February 23, 2013

Theaters charge big time to play trailers

Small studios may pay as much as $100,000 to play a trailer for a single film.

By BEN FRITZ and RICHARD VERRIER Los Angeles Times

Coming soon to a theater near you: a multimillion-dollar battle over coming attractions.

click image to enlarge

People walk in front of the Regal Cinemas LA Live Stadium 14 in Los Angeles. Movie theater chains are putting pressure on studios to pay more to have their trailers placed in front of the audiences they want.

Los Angeles Times

Theater owners are squeezing extra coin out of film companies by charging them to play the trailers for their upcoming movies.

Traditionally, theater owners were happy to run the advertisements for upcoming movies on the understanding that they drove box-office receipts and concession-stand sales. Studios paid to make the trailers and cinemas screened them. Each movie came with two coming attractions attached, while others ran at the discretion of the theater, often as a result of lobbying by Hollywood marketers.

But now theater owners, realizing the value of having Hollywood's target audience already in the theater, have begun charging movie companies to run their trailers. Although some trailers still run for free, movie distributors complain that they're increasingly being asked to pay to get their trailers played -- or get shut out.

"We've reached the tipping point," said Jeffrey Neuman, chief executive of Verites, a Burbank, Calif., company paid by studios to check theaters to see that trailers are being shown and that marketing materials such as lobby cards and standees are in place. "If you're not one of the ones paying for trailers, you're left struggling for placement."

In one controversial move, the nation's largest cinema chain, Regal Entertainment Group, recently cut the number of trailers that studios can run with their own movies for free from two to one. Some studio executives are privately grumbling about the practice, upset that they are being asked to pay still more to a supposed partner that typically keeps half the box-office receipts.

"It's logical a theater operator has an obligation to market studios' movies, when we're spending hundreds of millions of dollars on (making) each one," said one studio executive who asked not to be identified. "But they have gone all the way around to wanting to be paid."

Four of the major studios -- 20th Century Fox, Sony Pictures, Universal Pictures and Warner Bros. -- reportedly have made annual marketing deals worth several million dollars with theater chains such as Regal and AMC Entertainment. In exchange, the studios are exempt from the one-free-trailer-only rule and get the best possible placement.

Walt Disney Studios and Paramount Pictures don't have such deals, while smaller studios may pay as much as $100,000 to play a trailer for one film.

Some coming attractions still make it on the screen through studio executives lobbying and cajoling contacts at theaters with whom they have long-standing relationships. But such old-fashioned methods that don't involve payments are increasingly rare.

Large theater chains won't publicly acknowledge that they charge for trailers, nor will the studios that pay them.

But within the film and exhibition industries, it's common knowledge, and a growing source of resentment.

"Everybody says, 'No, no, there's no money ever paid to show trailers,' but we know that's not the case for some of the big boys," said Rafe Cohen, president of Galaxy Theatres, a Los Angeles-area chain that operates 115 screens. "For us little guys, we'd love to charge for trailers, but we don't have the leverage."

There are no official stats on how many trailers make it to the big screen thanks to a payment, but the practice has become increasingly common. Verites checked on about 100 trailers in 2012, compared with 30 in 2009, Neuman said.

The dispute marks the latest flare-up between film companies and exhibitors, whose symbiotic relationship has been strained in recent years. Turning trailers into a business, some fear, could add to the tension.

"What makes this business run are trailers," said Chuck Viane, a former president of distribution for Walt Disney Studios. "When the right trailers aren't seen by the public with the right movie, that can hurt the box office."

(Continued on page 2)

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