This year’s Larry D. Hanson Award of Excellence goes to a fitting honoree: Joel Davis of Premiere Cinema Corporation and the Independent Cinema Alliance (ICA; cinemaalliance.org). At the ICA, Davis plays a key role in the group’s Cinema Buying Alliance (CBA), meant to keep costs down for independent exhibitors; the CBA is a continuation of the Cinema Buying Group (CBG), which in the early years of the 21st century was instrumental in helping smaller exhibitors afford the conversion to digital projection. The CBG, fittingly, came about in large part due to the time and effort put in by Hanson, a tireless advocate for the cinema industry. Here, Boxoffice Pro speaks with Davis—along with Bill Campbell (ICA chairman) and Byron Berkley, both active in the CBG’s founding—to trace the creation and evolution of the Cinema Buying Group. This interview has been edited for length and clarity.
How did the Cinema Buying Group first come into existence?
Bill Campbell: It must have been around 1999, in the halls of the Geneva Convention, actually. Byron and Larry Hanson and a lot of independent exhibitors were sitting there trying to figure out how we could get pricing like the big guys. Not on film rental, but all the other things it takes to run a cinema—bulbs, toiletries, things like that. [The CBG came into being] through Larry and his volunteerism. He was such a big volunteer; he would take a project and run and run and run with it.
Byron Berkley: It goes back a long, long time to the days when Larry Hanson would hold court, if you will, late at night at a bar wherever NATO was having one of his meetings. Larry would be surrounded by people like Bill and myself and a lot of others. We would discuss all the issues of the industry and all the problems that we were confronted with, and then we would try to solve them. That’s really where it started: at a bar somewhere where NATO was having a meeting.
Bill Campbell: The problem was, every independent exhibitor is set in his ways, and it was a hard sell. We talked to a few vendors, but it’s a chicken-and-egg thing. We had some growing to do. We had a couple of programs that did take off. A lot of companies did work with us, like xenon bulbs for the projectors.
We had a little traction, but it never really, really took off until 2008 or so, when digital cinema started coming on. That became a major threat to our existence as independents. [The major domestic theater chains] had started working on their [virtual print fee] programs. That was going to leave the little guys out. With the help of Wayne Anderson, we started touting the idea that smaller exhibitors needed their own VPF programs. NATO saw how important that was for the whole industry, to keep independents alive. As much as it sometimes seems like there are always fights, independents need the big guys, and the big guys need the independents. You can’t lose one piece of that infrastructure and expect it to exist profitably.
NATO took the CBG under its wing and formed a nonprofit for it inside of NATO, where we started working on the VPFs. We had 7,000 screens of interest back then. We didn’t get all 7,000 signed, but we at least pushed forward the agenda of VPFs for independents. There were three or four different deals—it was a bit like herding cats. We couldn’t force everybody to do our deal, but at least we opened it up for the industry.
The conversion to digital cinema was going to cost theaters upwards of $100,000 per screen. That’s a really big nut for us to take on with no help. And, to be honest, not a lot of increase of butts in seats. There was not a lot of advantage to digital in terms of us making more money. The studios were going to save tons and tons of money [from not having to strike and ship physical prints]. The idea was to find a way to use some of that savings to help us pay for the digital conversion. It was a good idea. You’re asking somebody to help pay for things, so things get contentious, but it seemed to go well. It was easy for the studios to strike deals with large circuits in the big towns, because they know they’re going to make enough money. In the marginal towns, it got a little harder. The cost of that print fee for the studios was more challenging. That’s where the CBG stepped in.
By the time we really started pushing the idea and getting to a point where we chose our integrator—which ended up being Cinedigm, Access I.T. before that—there was a 10-year deal, so we were pushing hard around 2010 to 2012 [for cinemas to sign on]. Making sure the independent exhibitors knew: “This is it. You have to change, or you won’t be around. Prints will go away.” A lot of people hid. They thought that wasn’t going to happen, but sure enough, probably by 2014, prints pretty much stopped.
Byron Berkley: A lot of smaller theaters were not financially able to address the conversion to digital and all the complications that went along with that. Like going out and getting equipment financed, which was a big problem because a lot of smaller theaters couldn’t qualify for the type of financing that was necessary. That became a real concern for a lot of smaller theaters.
Bill Campbell: In 2008, things tightened up for financing. That was the big crash. The original VPF programs consisted of the integrator, Cinedigm, getting money and then deciding if that theater could support their business model. One thing we did is say, “Look, we’ll take the risk. We’ll go out and get the money.” That VPF money was paying off our notes that we went out and got, so Cinedigm didn’t have to take the risk. A town may be too small for digital conversion in their eyes, but we knew it would happen and we could find a way, because we were working with our local banks.
Joel, at this point you’re working with second-run films at Premiere, dealing with scratchy film prints. From your perspective, how much of a challenge was the digital conversion, and how did you work with the CBG to get through that challenge?
Joel Davis: We come from a little bit of a different perspective. We entered the CBG later in the game. We basically formed our own contract with a VPF deal. We brought in our integrator—which was Access I.T. at the time and ultimately became Cinedigm—and we basically rewrote the contract. We sat down with their team—Chuck Goldwater and Bud Mayo—and we basically asked for the moon. We came out of that meeting so delighted. I felt like Bud was the Godfather, and he basically said, “Give them what they want.” It was amazing.
We got through our part of the contract and did an early rollout into the digital space. We picked Barco to be our DLP company. And then we were hit with a maintenance contract. As a regional company or a smaller operator, you start really looking at expenses. Because now that you asked for the moon, you got what you wanted. And now you need a maintenance contract. The goal back then was that projectors would stay up and running 99 percent of the time. I went through the contract, as a suggestion from our CEO, and rewrote it on maintenance. I came up with a bronze program, a silver program, and a gold. We felt that this would be a better way to stomach the cost of being able to convert over to digital and to be able to handle these maintenance programs. Basically, you’re going from a world where everything was machinery, gears and grease, to a digital world, which requires a different way to handle issues.
You had this great technology, but you also needed the training. You needed to make sure you invested with a company that could provide you with the training, not just for one year or 10 years, but from now on. Technology is going to keep on getting better and better and better. What are you doing to keep up with that? Those are some of the things that we forecasted out when we were doing our conversion.
The reason why we joined the CBG: I had cut a deal with a little company called RealD, because there was a movie coming out with a bunch of blue guys [laughs], and we really needed that type of technology so that we could enhance the experience for audiences. I negotiated a contract with RealD, and I will tell you: not the very best of contracts at that point in time, because they were really the only 3D technology company in the market.
So I’m calling around, and I called one of the companies that we buy equipment from, and I said, “I really need to buy some of this RealD equipment instead of leasing it.” And he says, if you join the CBG, they have a really great contract with RealD. So I contacted the CBG, I joined, got the confidential contract, and read through it. Could not believe what I had read. We called RealD on the phone and said, “Hey, I’m a CBG member.” And they had to refund me all the money that I had spent on RealD equipment. After that, I was sold on their program. “This is the best thing since sliced bread.”
In 2019, the Independent Cinema Alliance was started, with their Cinema Buying Alliance taking over where the CBG left off. How did that come about?
Bill Campbell: A little history on why the CBA is outside of NATO now: We were still having some issues with the studios, availability of films, and those types of things. Because of NATO’s market position of representing 90-some percent of North American theaters, we as a small independent group could not have those conversations under the NATO umbrella. NATO recommended that we find a way to do that ourselves, and they offered to let us take the CBG with us to help with the finance part.
Byron Berkley: [The separation of the CBG from NATO was] a very friendly separation. A very functional separation. NATO could not, as a trade association, really enter into any type of significant discussions with the studios. By separating these two entities, it enabled the group of theaters that were most affected to be able to negotiate with the studios outside of the NATO framework. That was a very beneficial arrangement for both NATO and the Cinema Buying Alliance.
Bill Campbell: We renamed it the CBA: a buying alliance to go with our independent cinema alliance. We’re currently trying to revamp. We don’t have a major project, like a VPF program, so we’re trying to find the big line items on our balance sheets where we can make a difference. Joel has taken charge of this, and he’s bought into the program. He knows how important it can be and what a difference it can make to independent exhibitors. So he’s jumping in, and we’re trying to find programs that are going to be as substantial as the VPF program, but on an ongoing basis. That was a one-and-done type program. Hopefully under Joel’s leadership, we’ll find programs that will help us save money year after year.
What are the priorities for the CBA moving forward? What are some of those big-ticket items where it will really help cinemas save money, and is there any interest in opening it up for other types of cinemas or businesses to join?
Joel Davis: I have a great volunteer team that’s come in. We identified what we believe exhibitors are looking for most in a buying program. Of course, concessions seems to be the number one thing. The items that people buy the most, whether it be the popcorn, bags, the tubs and oil. The second thing would be equipment. You break equipment down into two categories: projection equipment and construction equipment. The last is insurance. We’re looking at each one of those line items individually and handling them separately.
Byron Berkley: I think the future of it is wide open. With the proper guidance and foresight, the association could become involved in many other areas. One of the most frequently mentioned is the Bowling Proprietors’ Association [of America]. We, as an entity, could provide services to that organization, because they’re in a very similar business as we are. We’re providing entertainment for the public. There’s an opportunity where these associations could join forces and expand their influence. There are many areas like that we could explore.
Joel, as director at the ICA, how do you work with the Cinema Buying Alliance?
Joel Davis: I would say that I’m the team leader. I’m overseeing that piece at the marketplace: what the marketplace is now and my vision of what it could be in the future. I’m laying that track and trying to build that train station so that people in the future have a direction to go in.
We hired a GPO—a group purchasing organization—to come in and help us. They have a larger team of individuals, and they’re not volunteers. They’re paid to do this job. They have 10 full-time people that are working behind the scenes with us, just to make sure that this vision moves forward. That track’s getting laid, and that train station is getting built, and pretty soon the train is going to be leaving the station.
In the meantime, we’ve created a lot of bonus programs for members. Those are on our website. There are a lot of things that were already there, legacy programs that Wayne and Bill and Byron put in place. We added on to those programs. The way the program is going to be designed is that members will be buying as one entity. Being able to buy in bulk and save money, that is what we’re trying to do. We’re investing in data at the moment—collecting data and being able to push that out for the future. That’s going to be the key.
Bill Campbell: Joel and Byron and I, from where we were in 2018 with the Independent Cinema Alliance—and this brings us back to the Larry Hanson Award—as a board member, you are signing yourself up to be like Larry Hanson, to be the ultimate volunteer for the industry. As a fledgling company, we’re trying to build our membership dues and get some rebates through the [new government] programs. But it’s a volunteer organization. To be on the board of directors means you’re putting in lots and lots of volunteer hours away from your own job and your family. So we thank Joel and Byron for their service. Anybody that signs up for the ICA knows that [board members are] going to work hard for them.