — her colleague Grant is, too — but when you look at what we’re doing as a cultural arts organization, Gwen ticks all the boxes. Rick said I know a lot about film; yeah, but I don’t know one-tenth of what Gwen knows about film history, and filmmakers young and old, new and emerging, international and domestic. She talks about film with such love and affection. And when I looked at her history at the organization and all that she has been able to accomplish with very few resources, I thought, “Wow, just imagine if we could empower her with some resources and support.” So that was really my endorsement to the board.
Gwen, first of all, congratulations. I believe that you are now the person at the Cinematheque with the longest institutional memory, and you are also going to be a central part of its new era. What do you feel most needs to change and most needs to stay the same?
GWEN DEGLISE For a nonprofit to survive its founder is always a challenge, but the board and Ken really took the time to understand what was there and where we needed to go. What needs to remain is the diversity of our programming and the quality of our presentation. What needs to change, as Ken mentioned, is more support and more tools so that we can do better what we’ve been doing all along and grow.
Rick, the Netflix deal is obviously a game-changer. How did it come about? And how does it benefit both parties?
NICITA We weren’t on the market with the Egyptian by any means. But the building was starting to deteriorate at a fairly rapid pace, and [Netflix co-CEO and chief content officer] Ted Sarandos, who is a longtime board member, approached us and said, “I have a thought that would be beneficial for both parties — a win-win. You would have much-needed money, resources and a beautifully renovated theater,” and then Netflix would have an iconic theater in which to hold their premieres. They have a lot of product, which means they have a lot of premieres, and instead of them being scattershot all over town, frantically trying to book places, they wanted one place to establish as their home for premieres and special events. When first approached we said, “Ted, nice idea, but we can’t do it because we have to retain our autonomy with programming.” And he said, “Yes, we can.” And we got exactly what we needed, which is every Friday, Saturday and Sunday — and I mean every — plus we can work out a few days during the week. But our main days were always Friday, Saturday and Sunday, so, to us, this opportunity had no negatives.
Some are asking how it is possible for a nonprofit to sell something to a for-profit, which is obviously an unusual situation. I mean, the Cinematheque has previously received sizable gifts from places like the Hollywood Foreign Press Association specifically for the Egyptian, which you no longer own. What sort of hurdles did you have to clear to get this deal approved?
NICITA Any real estate deal has hurdles with the city, and particularly any landmark building, so we had to get approvals from the state attorney general and a series of other things, all of which were approved because Netflix bought a building; they didn’t buy us. There were misunderstandings: “Netflix is buying the Cinematheque?!” No. Netflix is buying a building that we owned and now will get to utilize, in essence, rent-free.
How long is the deal for? Can Netflix ever say, “Sorry, guys, we’ve decided that we will need the use of the Egyptian on weekends after all”?
NICITA No. It’s a 99-year deal.
SCHERER We had to present a lot of documentation, as Rick said, to the state attorney general’s office, which oversees nonprofits, and we really had to document — which we did to their great satisfaction — the value and benefits to the Cinematheque. So we have 99 years of rent-free use, and part of the deal is they are also underwriting the costs of operating the theater. We are the actual operator of the theater — I think that’s important to note — so our staff will continue operating it, even for Netflix, and, in return, we are being paid a management fee on a monthly basis, which helps me underwrite the cost of operations. And we get a renovated theater! When Rick brought me in, we did an assessment, and we had about $2.5 million to $3 million worth of absolutely necessary renovations — everything from generators to all kinds of internal systems. I learned more about HVAC than I ever thought I would. (Laughs.)
NICITA And that number was going to grow. It wasn’t going to get lower.
SCHERER About six or seven months into this process, the city laid on us new seismic upgrade requirements, which were going to add somewhere between another $2 to $3 million. So when you looked at the cash flow of the organization as a nonprofit versus those expenses and some debt that the organization assumed to finance the original purchase of it all — if we had not sold the Egyptian to Netflix, given the pandemic, we would be out of business, pure and simple.
NICITA Ted, being a board member, understood who we were — who we are — and what we wanted to do. Netflix played ball with us 100 percent of the time. They respected our needs and gave us virtually everything we wanted, in terms of time and controls. The negotiation, for something like this, was surprisingly conflict-free. It took much longer to get various procedural approvals than to resolve any disagreements with them.
SCHERER Our biggest concern is appearing too aligned with Netflix in the public perception, because the mission of the organization is only fulfilled when we can work with every partner in the business who has a film for us to see and an artist for us to talk to.
DEGLISE We will sometimes welcome a program from Netflix on the weekend if there’s a great film that they have, the way that we did when we had a two-week run of The Irishman — just as we will work with Amazon, Disney, Paramount, Warner Bros., A24 and Focus Features.
Ken, how will the Egyptian look different once Netflix is done with it?
SCHERER It’s Netflix’s story to tell, but I will say that they have consulted with us on the renovation, and from what I have seen so far — I don’t think the plans are final, but they are being finalized this month — the plans take the building back to the original 1922 concept. The Cinematheque added the balcony in 1998 when they did that renovation, so that is going to come out. And it’s just going to be stunning. It’s going to be a movie theater with 100-year-old bones, but with a great facelift — very appropriate for Hollywood! (Laughs.)
The Egyptian has seated 616. I understand that the Netflix renovations will slightly reduce that capacity?
SCHERER Yeah, because of the balcony coming out.
DEGLISE We were 616, and now it’s going to be high-500s, so barely a change.
SCHERER They are also renovating the front part of the property, what we call the North Annex — when you first go in the courtyard, to the left — which we had been using for offices; that’s going to become an incredible entertainment space for them and for us. The courtyard won’t get touched much because of the historic nature of it. And the theater just gets opened and the lobby gets opened. So it’s going to feel like a palace. And there are few of them left.
Rick, the Cinematheque’s board currently is composed of 22 members of the L.A. film community, including familiar names like Peter Bart, Sue Kroll, Michael Mann, Mike Medavoy, Ted Sarandos, your wife Paula Wagner and yourself. Today, I believe you would like to announce the addition of three more board members?
NICITA The new members are [producer] Stephanie Allain, [WME partner and talent department head] Esther Chang and [Black List creator] Franklin Leonard. Each of them will bring a fresh viewpoint and perspective to the current board. We wanted to expand our board, not numerically but to reflect current thinking of what a cultural arts organization ought to be, how it should be formulating its judgments and what it should be doing to integrate itself with the community. I think that the résumés of all three of them speak for themselves. We are very excited by the addition of all three of them.
SCHERER And we should note, we actually shrunk the size of the board. The three people who were added, after a really wonderful nominating process, are replacements of people who had stepped off the board. But we changed our bylaws so that we now have fewer board members than we had before. That is a trend in nonprofits.
How often does the board meet and what are its responsibilities?
NICITA Certainly not programming; programming is in the masterful hands of Gwen and Grant. We are very closely aware of the financial movements of the organization, and we make the larger decisions such as the Netflix purchase and adding board members. We are also going to be forming a board of advisers, which we’ve never had before, comprised of experienced people we can go to for ideas whose time won’t be as formally taken as the board members. We, on the board, constitutionally have several meetings a year and various committee meetings.
Gwen, how has the pandemic impacted the Cinematheque’s work? Your theaters have been closed since March, but have you been able to offer other programming to AC members?
DEGLISE We were starting the second weekend of ‘Noir City,’ one of our oldest annual film series, when the pandemic forced our theaters to close. But thanks to the Hollywood Foreign Press Association, we got a seed grant that enabled us to equip ourselves for digitization, and we created our archive project. That opened for us a new way of thinking about programs, because we have 30 years’ worth of videotaped and audiotaped Q&As, which we are now working to make available online. We still have a long way to go with that. Additionally, when we realized that this pandemic was not going to end quickly, we wanted to figure out other spaces for filmmakers and filmgoers to talk about cinema. So, since the beginning of May, we have organized 35 or 40 online conversations with people like Spike Lee, Bill Duke, Atom Egoyan, Reese Witherspoon and Werner Herzog, and it was exciting to see that the audience was really engaged. Being together in a movie theater is important, but in the meantime we are continuing our mission in whatever ways we can. The American Cinematheque is not just the buildings, but the spaces we create around the conversation of cinema.
Via a virtual ceremony on Jan. 14, 2021, Spike Lee will become the 34th recipient of the American Cinematheque Award. This conversation has been edited for length and clarity.
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