Editor’s Note: This feature is a follow-up to our earlier feature on the theater industry, as penned by “Hardcore Legend,” our resident theater owner.

It’s been awhile, but I felt it was time for another installment.  With the release of Shaggy Dog and V for Vendetta, thus begins the ‘movie season’. From now until August (with a slight slow down in mid-April to mid-May), the films that the movie studios will use to pack the theaters are going to start rolling out. In my next writing, I’ll try to touch on where all the money goes and why you are hit with higher prices on popcorn and bombarded with Dove commercials. However, I have to give you some background before I dive into it.
 
Funny that my second installment has the same topic as my first one. I have no problem with Disney. I really don't. I think it was one of the best moves the company could make when it signed up with Pixar for the future of its animation department. I think the quality of their films has gotten better and even their scheduling has improved. However, their business practices have not.

The Chronicles of Narnia was a boon for the Mouse House, giving them a legitimate counterweight to the box office giant Harry Potter. It was a far superior film, with a better story, better acting, and, unlike Potter, a series with plenty of installments to go. For exhibitors, it was a breath of fresh air as the film crossed demographics, bringing in kids, families, young adults who read the books by C.S. Lewis as children, and even religious groups that generally stay away from modern theater releases. It was good for everyone, all the way around. Or so I thought.

For those of you that don't know how this works, typically when a film is released, the film company collects a percentage of the box office take over the duration of the run. For a first run film, it can go something like this:

Week 1: 70 - 60 percent
Week 2: 60 - 50 percent
Week 3: 60 - 40 percent
Week 4: 50 - 35 percent

Or any similar equation. There are some outliers. Spiderman 2 wanted 80 percent first week. Some films come up with creative numbers like 52.6 percent. But you get the general idea. Now, each week’s due is paid the following week, so if you have a film in November-December, by the 2nd week of January, it should be paid in full. That's usually the end of it. From time to time, they readjust the numbers slightly to get a little more, but nothing drastic. However, in the eight years I've been a part of this, 98 percent of the time Disney is the one with the creative financing.

Back to current day. Disney's original take on Narnia for a first run engagement of four weeks was 60, 50, 40 and 35 percent, respectively. Standard percentages that happen all the time. Well, in the first week of March, they readjusted those figures. Slightly. Because of the week leading up to Christmas, the second week numbers for this film sagged a bit. Nothing major, but just enough to where generally the third week grosses were higher than the third, due to it actually being Christmas. I concede that Disney has a right to switch the second and third week, if they did better.

However, that's not all they did. What was a 60-50-35-35 cut should have been a 60-40-50-35. Instead, it ballooned to 70-60-70-40. That's right, not only did they pick and choose which weeks to apply their percentages to, but then raised them by 10 one week and 35 another. So, if in that third week, say you made $1,000 in tickets (you'd go out of business). Anyways, originally you owed Disney $350. After the readjustment, you now owe them that same amount again.

Now these are all made up figures and any theater that is still in business would have higher per screen grosses than that. However, I think you can see the situation.

Why March? Why would Disney do this now? A couple of reasons. Firstly, these new numbers came out exactly five days before prints of Shaggy Dog shipped to theaters across the nation. The ultimatum was laid out, pay it or don't get the print. Secondly, if Disney had collected the higher amounts in December, that profit would have been taxable in 2005, with no major release for the company coming out until mid-March. Less cash flow and higher taxes doesn't work out so well. However, with it on first quarter 2006, with a major film coming out just three weeks before the end of that quarter, it means an infusion of cash flow after 1st Quarter 2006 which not only helps pay those taxes but boost stock outlook for the year.

Shady business, huh?

The real loser here is all movie theaters of all kinds that showed this film. It didn't just happen to the first run people, or even the second. People that got the film 12 weeks out were hit with this as well. During one of the slowest periods of the year for the film industry, Disney decided to squeeze what coin was left out of every screen they could. The result?

The further destruction of the American Movie House.