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What you need to know about buying a cinema

January 24, 2019

The Victa cinema in Victor Harbour is for sale. Photo: Supplied

Victa Cinemas co-owner, retiree Carol Stonnill, loves movies. “She watches three movies a week,” her husband and co-owner David Stonnill told Commercial Real Estate. “She loves picking the movies, and seeing how they go, and just generally organising, programming – she loves all that.”

After they sell the two-screen art-deco cinema in South Australia’s Victor Harbor, currently listed with Raine and Horne for $2.145 million, he thinks she’ll still visit the 80-year-old building every day. “She really loves movies,” he said.

For other movie lovers wondering what life could be like running a cinema, what do you need to know?

Kristian Connelly, general manager of Cinema Nova in Melbourne, said a typical day begins by checking the projectors. Films are no longer delivered on big reels of celluloid, but are digitally projected – either emailed to the cinema as an attachment, or delivered on an encrypted hard drive.

Mr Connelly said that this meant “a film looks as good on day one as it does on day one hundred and one.” Remember going to the movies as a kid? “The scratches, the pops, the soundtrack would sound a bit funny? All that’s now gone.”

The Victa cinema ???? Photo: Supplied The Victa Cinemas is for sale. Photo: Supplied

Next, ensure the ticketing machines are working, the website is up, and the candy bar is well stocked. Mr Connelly told CRE that, “in the midst of summer, you double down on the choc tops.”

Cinemas incur a lot of wear and tear, and modern audiences anticipate a high level of comfort, so cleaning and maintenance require significant daily attention.

Mr Connelly said: “Back in the day when you had concrete floors and wooden seats, that was one thing, but the audience has come a long way in their expectations.”

There are constant issues, he said, like “broken seats, or doors coming off hinges, somebody’s destroyed a toilet seat. It’s never-ending.”

Mr Stonnill said an older building like the Victa, established in the 1920s but rebuilt in 1934, had its share of maintenance issues, but added, “It’s not been challenging for me as that’s one of the things I love – I love getting in there with a paintbrush and fixing stuff up.”

A cinema at the Nova Cinemas in Carlton, Melbourne. Photo: Supplied A theatre at Cinema Nova in Carlton, Melbourne. Photo: Supplied

For the Stonnills, following the complex and numerous policies of movie distribution companies is the biggest challenge. Also, as they are a small cinema, he told CRE that “we are limited to the number of films we can show at any one time” so “putting the right movie in at the right time” requires careful deliberation.

Then there are the overheads: insurance, staff, maintenance, advertising and more. Mr Connelly, who has also worked at Village Cinemas, said “electricity is a very, very large part of the outgoing costs” of running a cinema. Mr Stonnill agreed. “I’m thinking of putting solar in,” he added.

But despite the outputs, and the rise of streaming media such as Netflix, Mr Connelly said cinema was “still a profitable industry to be in,” with the largest portion of revenue coming from ticket sales.

Indeed, a report released this week by the Motion Picture Distributors Association of Australia, revealed that the Australian box office reaped $1.245 billion in 2018 – the second highest annual profit to date.

Kristian Connolly from the Nova Cinemas in Carlton. Photo: Supplied Kristian Connolly, general manager of Cinema Nova. Photo: Supplied

Mr Stonnill said: “It’s very profitable. We’ve been there 14 years. We were mortgaged up to the hilt like you wouldn’t believe – a million bucks worth, which gave me a heart attack—but last year all our debts are paid.”

Mr Connelly believes punters are looking for an experience when they go to the movies. This is why, in part, media streaming hasn’t negatively affected cinema attendance, which increased in 2018, according to the MPDAA.

“Michael Smith who runs the Sun Theatre in Yarraville likes to say, ‘everyone’s got a kitchen at home, but people still choose to go out to restaurants’,” he said.

And, speaking of food, the cinema candy bar also brings in a decent profit.

Mr Stonnill said: “We make so much money from the popcorn.”

Mr Connelly said there “was a certain degree of nostalgia about popcorn. It’s one of those inherent things with the movie experience.” Mr Stonnill agreed: “There’s a bit of a riot if the popcorn machine breaks down!”

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