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Lisa Milne, the owner of the Royal Theatre in Trail, B.C., says she can no longer maintain Monday or Sunday hours due to a combination of issues that are posing a serious challenge for theatres in small markets across Canada.DAVE HEATH/Handout

After taking over the Royal Theatre in 2009, Lisa Milne kept the cinema running seven days a week, 363 days a year – closing only on Christmas and one day in the late summer for maintenance.

But today, she often can’t be bothered to maintain Monday or even Sunday hours at the single-screen movie theatre in Trail, B.C., which serves the Kootenays region.

“We’ve got that relationship with the community – I’m the same person serving you popcorn who owns the building, and who you might also see during school at drop-off. But right now, it’s a hard slog,” Milne says. “Things need to be looked at differently for us to be able to not just thrive, but survive. The system is broken.”

Milne is far from alone. Thanks to a conflagration of challenges both specific to the film industry (Hollywood strikes delaying new releases, a reduction in overall studio output as companies focus on beefing up their streaming services) and those affecting businesses across the country (inflation, the rising cost of living), the Royal is one of many independent Canadian theatres at an inflection point. And it is a situation that may see small-market cinemas – the kind of businesses that act as crucial community hubs, many of which are situated in historic buildings – disappear entirely.

Last week, the Network of Independent Cinema Exhibitors released a new report noting that the country’s indie theatres – exhibitors not part of multiplex giant Cineplex CGX-T, which has a market share of about 75 per cent, or its nearest competitor, Landmark – are in a state of “crisis.”

After asking members whether they felt “close to making tough decisions about the future of your venue,” NICE leadership received distress calls from more than two dozen exhibitors. Concerns ranged from failure to pay back Canada Emergency Business Account loans to being locked out of this summer’s Barbenheimer phenomenon because of “unfair zone restrictions” (a vague system that enforces which cinemas can play which movies in a certain geographical area).

But the most pressing issue, according to exhibitors, is dealing with increasingly restrictive demands from the studios and distributors that provide films to theatres. Historically, distributors split the box-office revenue of a title 50-50 with theatres, with run-of-engagement terms that provided some measure of flexibility for exhibitors. For instance: If a single-screen venue booked a children’s film for a week-long run, it might be able to program a more adult-targeted film during the evenings to avoid playing to an empty house.

Today, though, theatre owners say they are facing box-office splits as high as 64 per cent in favour of studios, as well as demands for “clean run” arrangements in which exhibitors who want an anticipated title must agree to play that movie exclusively for as long as four weeks. No matter if the title flops on opening weekend, or if it targets a demographic that makes either matinee or evening screenings redundant.

“When Avatar: The Way of Water came out, Disney demanded that we run it for four weeks – no other movie could run in our cinema. I already had a live event booked, a standup comic, and I was pleasantly informed that I’d have to cancel that contract or cancel my request for Avatar,” recalls Shaun Aquiline, who operates the single-screen Gem Theatre in Grand Forks, B.C. “A four-week run is a lot for us. We only have about 4,000 people here, and we know our markets.”

In Humboldt, Sask., the owner of the two-screen Reel Attractions cinema faces similar dilemmas.

“We were unable to get Barbie when it first opened because we were locked into the new Indiana Jones by Disney, who forced us to keep it longer than we would have otherwise,” says Mike Yager, who serves a market of about 20,000, with the nearest Cineplex and Landmark locations an hour-plus drive away in Saskatoon.

“If you’re a big multiplex, it’s easier to move things around to different screens. But when you’re a small theatre, you’re not as in control of your own business as you’d like.”

Andrew Connors, artistic director of the non-profit Yukon Film Society, which took over the two-screen Yukon Theatre in 2021, says studio flexibility is critical if distributors want their films to reach communities outside urban centres: “I don’t know if the studios care, but they have to understand the situation for independents in this country is incredibly precarious.”

Or as Milne of Royal Theatre puts it: “I haven’t opened a Universal film in a year other than Super Mario Bros. I haven’t opened a Disney film other than Avatar. They’re just bullies, and the relationship has to get better.”

Representatives for the five major Hollywood studios operating in Canada – Disney, Warner Bros. Discovery, Universal, Paramount and Sony – all either declined to comment or did not respond to requests from The Globe and Mail.

“The concentration of both content and cinemas breeds a certain kind of brinkmanship, and it’s usually left to those at the top of those heaps to deal with those kinds of discussions,” says Noah Segal, co-president of independent Canadian distributor Elevation Pictures and head of the Canadian Association of Film Distributors and Exporters, whose membership includes such fellow independents as VVS Films, LevelFilm and Vortex Media.

“When you think of small-market Canadian theatres and them getting a fair shake, you have to ask yourself whether monopolies and/or corporate concentration is the best thing.”

One lifeline that could help indie theatres would be pumping up Telefilm’s Theatrical Exhibition Program back to its pandemic-era strength, when theatre owners who played Canadian films received upward of $50,000 each. Currently, the fund sends a maximum of $5,000 to eligible theatres. That pales in comparison to the Quebec model, in which Société de Développement des Entreprises Culturelles continues to support theatre owners with between $25,000 and $60,000 annually – though that province’s box office for homegrown cinema is many times greater than the rest of the country’s.

“Every theatre is grateful for any amount, and you don’t want to sound rude or selfish and you appreciate whatever you get,” says Aquiline of Gem Theatre. “But as we’re still dealing with the after-effects of the pandemic – the economy, how people’s viewing habits changed, how the studios put out films – it’s not enough.”

In an interview, Telefilm’s executive director Julie Roy sympathized with exhibitors’ plights, but noted that the support program had access to emergency funding during the pandemic, which is no longer available.

“We have to look at the notion of discoverability of Canadian film holistically, and how we want to modernize our program,” Roy says. “It’s difficult for us to come up with answers right now because our main priority is securing the confirmation of Telefilm’s own funding as a whole.”

In the meantime, theatre owners will keep pumping out the popcorn while hoping for a Hollywood ending.

“Just because we’re a small town doesn’t mean we’re small-minded – we want these big movies as much as the folks in the big cities. But if there’s no flexibility with studios, we’re going to lose our audiences,” says Milne of Royal Theatre, who notes that she undertook a multimillion-dollar renovation in 2020 as studios were urging exhibitors to enhance their facilities.

“There has to be a new model, or they’re going to lose us.”

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