Raving about moviegoing: Michael Lambert believes in theatres as part of the media mix
“I think exhibition is unique in the media mix in that it is the only one that requires you to get off your butt and into your car to drive to see a movie that is worth going to see. Creating the very environment for that experience is the business I am excited about being in.”
Meet Michael Lambert, one of the key investors in and vice chairman of Rave Cinemas LLC. “There are tremendous opportunities for exhibition in the future. It’s a very exciting time,” he declares. “The rebuild into stadium seating has made the theatre experience vastly different than it used to be. No more walking into a flat or sloped-floor auditorium with chewing gum on the floor and you couldn’t see past the person in front of you. It’s just a very different experience today in digital sound and picture clarity, in the quality and variety of food offered at the concession stand: There’s a lot that makes it fun!”
In Rave’s chief executive officer Tom Stephenson, he has found “just a terrific, innovative operator” to have all that fun with. “He’s just one of the few really aggressive, entrepreneurial and enthusiastic exhibitors. The theatrical business has many sort-of sleepy companies that are not innovators and are not reinventing themselves.” The Rave theatres, by comparison, Lambert finds to be “really beautiful, exciting, bright and colorful environments that have great energy. They are all digital, have 3D everywhere and all the other state-of-the-art picture and sound features, fantastic seats…that’s what got me excited about the deal.”
The founding partner of investment and management company Lambert Media Group began his career in 1974 when he joined Viacom in New York City to help launch the Showtime and Lifetime cable networks. His responsibilities there included the acquisition and sale of motion pictures for theatrical distribution, broadcast and cable television. The latter segments remained the focus of his executive career, with positions at HBO and with 20th Century Fox Domestic Television in Los Angeles, from 1985 to 1992, when he formed Lambert Television.
From then on, Lambert partook in what his official biography calls “several highly successful entrepreneurial ventures in media and entertainment,” many in partnership with Norman Lear and the late Hal Gaba. The 1997 sale of Lear’s Act III Theaters to KKR Kohlberg Kravis Roberts & Co. gave him his first brush with theatrical exhibition, though Lambert readily tells our readers: “By no means was I the architect of the deal. I began my entrepreneurial career with two fantastic men who later became my business partners and friends.” For those of us who don’t recall the details, Act III changed hands to a record 11 times forward earnings, resulting in a return of nearly $300 million on $18 million initial invested capital. Quite a start for getting into the movie theatre business.
In addition to Lambert’s television assets, today the Media Group also holds investments and ownership stakes in other content providers such as Concord Music Group (5,000-album catalog) and Village Roadshow Pictures (which co-produces and co-finances six to eight movies annually). Further on the theatrical side, Lambert invested in Gold Class Cinemas. Over the next five years, the joint venture between Village Roadshow Ltd., Act III Entertainment and Lambert Media Group plans to have over 50 premium luxury locations across the U.S.
Calling upon his knowledge of all aspects of content distribution, Lambert has “a much different view” about showing films in movie theatres than as double loss leaders for theatre operators to sell popcorn and for studios to market their films for ancillary revenues. “I think the exhibition business probably stands alone as one of the remaining parts of the media mix which is not being dis-intermediated by other technology,” he explains. “In other words, we are seeing a slicing and dicing of viewing content on various screens for personal use by the consumer. Whether that be laptops, the iPhone, PCs or flat screens in the home, the windows are changing and the availability of content is becoming more consumer-driven.” Going to the movies, by comparison, “is unique and not a victim in the same way as these other distribution forms are. So my view about wanting to play in the content distribution business is that exhibition is the best way to do it.”
Lambert believes that consumers “taking greater control of that part of the distribution mix [and companies] making it more and more convenient for them is not economic for the content owner… We have made a very good living over the years with making people sit on their couches, watching TV and interrupting them with commercials. That was a good business for the content creator and, maybe, not quite so terrific for the consumer.”
As Lambert and other media providers are continuing to sort that out in the television mix, he remains steadfast when it comes to the theatrical experience. “There is a great opportunity to make this environment even more compelling for consumers. At the end of the day, when you are tired of looking at your BlackBerry and flat-screen TV, you say, ‘Honey, let’s go to the movies tonight’…to have that experience of sharing something that is funny, scary or adventuresome, romantic with other people.”
For Lambert, the communal experience goes back to “when the circus came to town in the old days. The wagons rolled in and you knew you only had three days or so to see the elephants under the big top before those wagons would roll on to the next city. If you didn’t see them when they were there, you missed it. That call to action exists today in the theatrical exhibition business. And it doesn’t exist today in other forms of digital content distribution.”
At the same time, “the whole area of digital distribution has opened up new opportunities for alternative content in cinemas and we’re excited about that.” Naming the capability for theatres to go live for the first time and opening up for “different uses during an off-time where you normally wouldn’t have traffic in the theatre,” Lambert is further excited about “treating consumers to different experiences while they are in the theatre. We’re looking forward to working with some of the studios to sell merchandise that is connected with films,” he elaborates. “Imagine leaving the emotional experience of a movie and wanting to buy a plush animal that is connected to one of the characters in the film.” He also argues that while Burger King and McDonald’s make happy meal-type offerings, exhibition is “not yet doing a very good job at that. Those are all opportunities to work with our studio partners to create a new and exciting revenue stream for both parties. I come from a studio background and do understand what their needs and interests and those of the content creators are.” With the Rave Cinemas assets, “this puts us in a unique intersection where we can serve the needs of both constituents and create a lot of value on the way.”
Being at the intersection, which window does he actually prefer to look out of? “I don’t know what the right amount of time is,” Lambert admits. “We all have A.D.D. today and what used to be nine months is now six or even four months.” But whatever the case, “it has to remain something special. The minute you put a movie on television first, it becomes a made-for-television movie… If it is available on Hulu.com anytime you want it, there’s no call to action. I think the long tail of value that comes through the subsequent windows over the years is created [in the movie theatre]. You get something special when you subscribe to HBO or download video-on-demand. And it is made so by the perceived value that is created because it was produced for the theatres. That perceived value is what the studios are so masterful at creating with their campaigns. They make you want to do that. It is a theatrical experience—one that is all about going out of the home to see and experience something special.”