Southwest Showmanship

Aug. 01, 2003

-By Kevin Lally


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Even a dreamer like Dwight "Red" Harkins couldn't have imagined that the theatre company he started as an 18-year-old at the height of the Depression would be thriving in 2003 as one of the top 20 circuits in the nation. Celebrating its 70th anniversary in September, Harkins Theatres has grown under the leadership of Red's son Dan to 259 screens in 22 Arizona locations, and is poised to expand beyond that state's borders in the coming years.

The colorful Harkins saga began with the 16-year-old Red Harkins' quest for a career in Hollywood. "My dad ran away from his home in Cincinnati on a motorcycle," Dan Harkins recounts. "He'd skipped three grades, so he was a senior in high school when most of us are freshmen." With money he earned from his own printing business, Red bought a Model A car, which he then traded for a Harley. The restless teenager never made it to Hollywood; instead, he settled in Tempe, Arizona, where he learned about a downtown movie theatre that had been shuttered by the local bank.

"The operator had over-invested in a new invention called talkies," Dan Harkins explains. "And my dad simply picked up the lease where they left off, and reopened the theatre with a $50 down payment he earned from a dance band he led called Einstein and the Eight Atoms. (Dad played lead violin and sang through a PA system that he built himself.) That theatre, the State Theatre, was the birth of Harkins Theatres on September 22, 1933. At age 18, he put together the team to run that theatre and ran it through the Depression, and he built a new theatre around the corner that opened in 1940 called the College Theatre—it's still open today as the Valley Art. We just spent a million dollars to renovate it, as a tribute to my dad, and to the support we've gotten over the years from Tempe and the surrounding areas."

The enterprising Red Harkins was much more than a local exhibitor. "My dad went on to become an inventor," Dan notes. "He invented FM multiplex, which is the system by which you have stereophonic broadcasting on both television and radio. He also started the first FM station in Arizona, and the second TV station. He was really quite an innovator. If you asked him, 'Hey, Red, what do you do for a living?' he wouldn't say he was a businessman. He would say, 'I'm an engineer, and I'm also a showman.' He taught me the meaning of showmanship at a young age."

Red brought a number of innovations to his theatre business, installing glow-in-the-dark carpeting and electronically controlled drinking fountains at the College, along with headphones for the hearing-impaired. Recalls Dan, "The most important thing he said to me was, 'Satisfaction is your enemy—whatever you do in life, you should be constantly looking for ways to improve.'

"Most important of all," Dan Harkins declares, "he was a great dad and my best friend."

In 1973, Red Harkins opened his fifth theatre, the three-screen Camelview in Scottsdale. One year later, he died of emphysema. Dan, who was already working as the chain's general manager, left his pre-law studies at Arizona State University at the age of 21 to take over the family business. "He wasn't that sick," Dan recalls. "I thought my dad would live another 50 years, but he died at the lean age of 59."

In the midst of coping with his loss, Dan Harkins also discovered that "the company was not in great shape. My dad was able to keep it going because of his genius and innovation—he always found ways for the company to keep its nose above water. But after his death, our CPA said, 'You know, you are the textbook definition of bankrupt. On your balance sheet you have more debt than you have assets—that's called being bankrupt.' And I said, 'I didn't get that far in college, I didn't take that accounting course that defined bankruptcy. So I just don't know any better—I'm going to keep on running this theatre chain for the love of my father and the love of the business.' I stayed focused, and for the next eight or nine years was really living from paycheck to paycheck. Looking back on it, I should have been terrified."

But Harkins also had his father's legacy to tap into. "Our vendors and creditors and the media all worked with us because they knew my dad. It was a nice community feeling: 'Hey, let's help Dan—his dad died young and he wants to make a go of it.'"

Dan's enthusiasm for the theatre business also surely helped him through those rocky times. "There's a sense of achievement one gets from operating a movie theatre that you get nowhere else in the world," he declares. "If you're building a building or creating a product, you wait many months or years to get a sense of achievement, but in the theatre business you get it every time you open a new film. You have brought thousands of people through your doors and entertained them; you may have created new romances or even families—people get married from their first date at your theatre."

Harkins' commitment to his customers did not go unnoticed. He won the United Motion Picture Association of America's "Showman of the Year" Award an unprecedented three times, and was twice named Arizona's "Outstanding Showman of the Year." Says Harkins, "Exhibition companies who do not talk about showmanship, especially with their marketing department and their managers, are making a big mistake. Showmanship is an all-encompassing word—it means that you are a good citizen, a good leader, and a good marketer. It employs all the highest quality and integrity it takes to have the community look to you as their venue for entertainment, all the time."

To show their appreciation for their customers, "annually we give to charity over $600,000 in resources. Usually it's in the form of PSA screen advertising, but we sometimes write a check or help with a fundraiser. Our main focus is helping humankind, like the Boys and Girls Club, Big Brothers and Big Sisters, and the YMCA."

On a less lofty level, Harkins is something of a pioneer. He believes he may have been the first theatre owner to install video games in his lobbies. "I came to the very first ShoWest convention in February 1975, not only as an exhibitor, but as an exhibitor in the trade show," he recalls. "I sold enough video games at that trade show to finance my next theatre expansion. It helped me build a twin theatre."

In 1977, Harkins filed an antitrust suit alleging that the national theatre chains and major studios were effectively denying his circuit access to the top films. The case was finally settled in 1991, when Harkins received a satisfactory out-of-court settlement. From that point on, the chain grew substantially, building deluxe new complexes and acquiring 41 screens from Mann Theatres and 21 from General Cinema. By 1997, Harkins had entered the megaplex era, opening such huge venues as the Superstition Springs 25 in Mesa and the Arizona Mills 24 in Tempe.

Now, for the first time, Harkins Theatres is looking beyond its Arizona niche. "We have a theatre site in Albuquerque which we bought but haven't developed yet," Harkins reveals. "We're negotiating now in different states—we probably have 22 different negotiations going on, from California, Washington, Colorado, all the way to Oklahoma."

In the next five years, Harkins notes, "I hope to more than double our screen count, ideally through building new theatres, but I'm also looking at acquisitions. We grew over the years by acquiring the General Cinema and Mann theatres in the Phoenix market. But the more affordable way to expand an exhibition company these days is through theatre construction more than acquisition.

"With each new theatre, we put in the latest and greatest innovations. We don't come up with a prototype and say that's going to be the next 12 locations during the next two years of construction. Instead, we look at every one and say: How can we improve it? Our director of engineering Kirk Griffin, executive VP Wayne Kullander, VPs Tim Spain and Mike Bowers and I are always looking for new and better ways to make Harkins Theatres the venue of top choice in every market we're in. In the next five years, we want to get past 500 screens, but 500 of the best screens in the markets we're in. We are competitive—we can prove statistically that we gross better and are more supported by moviegoers than our competitors, which are often national circuits that are many times our size."

In fact, Harkins Theatres is the 12th largest circuit in the country, when measured by box office. "I'm overjoyed by how much business we do," Harkins enthuses. "We entertained over 14 million patrons last year, and that's more than all the sporting venues in Arizona, including the Diamondbacks, the Suns, the Cardinals, the Sun Devils and the Wildcats all put together. Throw in the Grand Canyon and we still have a higher attendance. And because of our snack bars, we probably feed more people than anybody in Arizona."

Dan Harkins is particularly excited about the circuit's latest venue, the Scottsdale 101 in North Scottsdale. "It's a 14-screen complex, but one of the screens is a special, beloved event for Arizona—a replica of the Cine Capri. That was a single-screen, palatial Cinerama theatre that opened in 1965—in fact, Wayne was its first manager. In the NATO Encyclopedia of Exhibition, you can see Wayne's Falcon parked in front of the theatre. The Cine Capri spurred one of the most amazing historical preservation efforts in our state. The owner and developer gave us notice that the theatre would be closed and torn down for a high-rise. I mentioned that on a radio show one day, and moviegoers wouldn't take no for an answer—they came up with a statewide petition drive and collected 268,000 signatures, the largest petition drive in the history of Arizona, and these were not professional petitioners. These were just people who took forms to work, to school, to their neighborhoods. It didn't save the theatre, but folks didn't forget about the Cine Capri. We own the brand, and we've recreated it. It's a giant auditorium, a 600-seat stadium, which is the equivalent of an 800-seat sloped-floor auditorium. The old theatre had 14 surround speakers; this one has 32, with over 22,000 watts of power. It has our signature high-back rocker loveseat, with more spacing than any other theatre in town. And a gigantic screen.

"The neighborhood is very high-end, and the theatre's on a freeway that can reach the whole valley—anywhere in the valley, you can get to the theatre in 30 minutes, and most of the market within 20. It's the place to see a movie. It will be to Phoenix what the Cinerama Dome is to Los Angeles."

Another upscale Harkins tradition is the programming of art films at its Camelview venue in Scottsdale since 1974. "The Camelview has become one of the top five art houses in the country," Harkins declares. "To make that work in sun-drenched Arizona, where art films per capita don't do as well as in the cloudier, coastal markets like Seattle, it's amazing to me that 29 years of dedication has finally paid off.

"We debut 70 to 90 exclusive titles a year, and 90 percent of those titles still have to be coddled and marketed. Not everything is as lucky as Crouching Tiger. We're the only circuit our size I know of that has a marketing department focused on doing that. When there is an Italian movie, we'll call up the Sons of Italy; when there's a French film, we'll call the Alliance Francaise. When there's an Australian film, we'll dig up all the native Australians who live in Arizona."

In keeping with their Southwestern environment, Harkins theatres are often designed with natural stones like marble and granite. "We're the only theatre chain I know of that makes concession stands out of granite slabs," Harkins notes. "It's very expensive, but we're not redoing the snack-bar countertop every seven years. That demonstrates our permanence—we're not building these theatres to turn around and sell them in a decade, we're building them for as long as they'll live in the marketplace."

The offerings at those granite snack bars have been strongly influenced by Dan's wife Karen, a chiropractic doctor and nutritionist. "She started influencing our snack bar almost as soon as we got married, because she realized there were things in the snack bar she couldn't eat. Our popcorn cooked in coconut oil, using artificial flavorings mixed with the salt, was contrary to her diet. We changed it to canola oil, using pure salt, and consequently made our product much healthier. In addition, we started carrying juices. It's now very commonplace, but I believe we were the first theatre chain to sell bottled water. We have many products in our snack bar that are healthy, thanks to Karen's influence."

The Harkinses have two children: Danielle, 11, and James, who is nine. "They seem to love the theatre business," Dan observes proudly. "They don't mind helping clean up an auditorium after the show. Whatever they want to do that makes them happy is fine with me, but I hope they'll be the third generation to run Harkins Theatres."

Harkins knows firsthand that the theatre business his children may enter will be very different from the one that thrives today. "We had one of the first digital-cinema prototypes, one of the first 12 or 16 put into the marketplace. We split the cost with Buena Vista, and we have it at our Arrowhead theatre. When I first saw digital cinema work at a NATO board meeting in the fall of 2000, I felt like I had just seen the newest invention that would totally change our industry. I realized that my children probably wouldn't touch film, they would never breathe the fumes of film cement or have to untangle film-splicing tape from their clothes. And there will be no more ordering new prints on a Friday morning because you suddenly have a hit. With the push of a button, you can flip to a bigger auditorium. All these great conveniences that accommodate what's best for the moviegoer and the industry were just flashing at me. I assumed it would change within five years. But here we are three years later and we're not even near it yet, because the projector cost is so high. The impact is going to be very positive, but the sector that will benefit the most from it should pay the most for it—which is distribution."

Harkins notes with amazement that his circuit is the fifth-largest private-sector employer in Arizona, with over 1,500 employees, and probably the largest employer of teenagers in the state. Much of the credit for the company's phenomenal growth, he says, goes to his executive team, which has remained remarkably constant over the years.

"I think this team could easily run a circuit ten times this size," Dan Harkins declares. "And I hope we're given that chance some day."


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