Coming to theaters Sept. 3, Warner Bros.’ latest action-thriller Tenet promises time travel, espionage, car chases, and explosions. It is the first new release to air only on the big screen in U.S. theaters since the coronavirus pandemic wiped out the traditional summer blockbuster season.
San Antonio-based Santikos Enterprises hopes it will also bring movie fans back to theaters.
Santikos shut the doors of its nine theaters March 19 and reopened several starting in early May with showings of family-favorite oldies like the Wizard of Oz and the 1980s classic Karate Kid along with Jaws, kitschy horror films, and former award-winners. All tickets are $5 for these previously released movies.
Five of nine Santikos theaters are currently open in the area, but even with health protocols and capacity limits, box office revenue is far below normal. Executives made the decision to open May 2 in order to “give people their jobs back,” said CEO Tim Handren, but the company is losing money.
Since the middle of March, Santikos has been operating with “zero-to-very-little revenue,” he said. “In simple terms, we are employing people, and we are starting to eat into our fixed operating costs. [But] it’s better to be open than closed, economically – although, during this time with no new movies coming out, we continue to operate at a loss.”
Theater chains across the country, which employ 150,000 people, are experiencing steep losses as movie patrons turn to drive-in theaters and popular streaming services.
The largest chain, AMC Theaters, has waged a battle with Universal Studios ever since the studio sidestepped theaters and released “Trolls World Tour” directly to premium video-on-demand platforms rather than honoring the 90-day “theatrical window.”
Though a recent agreement between the two resulted in a 17-day window, the terms are not well understood by analysts yet, Handren said. In a departure from views held by other large chains, including Cinemark and Regal Cinemas, he does not foresee the issue affecting Santikos or its profit margin.
The majority of movies stay in theaters just three weeks before going to video-on-demand anyway, he said. “When we get back to where the studios are releasing their content, we will have access to all the same content we did before,” he said.
And once theaters are permitted to open to full capacity, he expects new releases are going to show longer in the theaters “because they’re going to have to in order for the studios to make the money that they need before they go to video-on-demand.”
Handren said most studios, especially Warner Bros. and Disney, are committed to releasing their films first in movie theaters. “They’re not going to try to just take everything video-on-demand as has been speculated for the last 10 years,” he said. “This isn’t a meteorite that killed the dinosaurs called theater – that’s not what this is yet.”
The bigger impact to the future of the industry is whether people decide to return to public spaces as lockdowns are lifted.
“Do we have a new wave of agoraphobia going through our community or are people going to feel comfortable going to a theater like Santikos where you have luxury seating [and] you’re automatically 7 feet apart, front to back, because of our recliners?” Handren said.
Movie theaters were among the first businesses to reopen in May, with the state mandating a capacity of no more than 25 percent. The market responded.
A July 8 report in The Hollywood Reporter said Santikos was one of the few movie theater companies operating in the unusual environment created by the pandemic, and after opening May 2, the “tiny Texas-based Santikos … represented a whopping 57 percent of non-drive-in domestic box office revenue for the week.”
Since then, capacity limits have increased to 50 percent, but movie-going has not returned anywhere close to those levels. If it did, Handren said, Santikos would again turn a profit. “Because I can tell you last year, if you look at the occupancy of all of our theaters and all of our showings combined, it was only 23 percent,” he said.
But ticket sales won’t go up if movie studios continue to change and delay release dates, which has been a daily occurrence, Handren said. The lack of new releases affects profitability the most, as will the ongoing trend toward movie debuts on streaming services.
This month, Disney reported losses of $5 billion from its theme park, movie distributions, and live sports programming during the second quarter. But its streaming service took off and now Disney plans to debut its remake of Mulan, originally slated to open in theaters this spring and postponed several times since, as a premium-priced download on Disney+.
While the bulk of Santikos’ profits previously came from the theater segment, its smaller commercial real estate business remains profitable. Likewise, because Santikos owns its properties, it is stronger financially than other theater chains, Handren said.
“That’s where a lot of challenges have come in, [but] our balance sheet is strong from a total balance-sheet standpoint and from a cash-position standpoint,” he said. “Some of the changes that we had made were in how we structure our balance sheet, and we are weathering the storm.
“I do believe there’s an end in sight, and I am optimistic.”
The outlook for this year’s contributions to the charitable foundation established upon the death of its founder, John L. Santikos, is less hopeful, and that could leave many nonprofits reeling.
In his will, John Santikos left his business, valued at $605 million, to the charitable foundation named for him and managed by the San Antonio Area Foundation. Annual profits from both the entertainment and real estate lines of business flow to the foundation and benefit Santikos’ charitable interests in eight counties.
Last year, the Area Foundation awarded 100 area nonprofits and other charities grants totaling $10 million from the Santikos Foundation and the group of 60 charitable funds it manages.
“We were on a glide path to continue to increase our foundation contributions,” Handren said of the months leading up to March. “But now I can’t tell you what that picture is because I don’t have clarity from the studios on what their release schedule is – they [moved] it … as recently as last week.”
Along with the spy movie Tenet, the $33 million tension-filled flick, Unhinged, starring actor Russell Crowe, is also slated to open in theaters during the Sept. 4 weekend. Solstice Studios has changed its release date four times.
On Wednesday, Walmart made its entry onto the movie experience playing field, announcing it will be showing movies in select store parking lots, free and available until all parking spaces are full. The first of four scheduled movie events in San Antonio is on Sept. 22 at the Walmart located at 6703 Leslie Road.
On the marquee: Selena.
