America’s Impresario: CinemaCon honors Carmike’s David Passman with Marquee Award
“When you’re the Cinderella in the industry, there are a lot of courters.” The phrase “Cinderella story” gets thrown around a lot, but we agree with David Passman: When it comes to Carmike Cinemas, there’s really no better term to use. From humble beginnings, this Columbus, Georgia-based company rose to become the fourth-largest exhibition chain in North America. And now, in the form of AMC, Prince Charming is knocking. To stretch this metaphor further, one might consider Passman—president and CEO of Carmike, two-term NATO chairman, and recipient of the 2016 NATO Marquee Award at 2016’s CinemaCon—Carmike Cinemas’ Fairy Godmother.
When I spoke to Passman and other members of the Carmike executive team, it had been six weeks since AMC approached Carmike about a potential acquisition. Just under two weeks later, after (per Passman) “lots and lots of negotiating,” a merger agreement was reached and the possibility of a combined AMC and Carmike was announced to the world outside those two companies. The hard work of making everything official is still to come—Passman notes that “it’ll probably be some time in the fourth quarter”—but for now the AMC deal stands as a fitting finale to one of the exhibition industry’s most inspirational rags-to-riches tales.
Not that Carmike is coming to an end, of course. Many of the operational details of the AMC acquisition are still to be determined, but Passman has said it’s his guess that the Carmike brand will live on, if only because re-signing some 200-odd Carmike locations (the Carmike brand also includes Rave Cinemas, Muvico Theaters and Sundance Cinemas brands) would be an expensive proposition. The AMC deal would herald less the end of a story than the beginning of a new chapter, one in which the hard work and dedication of the Carmike team is rewarded. With Carmike’s bright new future on the horizon, we at Film Journal International would like to do our part to pay tribute to what the company and its leader, David Passman, have been able to accomplish.
Leading the Charge: President & CEO David Passman
In an industry where executives routinely spent their formative years as ushers and theatre managers, David Passman—who went from being on Carmike’s board of directors to its president and CEO in 2009—is a relatively new player. Prior to working at Carmike, he was the president and CEO of IBS-STL, Inc., a book publishing and distribution company; before that, he put in years at Harland Printed Products and Harland Checks and public-accounting firm Deloitte & Touche LLP. Since his publishing and accounting days, he’s become a key player in the theatre industry, completing two terms as NATO’s chairman and serving on their board of directors for six years. He currently serves on the board of Screenvision and the executive committee of the board of directors for the Will Rogers Foundation. (“Guy doesn’t sleep!,” jokes CFO Richard Hare.)
Speaking with the Carmike team, no one had a single bad word to say about Passman—and it’s clear that that’s because of genuine respect, not a fear of professional reprisal. Passman’s tenure at Carmike has been characterized by transparency and bold thinking. “I have never fired somebody for failure, ever, in my entire career,” he says. “I’ve fired people for lying, I’ve fired people for stealing and I’ve fired people that could not get it, after repeated tries. They just didn’t understand their responsibilities. But I’ve never fired anyone for trying something and failing. I’ve had the most boneheaded ideas ever, and nobody fired me for them!”
That philosophy has yielded some successful initiatives for Carmike Cinemas, among them “Stimulus Tuesday,” which was cooked up around the time of President Obama’s stimulus package. Under the program, guests can get a small popcorn and soda for two dollars (one dollar, originally) each. Passman recalls his new (at the time) employees asking him which theatres he wanted to try the then-untested program in. “I said, ‘All of them!’ You’d have thought I just said, ‘We’re on the Titanic, and I saw the iceberg!’ Long story short, two weeks later we rolled it out across Carmike. It was the most successful promotion Carmike has ever done. And guess what? It’s now seven years later, and we’re still doing Stimulus Tuesday.”
To use a superhero analogy (hey, they’re industry bread and butter), Passman’s management strategy is to, ahem, assemble a team of crack talent and foster an open, forward-thinking environment conducive to creative thinking. There’s no micromanaging, and there’s no scapegoating when something doesn’t go as planned. In fact, Passman wouldn’t call his management style “management” at all. “My job is to lead the organization, not to manage it. That’s what Fred [Van Noy, COO] and John [Lundin, VP, film] and Tom [Wilkinson, director of real estate and development] and Rob [Lehman, VP of food and beverages] do—their job is to manage the individual functions or across functionality. My job is to lead the organization, hopefully in the right direction to make it bigger, better, stronger and more liked by our studio partners, our stockholders and our employees. And of course, most importantly, our guests.”
“I really like smart people,” Passman says of how he builds his team. “I like energetic people. I like people that aren’t afraid to voice their opinions. A big [misconception], particularly in larger companies, is that if you express your opinion, your head will be chopped off. If you try something and fail, your head will be chopped off. It’s a negative way to run a business. It’s ‘stay out of trouble, keep your nose clean, keep your head down, and you can retire.’ And that’s the last thing in the world I want.”
If Passman had ever been the sort to subscribe to the “stay out of trouble” mentality, it would have gone out the window on his first day as NATO’s chairman. As luck would have it, that was when Universal announced their plans to release the Brett Ratner action comedy Tower Heist on VOD a mere three weeks after its theatrical bow. “We had our annual meeting, and at the end of the meeting, I was elected chairman,” Passman recalls. “And 15 minutes later, John [Fithian] called me on my cellphone and said, ‘We have a major problem.’ I swear to God, 15 minutes later! ‘I tried to find you before you left! Can you come back?’ ‘No, I’ve got a plane to catch!’
“I spent the next three days on the telephone, four or five hours a day, with Adam [Fogelson, Universal chairman] and his bosses and his subordinates, just trying to mediate and debate the whole issue of whether it made sense or not. It was truly an initiation by fire, because I had never met Adam at the time. Ultimately, it improved our relationships with Universal. Universal and NATO, Universal and Carmike, Carmike and NATO.”
In addition to making sure his first weekend as NATO’s chairman wouldn’t be boring, the controversy “helped ground me in the importance of the role of NATO and my role of chairman. As I reflect back on doing that, we had many big issues to deal with.” There’s the constant discussion over shortening exclusivity windows, for example, and Netflix’s increasing activity in the original-content space with movies like Beasts of No Nation and Crouching Tiger, Hidden Dragon: Sword of Destiny. What Passman brought to NATO, he argues, was being “a large company in a very, very big trade organization. But the smallest of the large companies. The thing I’m proudest of is I believe I helped bridge the gap between the independent, small exhibitors and the very large exhibitors. Because I could see both sides. I’m in small towns like they are. I have to fight for film from studios like they do. And I have to compete in big towns against other theatres. Being able to relate to and bridge some of that gap, I think, helped the NATO organization as a whole.”
For his part, Passman is optimistic about distributors and exhibitors coming to an accord on the issue of theatrical exclusivity windows. “Things will change. I personally believe that if you’re not changing, you’re dying. If you don’t like change, you’re going to like irrelevance even less! As habits of consumers change, we have to change with them. In fact, we need to helpsteer consumers. That doesn’t mean that everybody should get everything, anytime, on any device. Even Steve Jobs didn’t believe that—that’s why he had staged releases. He believed in windows. I do, too. I would like to think that this mutual dependency that we have is one that both sides will always realize and recognize enough to want to nurture.
“The truth of the matter is, we can sit down at the table and talk intelligently and think about what the consumer wants and needs and is willing to pay for and when they’re willing to pay for it,” Passman continues. “We can come to a much better model on virtually anything.”
Though Passman agrees that it’s an exciting time for exhibition, he notes that it’s a “scary time, too.” In order to compete with other entertainment options, exhibitors have to bring high-value amenities like luxury seating and dine-in options to the table. In the next few years, technological advancements like High Dynamic Range and laser projection will be become more crucial as well. But Passman—and Carmike—didn’t get to where he is by playing fast and loose with money. “The biggest challenge any company has right now, in my view, is figuring out which amenities in which locations for which audiences, and figuring that out in an affordable and profitable way,” Passman states. “You put in luxury seating in a place people aren’t willing to pay for it, and you’re not going to make any money at all. You put a dine-in theatre in a location that isn’t conducive to that type of clientele, and you’ll be bankrupt, just like all those casual dining restaurants that you drive by that are closed. You have to be really, really careful in how you spend that precious resource called capital.”
If the Carmike-AMC deal goes through, Passman’s role in the new company will be, in his own words, “unemployed... I will have no continued involvement in the combined organization once the transaction’s closed, or after a very short period subsequent to closing. The company only needs one CEO.” But he’ll be leaving Carmike in the capable hands of AMC CEO Adam Aron, whom Passman describes as “a straight shooter—no nonsense, but no arrogance either.” The tale of Carmike cinemas—its growth, its moment of triumph, the passing of the torch—“is a good story,” Passman admits. “I get a little melancholy thinking about it, but it’s a real good story.”
Best of Both Worlds: Fred Van Noy, Senior VP & COO
Carmike Cinemas has seen a lot of changes over the years. But one constant has been the presence of Fred Van Noy, who’s been with Carmike since even before it was Carmike. Van Noy joined the company back in 1976, when he was a high-school student who needed a job in order to pay for his car. Back then, Carmike Cinemas was Martin Theatres. Years later, it was sold to Fuqua Industries, then (in 1982) purchased back by Carmike founder Carl L. Patrick Sr., who named the chain’s new incarnation after his two sons, Carl Jr. and Michael.
Through all that time, Van Noy was there. After his stint as an usher, he became a theatre manager, first at a drive-in theatre that only operated three days a week, then a two-screen theatre, then a four-screen. Then came city manager, district manager, division manager and general manager, which brings us to today: Fred Van Noy, senior vice president and COO of Carmike Cinemas.
Perhaps more than any other person at Carmike, Van Noy has the long view of how Carmike has changed over the years. A huge element of that is technology. Carmike was an early adopter of both digital projection and 3D. The chain currently boasts 55 Premium Large Format auditoriums, including 32 “BigD” screens, 21 IMAX auditoriums and two MuviXL screens.
Now, Van Noy is looking ahead to things like laser projection, 4D, HDR and immersive sound. “We like to think that we’re leading some of those technologies,” he says, while with others “we think of ourselves as shoulder-to-shoulder with some of our fellow competitors. And then some of those technologies we’re not quite sure about right now. We’re comfortable sitting back and letting somebody else test it.”
One of the technologies in that third group is laser projection: “It’s a very cool technology. I love what I’m seeing. But there’s a cost analysis that doesn’t quite make sense to us right now. We don’t have the volume or the attendance or sites to test and to play with that model like some of our competitors.”
4D is another “wait and see” technology; it has great potential, Van Noy believes, but it’s not currently the best fit for the smaller markets that make up much of Carmike’s footprint. “There have been some very remarkable, very impressive results from the sample sites they’re testing. Does it have a place in our business? I think so. Eventually, we’ll take a harder look at it.”
Van Noy credits Passman with his ability to “remove emotion from a decision” and take a considered approach to investing in new tech. “When I sat in the 4D test auditorium, I’m thinking all the things we can do with this. I’ve been in the business for so long that I can see an impact, or not so much of an impact, of certain things that the industry is playing with. But then you have to prove it to David, through the analytics. It’s all business.”
Passman’s ascension to CEO had an impact on company culture as well. While Van Noy stresses that “both management methods”—Passman’s and those of his predecessors—“worked,” Passman’s arrival did herald a change in how things are done. Passman’s approach, Van Noy explains, is very open and collaborative, which took some time for people to adjust to. Van Noy recalls the first annual meeting of theatre managers, a new practice that Passman instituted when he came onboard as CEO in 2009. During the first meeting, which took place in Myrtle Beach, SC, there was a Q&A session where theatre managers were encouraged to have an honest back-and-forth with Carmike’s department heads. “’Let’s be open here. Let’s be transparent. Good or bad, we want it all,’” Van Noy remembers saying. “And you could hear crickets! It was a very short segment of the meeting, because nobody participated.” There was even a rumor, Van Noy recalls, that all the theatre managers had been summoned to Myrtle Beach for a mass firing!
Now, things are different. “It took two or three of these conventions to go from no input to extending that period from a two-hour segment to a four-hour segment to almost a half-a-day segment,” Van Noy explains. Now, the yearly meeting yields a lot of what Van Noy calls “common-sense suggestions,” born of the managers’ on-the-ground perspective that those in the corporate office don’t have. “We’re here to serve the managers. They’re not out there to serve us,” he argues. “That is one message we wanted to send out to everybody: ‘We’re here to support you guys.’”
It’s very important, to both Van Noy and Passman, that theatre managers feel respected and that they take ownership of and pride in their theatres. “When David and I travel to go look at theatres, the first few trips that we would go on, the managers wouldn’t know what to do with us,” Van Noy recalls. “It took a little bit of time. The point that we wanted to get to with our team out in the field is that when we walk in the front door, we would love for the managing director to say, ‘Let me show you my theatre.’ When we started hearing that from our team members, we were almost humbled. It was an attitude change. And it was good. That’s what we try to do.”
Putting the Puzzle Together: John Lundin, VP, Film
John Lundin’s path to the theatre industry started at a wedding. Unlike many people in exhibition, he was never particularly into movies as a kid—summers were spent at a family cottage playing outdoors, not sitting in a dark room watching a glowing screen. Later on, college was in a small town in Michigan, where first-run movies were rare. “I didn’t even know there was an industry,” Lundin explains.
One day, he had a few drinks with Disney’s Pat Halloran (“I thought that meant he worked for the theme parks. I didn’t know!”) at the wedding of a friend’s sister. Two months later, he got a call from Halloran to reconnect. “We went to dinner, and he said, ‘I’m looking for a sales trainee in my office. You’ll have to move to Cleveland. I’ll pay you $155 a week,’” Lundin recalls. “And I said, ‘Done.’ The entrée didn’t get served before I took it! At that time, I was living in Detroit with my folks. They were on vacation in Florida. They came back the following Sunday night, and I said, ‘Oh, by the way, I’ve quit household finance and I’m moving to Cleveland. I’m going to work for the Walt Disney Company. So I’m going to need to take some furniture.’ ‘You’re doing what?’”
Thus goes the abrupt beginning to Lundin’s decades-long career in the film industry, which has seen him work in both distribution (as district manager of Sony Pictures Distribution) and exhibition. Though he didn’t start out with a love of film, “now, I could see every movie”—and he gets close, as Carmike’s VP of film. Prior to working at Carmike, he was the VP of film at Cinemark USA. Inc., where he worked for a time with its founder, Lee Roy Mitchell. “David Passman has a lot of Lee Roy Mitchell,” Lundin notes. “He has done the same stuff. He believes in it. He loves the business.”
Lundin’s passion for the business comes through as well—particularly the work of putting together the gigantic jigsaw puzzle that is Carmike’s film slate. “It’s never routine,” he says. “I like exhibition more [than distribution], because every Monday you’re starting over. We have to book our theatres again for Friday, and on Monday when you come in you find out if what you thought you knew the week before was right or wrong.”
For a recent example, Lundin cites Deadpool, which, when we spoke, had days prior run roughshod through the box office with a $150 million opening weekend. “There was not a clue” that it would do that well—not from film buyers or 20th Century Fox itself. “There are going to be people this weekend that ‘knew’ it was going to do that well. ‘I just didn’t say.’ Yeah, right. Or there’s the movie that’s supposed to be a $150 million movie that turns into a $35 million movie, and those people also ‘knew’ it was going to tank. You never know for sure what’s going to make someone go to the movies. It’s always different… Most of the time, we have nothing but a crystal ball that says, ‘You have no idea what you’re doing.’ Then it’s a matter of seeing how close you are on your guesses.”
Throughout his career, one particularly good guess (educated, of course) that Lundin took was a little film called Dirty Dancing, which came out when he was with Litchfield Theatres. “It was low-budget. A very small company was selling it, and they were having trouble getting screens. But we watched it, and my film buyers said, ‘This is going to work.’ So we went out, and we put it in every theatre. And they were right, and it worked. And then, all of a sudden, all the other circuits were looking for dates, and it’s like, ‘No, we’re not giving it up!’”
Programming films “isn’t just Xs and Os. It’s not just putting pegs in holes,” Lundin contends. “You have to be willing to think outside the box and find an audience in places your competitors might not think to look.” For example, “we have a couple of markets where we play Korean films. And one of these is Montgomery, Alabama. Because there’s this little company called Kia in Montgomery. I would love to tell you we knew to go after this, but they knocked on our door. Once they laid it out, we said, we’ll try this. And it worked. So we keep going. Champaign, Illinois plays Chinese films. Again, I would love to tell you that we knew. A distributor came to us because he has a group that moved to the university that wanted to see [a film]. We played it, it worked, and now we play ’em.”
Part of David Passman’s management strategy, explains Lundin, is that he doesn’t care who has these good ideas—he just cares that someone on the team does, and if they do, they’ll be listened to and will be given credit. “If something went wrong, we all did it wrong, and if something went right, we all did it right. He wasn’t the CEO of the good stuff and ‘I’m in the closet’ when it’s bad,” Lundin says.
A prime example of this philosophy can be found in Carmike’s success playing Indian films, a practice that Lundin brought over from his days at Cinemark. Years later, Carmike’s box office for that genre has gone from nothing to, in Lundin’s words, “a lot of money!” At a yearly company meeting, Passman singled out India film buyer Mark Jordan for making that happen. “It’s not just David talking to Wall Street and saying, ‘Yes, we do Indian films, and they’re very successful,’” says Lundin. “We made sure that everyone in the company knows they’re very successful for Carmike, and the reason they’re successful is because that person does the work. It’s not necessarily the way most companies operate, where they pass [the credit] all the way down.”
It almost feels like a cliché, but teamwork is incredibly important at Carmike. Passman “knew the dollars-and-cents stuff” when he started, Lundin explains, “but he didn’t know the film business. He’s taken time to learn. He put a team together, and we all work to do the same thing and get to the same place. We’re all looking to be number one. We’re not going to be as big as AMC and Regal. We won’t be as new as Cinemark. But we’re catching up to all of them. Our numbers have outperformed the industry quarter after quarter. We’re opening new theatres and getting rid of old theatres. It’s a new circuit. It’s something totally different. And David led the parade.”
Ushering in the Future: Bud Mayo, President, Alternative Programming
Superhero movies and children’s animated offerings are all well and good, but when there’s a Tuesday afternoon screening with nearly empty seats, exhibitors might want to look into other, or…alternative options, as in “alternative programming,” an area that’s grown increasingly in prominence over the last several years.
Bud Mayo is a longtime staple of the exhibition industry and evangelist for alternative programming. Previously the chairman and CEO of the Clearview Cinema Group and, later, Cinedigm, Mayo went on to fill those same roles for the exhibitor Digiplex. When Carmike bought Digiplex in 2014, Mayo was brought onboard as Carmike’s president of alternative programming.
It was a good call for both parties. “When David and I began our conversations a few years ago,” Mayo recalls, “it was pretty clear to me that, in particular at my age, it would take a long time to get a platform [for alternative programming] that would include [both Digiplex and Carmike locations]. The merger was not only a lot of good theatres merging with a lot of good theatres, but also an opportunity for me to continue to build and completely focus on the alternative programing business. And to bring my team, which is thoroughly trained in all disciplines—not just in programming, but in the marketing of those programs—with me to create the alternative programming distribution division.”
And Passman was a big draw; Mayo describes him as one of the few people who understood the potential of alternative content in the early days. “It’s not about technology. It’s about what you do with technology,” Mayo argues. “And one of the few people in the industry who got that is David. He understood the incremental impact of this business within a business.”
This “business within a business” faces some challenges that the exhibition industry as a whole doesn’t, at least not on the same scale. For example: marketing. A studio may have millions of dollars to promote a movie that runs for weeks on thousands of screens, but for an event that’s only going to play to several hundred seats, more grass-roots, social media-based (read: cheaper) marketing techniques are essential. And those have to be tailored to each individual theatre, not the chain as a whole.
“The biggest challenge we have in the business is getting down to the theatre level and having direct contact with the guests, and to raise their awareness,” Mayo explains. One of the methods that’s in the works is the installation of alternative programming kiosks, which individual theatres can use to promote upcoming events. “We can reach out with messaging on social media, we can do media alerts and develop media contacts, but the real work also has to be done at the theatre level with the staff. They need to be familiar with what’s coming, and be able to talk about it, the same way they can a movie that’s playing there at the box office.”
Carmike has had success with alternative programming in the past; events of note include the concert Live from the Grand Ole Opry and the anime Dragon Ball Z: Battle of Gods. But there’s still room for ample expansion, not just with Carmike, but industry-wide. Mayo compares it to daytime TV—you have to tailor your programming to who’s there and willing to watch, instead of providing the same options regardless of what time of day it is. “If you have kids, you can’t go out during the week. And if you’re in school and you’re a kid yourself, you can’t go. So who’s left, and what are they interested in?” he asks.
It could be opera, it could be specialized documentaries or sports or—an increasingly popular area—content related to videogames. Mayo reports that alternative programming events throughout 2015 would regularly earn between eight and twelve times what the film they replaced would likely have earned in that same slot. It has to be done intelligently, of course; not everything works, and you have to know your market. But to ignore potential sources of revenue in favor of an 11 a.m. screening of Transformers 5 with 12 people in attendance is to leave money on the table.
“There should be room, at some point in the run—I’m not saying the first two weeks—to start taking that screen and thinking of it as a channel,” says Mayo. “Why are we playing an animated children’s feature at 9:30 on a weekday night? Why not add some shows on the weekend when they can come, and get something else that can be played during the week? That’s exactly what alternative programming is.”
Playing with Food: Rob Lehman, VP, Food and Beverage
If there’s one single object that exemplifies the soul of Carmike Cinemas under David Passman—the willingness to experiment, the importance of encouraging everyone to share their ideas, substantial success under a modest-seeming hood—it’s plastic, costs $20 and is filled with salty deliciousness.
Meet the popcorn bucket.
“When people think of Carmike, they think of the bucket,” says VP of food and beverage Rob Lehman. For a $20 fee, Carmike guests get a bucket that, all through the year, will let them get $4 refills. As of approximately a year ago, each bucket also features a QR code that, when scanned, gives customers a different concessions deal each month. It’s perhaps overly dramatic to say that the birth of the bucket is shrouded in legend, but it’s also true; I heard two or three different explanations as to who came up with it during my meetings with Carmike executives. This exemplifies a key Carmike philosophy under the Passman regime: that each theatre isn’t just a theatre, but a laboratory, and it’s a responsibility shared by the entire company to come up with innovative new ways to maximize profit. Do you work in marketing, or real estate, or investor relations, and have an idea for a concessions initiative that might work? David Passman wants to hear it.
While the origin of the popcorn bucket might be a mystery, what’s certain is that it’s been a massive success for the chain. “[Customers] love it,” explains Lehman. “When I started here in 2013, everyone was talking about the bucket. I’m a little traditional, so I’m like, ‘What?’ But I started looking at the data, and I said: This is unbelievable!” Guests love it, and so do studios, which recognize the bucket’s marketing potential: “People will walk through malls with their buckets to go to the theatre.” This year, it’s Sony getting in on the action with an Angry Birds bucket.
The popcorn bucket isn’t the only example of Carmike experimenting with their concessions offerings to better serve their guests. There are three dine-in food brands—Ovation, Bogart’s Bar & Grill and Mugs & Movies, with five, two and three locations, respectively—that are subject to tweaking so as to better reflect the needs of each particular market. “There’s a feeling-out stage,” Lehman explains. “What’s working? Is the menu too big? Is it too small? Are we offering the right items? Is it taking longer to cook a certain meal, versus another one? You tweak the hours, also. If there’s an office building around the corner, if we’re open during the lunch hour, can we get [the people who work there] to come in? Every theatre is different.”
There’s room for innovation with traditional concessions offerings, too. For example, there’s a “candy of the month” at Carmike Cinemas, and the employee that sells the most per theatre wins a cash incentive. Providing hot food like hot dogs and tenders is also something that Lehman is playing around with: “In early 2015, we started putting auto-fryers in our theatres… Our return was really nice. The executive team said, ‘Well, how many more can we do?’ They gave me a budget. I rolled out probably 20 more last year, and then they gave me another budget this year to roll out another 20 to 25.”
Expanded alcohol options—whether beer, wine or cocktails—have also brought in returns. For Lehman, who’s been in the movie theatre business since joining manager training at Kerasotes in 1992, wrangling the proper alcohol licenses represents one of the more challenging parts of his job. That’s because, though the industry as a whole has embraced expanded beverage options, government regulation is slower to catch up. The biggest barrier is “perception,” he explains; many people think a place where parents take their kids for the newest Disney feature shouldn’t serve alcohol. To the naysayers, “usually one of the first things we say is ‘Find the nearest Chuck E. Cheese’s.’ They’re family-friendly, too, and they have beer and wine!”
“We do many little oddball things” to get liquor licenses for theatres, Lehman notes. In one theatre in Washington, at the request of a county employee, the ushers are equipped with night-vision goggles, so they can see if an adult is giving liquor to someone underage. And “in the state of Indiana, you have to have 25 servings of soup available for patrons.” Soup? “Soup.” Why? “We don’t know. Somewhere, a long time ago, it got put on the books.” Still, mandatory soup laws aside, “we’ve been very happy with the rollout of alcohol,” says Lehman. “We have 57 theatre licenses. Full liquor licenses, I’d say we probably have ten or eleven. The rest is just beer and wine… I’d say we have maybe 40 other locations [in the midst] of getting licensed. It’s a process.”
All Systems Engage: Rob Collins, Senior VP & CMO
At the time of our meeting, senior VP and chief marketing officer Rob Collins was Carmike’s most recent hire, having joined the family in December 2015.
In a theme that would be repeated frequently throughout my interviews with Carmike executives, the presence of David Passman was a major factor in Collins accepting the job in the first place.
“A lot of times you pick your job, and you can have a horrible boss. It’s very smart to pick your boss, and [then] make sure the company fits what you need,” he explains. “Once I met with David, we connected well because we have a similar passion for the consumer. He’s direct, he has a vision, and he’s respected and smart. And he’s a nice guy! All of those things together make him a great person to work for.”
Collins, whose professional history includes executive stints at Turner Entertainment Networks and a variety of theme parks, was new to theatrical exhibition, if not to entertainment marketing as a whole. The rollercoasters in the exhibition industry may be metaphorical rather than literal, but Collins was still able to bring knowledge from his days at Paramount Parks and Universal Studios Orlando Resort—plus Focus Point Advertising, a boutique ad agency with clients in the theme park, hotel and water park arenas—and apply it to his new position.
That’s particularly true when it comes to social media, a crucial component of 21st-century marketing. “Social media, when activated properly and tied to metrics, can be a real advocacy piece, which helps with retention,” Collins notes. “In the theme park business, we used to chop it up into three segments. It’s the anticipation of the visit and all the things that go with that: all of your customer touchpoints and all of your planning tools and all of the excitement that you’re building. Then, it’s the actual visit, what the experience is. And finally there are the memories past the visit; what you remember and how, what and where you share it.” A two-hour movie is a much more modest piece of entertainment than a trip to Disneyland, but the principle still holds: Each is an experience, and one that customers should be encouraged to engage with via Facebook, Twitter and the like.
To that end, Collins has as one of his major goals at Carmike “totally revamping our approach to social media,” namely by utilizing metrics to interact with customers in an organic, rather than forced, way. “You will never see my marketing department use the phrase ‘Like us on Facebook,’ because that’s not engagement,” Collins argues.
Moviegoers these days—indeed, customers in general—expect “mass customization,” Collins explains. “You expect the companies to know you as an individual. Look at the Amazon model: People that bought this also bought this. They give relevant content based on search behavior and purchasing behavior. There are elements of that that we can bring into the cinema industry as well.” Someone who mostly buys tickets to superhero movies, for example, probably won’t be the one to go after for the next rom-com. “As we collect our data better, we can understand [customers’] behavior and preferences better and really meet them where they are… You want brands that understand you, brands that are aspirational. Those are the kinds of brands you want to connect with.”
It’s an exciting time at Carmike, one where there’s a lot of room for experimentation. Carmike “has never had a marketing leader who reported to David,” explains Collins. “The emphasis on marketing and the opportunities are laid out. I’m really looking forward to that. There’s a lot we can do here.”
Bigger and Better: Richard Hare, Senior VP & CFO
Of all the Carmike Cinemas executives Film Journal International spoke to, CFO Richard Hare is probably the one whose professional background is furthest away from the movie industry. “I was in the copper tubing and coal businesses before, and you don’t really talk about that at cocktail parties very much!,” Hare laughs. “People love talking about the movie business. It’s a lot of fun.”
Since joining the company in 2006, Hare has overseen the finances during a very dynamic—to put it lightly—time in Carmike’s history. From 2009, when Passman became CEO and president, to 2012, “we worked really hard to turn the company around financially,” Hare recalls. “We had to tighten our belts, reduce costs. We sold off old theatres, underperforming assets and surplus property. We scrimped and saved, and we paid down about a third of our debt. We had to get our house in order, and then after we got that done, we went out and started growing the business. We raised some equity, about $140 million worth of capital. Then we started going out and buying companies.”
Acquisitions of the Sundance Cinemas, Rave Cinemas and Muvico Theaters brands have been extremely successful for Carmike. And “we have a hundred million dollars cash-on-hand, approximately, that we can use to go out and buy more companies,” Hare adds. Of course, with the AMC deal now on the table, Carmike may be the one getting acquired—but, speaking with Hare before that potential merger was announced, growth through acquisition (albeit in a different direction) was still on his mind. “The motion picture industry is about 40,000 screens. It’s not really growing. We want to grow our footprint and continue to acquire smaller theatres and consolidate that way.”
Passman, Hare notes, used to be a CFO himself—of Harland Printed Products and Harland Checks, divisions of the John H. Harland Company—a fact that’s “been very nice for me. We speak the same language.” Part of the sea change Passman instituted at Carmike, Hare notes, is to take a “very aggressive approach” towards improving investor relations. “We’ve gone to hundreds of industry investor conferences, meeting with investors. [We’re] really active for a company our size. [Passman] has been instrumental in that.”
Another key part of Carmike’s strategy for success is maintaining close relationships with studios. Passman’s industry connections, particularly through NATO, have been invaluable for Carmike as a whole. “A lot of guys will focus on turning the business around, and that’s all they want to do,” Hare explains. But “David has this ability to turn the company around in a lot of ways: finances, culture, re-establishing good relationships with our studio partners and being a leader amongst our peer exhibitors and our trade associations. He’s done a fantastic job.”
For Hare’s part, it’s the community aspect that’s the best part of working in the exhibition industry (and the one that most sets it apart from copper tubing). “Half of the screens in North America are owned by four theatre chains. The rest are regional,” he explains. So, going to conventions like CinemaCon, you get “a really great cross-section of America. It’s not all big companies. You meet a lot of real people. It’s a family-type atmosphere and culture. The greatest people in the world, in this industry.”
Room at the Top: Tom Wilkinson, Director, Real Estate and Development
Before the concessions, before the technology, even before the films, you need buildings. That’s where director of real estate and development Tom Wilkinson comes in. Previously an executive at Bass Pro Shops and Lowe’s Home Improvement—whose building template Wilkinson generously describes as “a box”—Wilkinson is responsible for “identifying sites and dealing with landlords and developers” for new-build theatres, plus overseeing restorations for theatres getting added dine-in facilities.
Currently, the majority of Carmike’s theatres exist in smaller markets, out of the way of bigger multiplexes like AMC and Regal. However, “especially with our acquisitions”—and, if it goes through, the merger with AMC—“our footprint is increasing,” Wilkinson notes. “We’re in Seattle, we’re in L.A., we’re in San Francisco, we’re in Chicago, we’re in Tampa and Miami. There are some big markets. In some markets we’re going up against AMC, in other markets we’re going up against Cinemark, and in others we’re going up against some of the mom and pops across the country… It’s a mature industry, so there’s a lot of competition out there. We want to make sure that all the locations work.”
The variety of factors that go into the success of a theatre means that the process of choosing a new location “takes a lot of research. Most of what we do are leases, so we’re committed for a long time.” In addition to competition, the demographics of a potential market are a huge consideration. Here, having an analytical thinker like Passman in Carmike’s corner is a very valuable asset, notes Wilkinson. “He goes through all the data. He’s been very willing to listen and analyze, to think outside the box and get that competitive edge. But, again, it has to be right for Carmike. He tasks everybody involved with basically proving to him that it’s going to work. And if you can do that, then let’s give it a whirl.”
One of the things that sets Carmike apart from other exhibitors, Wilkinson notes, is that “our buildings are some of the most efficient buildings out there. There’s not a wasted square foot in them. We’re paying our rent, every square foot, so we don’t want to waste a single inch of it. That started before I got here, but we’ve taken it to the next level.”
At the same time, “efficiency” can’t mean “cramped”—no one wants to spend their journey from the parking lot to the theatre and back again shoulder-to-shoulder with strangers. To that end, says Wilkinson, “everything is painstakingly reviewed. If you’re going someplace to pay money, you don’t want to be waiting in line. You want people to get in and enjoy the show. We want to provide our customer with an experience that lets them forget about the outside world for two and a half hours. We do that, obviously, through operations and the efficiency of getting folks in and out. But we also do it with the efficiency of our building.”