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CARIBBEAN BUSINESS
Movie Theaters Make It Three Ways
by Lida Estela Rua
March 9, 2000
Copyright © 2000 CARIBBEAN BUSINESS. All Rights Reserved.
Movie exhibitors have three sources of revenue: ticket sales,
concession sales, and screen advertising revenue.
Due to the proliferation of movie theaters in Puerto Rico and
the technological advancements offering better quality sound,
picture, and facilities, the number of visits to movie theatres
has increased. And ticket sales have greatly increased as a result.
Ticket sales in 1993 were $28 million and have since increased
some 78% to about $50 million in 1999. The Puerto Rico Department
of Treasury (Hacienda) receives 10% of each ticket sold, as required
by Section 2052 of the Internal Revenue Code, which taxes public
shows. Last year, Hacienda collected $4.2 million. Most of the
money collected goes to the general fund, and 10% of it goes to
Festival Casals, according to Myrna Ramos, director of the collections
accounting office at Hacienda.
Movie distributors also get a percentage of ticket sales. There
are about seven distributors locally, each one representing movies
from studios such as Columbia TriStar, Fox, World Films, and Universal.
Movie distributors negotiate with exhibitors depending on theater
location.
Distributors, as well as theater chains, hire advertising agencies
to promote films. As moviegoers have increased, public relations
and advertising budgets have significantly increased as well.
"Advertising budgets for films has easily increased about
200% to 300% since the early '90s," says Guillermo Ramis,
president of Paradigm Associates Inc., adding that they handle
more than 50% of the advertising dollars spent in the local industry.
Paradigm represents various distributors as well as Caribbean
Cinemas.
"One of the fastest growing segments of the advertising
industry is movie advertising," he continued. "The whole
movie industry, not only in Puerto Rico, has experienced a rebirth
in the 1990s with the advent of the multi-plexes and then, the
mega-plexes [20 screens or more]."
A major source of revenue for movie exhibitors is the sale
of food, candy, and drinks through their concession stands. In
addition to sales of food, movie theaters are paid by companies
to sell their products exclusively. For instance, currently both
Caribbean Cinemas and CineVista have arrangements with Coca-Cola
Puerto Rico Bottlers to exclusively sell their products.
Screen advertising is another source of revenue for movie exhibitors
as they sell screentime to advertisers.
Industry insiders estimate screen advertising revenue to be
about $3 million to $4 million. Today, Casiano Communications
sell screen time through their product, Casiano Movie Magazine
in CineVista theaters, and Sono Film Productions Inc. sells for
Caribbean Cinemas theaters.
--L.G.
This Caribbean Business article appears
courtesy of Casiano
Communications.
For further information please contact www.casiano.com
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