Landmark Theatre Corporation

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Landmark Theatre Corporation

2222 South Barrington Avenue
Los Angeles, California 90064
U.S.A.

Telephone: (310) 473-6701
Fax: (310) 473-8622
Web site: http://wwwlandmarktheatres.com

Wholly Owned Subsidiary of 2929 Entertainment
Incorporated: 1974
Employees: 280
Sales: $26 million (2003)
NAIC: 512131 Motion Picture Theaters (Except Drive-Ins)

Landmark Theatre Corporation operates the largest chain of movie theaters in the United States that exhibit specialty films, that is, first-run independent films and foreign films that are often referred to as "art" films. Landmark, as an art-house operator, exhibits films that mainstream movie theater chains do not show, presenting its features in nearly 60 theaters in 14 states and the District of Columbia. Landmark is owned by 2929 Entertainment, an entertainment holding company co-founded and co-owned by Mark Cuban, the high-profile owner of the National Basketball Association's Dallas Mavericks.

Origins

Landmark changed its business orientation once during its first 30 years in business. Ownership of Landmark changed considerably more frequently, as one company after another sought control of the largest art-house theater chain, or "circuit," in the United States. Landmark began operating in 1974, when the acquisition of Los Angeles's Nuart Theatre was completed. Located on Santa Monica Boulevard in the heart of Los Angeles's Westside, the Nuart Theatre, which later become a favorite venue for staging world premiere events, served as the flagship theater for the soon-to-develop Landmark circuit. Landmark was led by Stephen Gilula, who co-founded the company and would preside over its operation through many of the changes that lay ahead. After acquiring the Nuart Theatre, Gilula and his management team acquired the Ken Cinema, a theater built in 1946 that exhibited the first high-quality foreign films in San Diego. Landmark acquired the Ken Cinema in 1975, adding another theater the following year when the company purchased the Rialto Theatre, located in Pasadena. Built in 1925, the Rialto Theatre was nearly razed by a wrecking ball shortly after Gilula completed its acquisition, but its addition to the National Register of Historic Places in 1978 spared the building from destruction. In addition to these venues, Landmark also opened a theater near the University of California at Berkeley and in other markets, all of which followed the company's operating strategy.

During their first years in business, Gilula and his co-founders followed a repertory-style format, one that differed from the operating strategy later used by Landmark. During the 1970s, Landmark's theaters showed old, "classic" films, foreign films, and cult features, presenting a different lineup of films every night. In an age when video cassette recorders (VCRs) had yet to become ubiquitous, Landmark's format thrived, drawing college students and others who delighted in watching films such as Harold and Maude, King of Hearts, and Pink Flamingos. Landmark attracted long lines of film watchers by distributing free monthly calendars of its schedules and by staging promotional events, tactics that enabled it to develop quickly into the nation's largest repertory film circuit.

Gilula's business strategy began to lose its effectiveness as the 1980s began. The decade saw the rise of the home-video market, as the proliferation of VCRs and the emergence of video rental businesses sounded the death knell for many repertory-style circuits. Gilula and his team responded to the changing market dynamics by adopting the operating strategy that would underpin its success into the 21st century. Thus, Landmark theaters began to show high-quality independent films and first-run foreign films, offering film goers a chance to see what the mainstream theaters were not showing. The plan worked well, attracting queues of film aficionados and encouraging Gilula to expand further. In 1982, Landmark was merged with a Sante Fe, New Mexico-based company named Movies, Inc., a transaction that gave Gilula 12 new screens in eight new cities in the southern and southwestern United States. At the end of the decade, Landmark merged with Seattle-based Seven Gables, which added another 33 screens. The Seven Gables merger was completed in 1989, by which time Gilula's company had begun to experience the numerous ownership changes that provided the backdrop for Landmark's second 15 years in business.

Ownership Changes in the 1980s and 1990s

While Gilula fashioned Landmark into one of the premier art-house chains in the country, an entertainment executive in Hollywood was transforming the nature of his company. Arthur Steloff ran Heritage Entertainment Inc., a company he took public in 1969. Until Steloff began to seek greater prominence for his venture, Heritage survived by licensing film and television series to other companies. Starting in 1982, however, Steloff began producing content for both television and movies houses, aggressively transforming Heritage into a production company. In 1985, he acquired New York-based IFEX, an importer and exporter of films that for the previous decade had acted as an agent for Soviet-bloc countries to acquire Western programming. By acquiring IFEX, Steloff gained control of more than 1,800 feature films and other programs made by Eastern-bloc countries, filling his library with art-house classics such as Closely Watched Trains, a film made in Czechoslovakia, and Moscow Does Not Believe in Tears, a Soviet-made film that won an Academy award for Best Foreign Film. The acquisition of IFEX, combined with other acquisitions and Heritage's internally produced content, gave Steloff a voluminous collection of films that were ideally suited for exhibition in specialty movie theaters. Steloff completed the vertically integrated connection between owning content and owning the venues to showcase the content when he acquired Landmark in 1989, the same year Gilula's company's merged with Seven Gables.

However, Steloff's bid to create an entertainment empire failed not long after his acquisition of Landmark. While Heritage declared bankruptcy in December 1990, the purchase of Landmark was not considered to be the cause for the company's rapid collapse. The art-house circuit, in fact, had drawn the attention of another suitor in the months leading up to Heritage's demise. Samuel Goldwyn, Jr., the son of famed movie mogul Samuel Goldwyn, had attempted to acquire Heritage in the fall of 1990, but negotiations with Steloff stalled before Heritage filed for Chapter 11. Goldwyn, who started his own company, Samuel Goldwyn Co., in 1979, began acquiring movie houses in 1985 as an outlet for films produced by his company, a move that gave him the four-screen Samuel Goldwyn Pavilion Cinemas. His interest in Heritage stemmed from the company's Landmark subsidiary, which was regarded as the jewel of Steloff's holdings. The collapse of Heritage breathed new life into Goldwyn's attempt to acquire Landmark, resulting in a reorganization plan for Heritage that was designed to make Steloff's company a subsidiary of Samuel Goldwyn Co. The deal was concluded in late 1991, making privately held Samuel Goldwyn Co. a public company because of Heritage's status as a publicly traded concern. The merger gave Goldwyn control over Landmark, which by this point operated theaters in 17 cities, all of which operated under the Landmark name except in Seattle, where the Seven Gables name was retained. Gilula, who had remained in charge of the company under Steloff's rule, was named president of the Samuel Goldwyn Theatre Group, the Samuel Goldwyn Co. subsidiary that counted Landmark as its primary asset.

Backed by the financial resources and stability of its new parent company, Landmark blossomed during the 1990s. The chain expanded by acquiring theaters, building theaters, and improving its existing properties. In 1994, Landmark was midway through an expansion program whose aim was to increase the number of its screens by 30 percent. By November, the company had acquired two theaters in Houston and six theaters in Berkeley, giving it a total of 100 screens in 42 theaters. The company was also using the roughly $20 million set aside for the expansion program to build its own, architecturally distinct, movie theaters. In 1995, two of Landmark's own creations opened, the five-screen Embarcadero Center Cinema in San Francisco and the nine-screen Kendall Square Cinema in Cambridge, Massachusetts, the largest art house in the country. Gilula and executives at Samuel Goldwyn Co., who helped pay for the expansion program, were encouraged by the success of speciality films such as The Piano, The Crying Game, and Like Water for Chocolate. "There are many differing special interests out there for movie-going audiences besides just the mass market," Gilula said in a November 7, 1994 interview with the Los Angeles Business Journal, "and we feel that we've helped to develop that. The distinction between a true specialized film and a mass-market film has blurred," he added. "The public is more open-minded, and the exhibitors are more open-minded too."

By the mid-1990s, Landmark ranked as the largest and most profitable art-house circuit in the country. Its parent company, however, could not boast the same level of success. Samuel Golden Co. began to struggle financially as it entered the late 1990s, suffering annual losses that prompted Goldwyn to diversify and reposition his company. Landmark, for the second time in a decade, found its ownership changing hands, resulting in its acquisition in 1998 by Silver Cinemas Inc. Silver Cinemas, based in Dallas, ranked as one of the largest second-run film exhibitors in the country. When Silver Cinema acquired Landmark, the art-house chain operated 54 theaters with 156 screens. Its theaters were located along the West Coast and in Dallas, Houston, Denver, Minneapolis, Milwaukee, Boston, Detroit, New Orleans, among other cities.

Company Perspectives:

Landmark Theatres, the nation's largest art-house chain, features first-run independent and foreign films, restored classics and non-traditional studio fare in 58 theaters representing 209 screens in 14 states and the District of Columbia. In exhibiting indie hits such as Garden State, Monster, The Pianist, Memento, Fast Runner, Monsoon Wedding, Bowling for Columbine, The Blair Witch Project, Run Lola Run and Crouching Tiger, Hidden Dragon, Landmark has never veered from its commitment to present cutting edge entertainment or shied away from controversial films, such as Fahrenheit 9/11, Y Tu Mamá También, Kids, Romance or The Last Temptation of Christ.

New ownership of Landmark once again triggered an expansion program, helping the company increase its stature as a specialty film exhibitor. The most notable aspects of the circuit's growth were the theaters constructed by Landmark, the first of which was the Plaza Frontenac Cinema in St. Louis. The six-screen Plaza Frontenac Cinema opened in 1998, the same year the company completed construction of the six-screen Embassy Cinema in Waltham, Massachusetts. In 2000, construction of a third theater was completed, the seven-screen Century Centre Cinema, a property that marked Landmark's return to the Chicago market.

Landmark in the 2000s

Expansion of the Landmark circuit stopped after the opening of the Century Centre Cinema. For the third time in a decade, the financial difficulties of the circuit's parent company led to a change in ownership. Silver Cinemas declared bankruptcy in 2000, making its two divisions, Landmark and a chain of 21 discount theaters, available for purchase by any interested party. Landmark, in mid-2001, was acquired by Silver Cinema's leading unsecured creditor, a Los Angeles-based investment management company named Oaktree Capital Management LLC. Oaktree paid $40 for Landmark and installed Paul Richardson and Bert Manzari as its two senior executives. Richardson, who was named president and chief executive officer, and Manzari, who was appointed executive vice-president, had helped manage Landmark since the company began its transformation from a repertory movie chain into an art-house chain. The pair left Landmark when Silver Cinemas acquired the company and marked their return by vowing to re-establish "Landmark's traditional core values," according to Richardson in a May 26, 2001 interview with The Dallas Morning News. Those values, according to Richardson, included exhibiting quality films in architecturally distinct theaters and employing a "film savvy" staff.

As Landmark neared its 30th anniversary, a familiar refrain from its history provided a new perspective on its future. Ownership of the company changed hands again. Oaktree, whose investment strategy meant it generally held onto a company for only a short time, sold Landmark in 2003 to an entertainment holding company named 2929 Entertainment. The company was founded by Dallas entrepreneur Todd Wagner and Mark Cuban, the owner of the National Basketball Association's Dallas Mavericks. Wagner and Cuban had founded a company named Broadcast.com, which they sold to Yahoo! for $5.7 billion in 1999. 2929 Entertainment was one of the ventures the pair founded with their enormous personal fortunes, a company that owned Rysher Entertainment, a film and television library, Magnolia Pictures Distribution, an independent distribution company, and stakes in HDNet (a high definition television network) and Lions Gate Entertainment, a creator, producer, and distributor of films. The acquisition of Landmark presented 2929 Entertainment with the same opportunity for vertical integration that it had afforded its previous owners, giving Wagner and Cuban the ability to control various steps of content creation, distribution, and exhibition. "What that adds up to," Wagner remarked in a September 24, 2003 interview with The Dallas Morning News, "is now being able to control your own destiny. All of a sudden, I can actually make a movie, play it on television, and release it theatrically."

Under the ownership of 2929 Entertainment, Landmark celebrated its 30th anniversary and prepared for the years ahead. The company added 11 screens in 2003, including the five-screen Magnolia Theatre in Dallas. In 2004, construction of the circuit's newest addition, the eight-screen E Street Cinema in Washington, D.C., was completed. Aside from the further expansion of the chain, 2929 Entertainment's plans for the future included remodeling Landmark's existing theaters, developing non-traditional concession items, launching a retail arm of the chain to sell DVDs, soundtracks, and other merchandise, and installing liquid crystal display and digital projectors into its network of theaters.

Principal Competitors

AMC Entertainment Inc.; Reading Entertainment, Inc.; Regal Entertainment Group.

Key Dates:

1974:: Landmark is formed and acquires the Nuart Theatre in Los Angeles.
1980:: Landmark abandons its repertory format in favor of an art-house format.
1989:: Heritage Entertainment acquires Landmark.
1991:: The Samuel Goldwyn Co. acquires Landmark.
1998:: Landmark is acquired by Silver Cinemas.
2001:: Oaktree Capital Management acquires Landmark.
2003:: Landmark is acquired by 2929 Entertainment.
2004:: Construction is completed of the E Street Cinema in Washington, D.C.