Ordinarily, Carmike‘s announcement today that it completed its stock-for-stock acquisition of Digiplex would merit only a brief mention. It’s a relatively small deal for 21 theatrrs with 206 screens, bringing Carmike’s total to more than 2,900 in 276 locations across 41 states. But the numbers don’t tell you what makes the transaction so interesting, and potentially important. Carmike bought Digiplex in part to land its founder, Bud Mayo, who’s the exhibition industry’s leading evangelist for alternative content — concerts, sports events, and other fare that can replace conventional movies on weeknights, when many theaters are almost empty. More than 90% of ticket inventory usually goes unsold. “Movie exhibitors are operating with the largest amount of excess capacity of any industry we could find in the free world,” Bernstein Research’s Todd Juenger observed in 2012.
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Carmike CEO David Passman wants Mayo to change that. “Digiplex has averaged up to 5% of its box office receipts from alternative programming in a given quarterly period,” the CEO told analysts this month. “Carmike’s circuit is more than 13 times larger than Digiplex. So you can see why improving our success with this content, understandably, intrigues us.”
Mayo will need more than Passman’s support to make the effort work. Theaters have been slow to offer alternative content, an option that opened up as managers started to work with digital files — delivered via hard drives or satellites — instead of heavy reels of celluloid. Too many local theater managers have become too accustomed to taking the fare that Hollywood produces and promotes, and don’t know how to program and market. It’s hard to figure out which audiences to target and what might appeal to them. Metropolitan Opera or Bon Jovi? Cheerleading competitions or wrestling matches? A Doctor Who special? Political or religious presentations? Managers also have to take crash courses in using social media or other low-cost marketing vehicles to reach potential ticket-buyers and persuade them to show up.
“You’ve got to get out of your theaters and meet people,” Mayo said in April at the exhibition industry’s annual CinemaCon convention. “You have to become part of the social fabric and the business fabric of your community. … Give a lot of free passes to influencers and VIPs to raise the awareness that you’re not just doing movies anymore.”
That’s a compelling message. But does Mayo have the corporate and personal skills to make change happen at a chain as big as Carmike? It’s time to sit back and watch the show.
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