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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.


This Caribbean Business article appears courtesy of Casiano Communications.
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