I wouldn’t want Tim Handren’s work, even if it includes free admissions to the movies and unlimited portions of buttered popcorn. Handren, a former USAA executive, has been the CEO of Santikos Entertainment and its nine theaters in the region since 2019.
The cinema business is in the trash. Major novelties are rare, and few of us go to the movies these days, even though they have been renamed as entertainment complexes with bars, bistros, video games, bowling and more. Even after the pandemic is over, we won’t go as much into the future as we did in the past. Most people “go to the movies” at home now, connecting to Netflix, Amazon Prime, Hulu, and other on-demand subscription services.
For young people, the smartphone is their cinema. Streaming services did to movies what the Internet did to print newspapers. The movie industry will survive, but it will never be the same again.
Looking back, I wonder if David Holmes, Handren’s predecessor in that role, and the Santikos board would now wish they had accepted one of the two reported offers to sell the theater chain that took place in the years since the death of John L. Santikos in 2014.. The company’s founder’s will, released in 2015, stipulated that all dividends from for-profit Santikos Entertainment go to the John L. Santikos Charitable Trust of the San Antonio Area Foundation for the benefit of nonprofit organizations in the area. designated.
I first wrote about this missed opportunity in March 2019, but the impact of the pandemic on the business only makes the issue more relevant today. Santikos himself, of course, had no way of knowing in the years before his death that the entertainment empire he had built from his own father’s modest film funds would be so threatened. One wonders if Santikos, a savvy operator and real estate investor, would have hung on to his holdings or would have sold while the market was still strong.
When the Santikos Charitable Foundation was first announced, Area Foundation CEO Dennis Noll publicly valued the company at $ 605 million, although it was later revealed that he failed to ‘Include over $ 200 million in debt on Santikos’ books. Noll predicted that the Santikos Foundation would become the region’s largest charity. It is well below this prediction.
Santikos executives never disclosed the names of potential buyers or the prices they were offering. If the business had been sold, 100% of the purchase price would have gone to the Santikos Charitable Foundation and inevitably would have produced significantly more money for nonprofits in the region than is currently being generated.
Instead, Handren and his team made significant capital investments in new and expanded theaters to stay competitive. These investments further reduced the financial benefits paid to the foundation.
The company received a much-needed lifeline last week in the form of a $ 50 million government loan from the Federal Reserve Bank’s Main Street Lending program, facilitated by the Bank of San Antonio. Handren told the San Antonio Business Journal that the loan was “a liferaft, frankly.”
The pandemic relief program is a generous bailout from the government. It allows Santikos to withdraw a private loan, the amount and interest rate of which have not been disclosed. The company did not have to provide any cinemas or real estate as collateral. The first year of the five-year loan is interest-free, and the second year the cash-strapped business only has to pay the interest. However, all loans eventually fall due.
Few businesses have been hit harder by the pandemic than movie theaters. Two of Santikos’ nine entertainment complexes remain closed and pandemic-era revenue is down 75%, according to the company. Many workers have been put on leave, probably for good.
Handren and his fellow executives, to be fair, see their business as strong and sure to recover from the pandemic. Others do not share this point of view.
Globally, the movie industry is, to quote Adam Aron, CEO of AMC Entertainment, the world’s largest movie channel, “beaten”. AMC operates most of its theaters, including AMC Rivercenter and AMC Boerne locally, but most films consist of older versions. Several expected blockbusters have been suspended and Hollywood film studios will no longer grant cinemas exclusive rights to new releases. In the future, streaming services will become an even bigger threat.
Royal movie theaters, the second-largest chain, closed all 536 of its theaters in the US and UK in October, laying off more than 40,000 employees just two months after theaters reopened in August. The chain will likely remain closed until widespread immunizations are carried out and new versions can attract paying customers.
Santikos has implemented a series of security protocols, including virus tests for employees, hands-free ticketing, reduced seating in theaters and wearing a mask. Despite all of these efforts, the experience just isn’t the same.
Regarding the future of Santikos, I remain pessimistic. Maybe realistic is the best word. As with the decline of any traditional industry, the free fall of filmmaking is a tragedy, affecting hundreds of workers here and tens of thousands of workers across the country. The real local tragedy may be the missed opportunity to sell Santikos and create a successful charitable foundation.
Someday a Hollywood studio will probably make a nostalgic film about the good old days of going to the movies. Many of us will watch with interest, probably from home.