Rolling out the red carpet for digital movies
May 8, 2013
A life-long film buff and former industry executive is taking Carson Valley's only movie theater into the digital age.
Jim Sheehan, along with two business partners, purchased Minden's Ironwood Cinemas out of bankruptcy last year. The way he talks about his investment, in light of the film industry itself, there's no way forward but digitalization.
"The industry is going digital," Sheehan said in an interview Thursday. "I think there will be no more film by the end of 2013. You either have to convert to digital or close your doors. There's no in between."
He wasn't exaggerating. Four outdated film projectors sat on the pavement on the north side of the theater on Thursday. Four more were in the days-long process of being removed and disassembled for parts.
"They're dinosaurs right now," Sheehan said, standing over the relics. "There is a lot of money here in scrap."
Nearby, a crew of film technicians was carefully unloading digital projectors off a freight truck. By the printing of this article, Sheehan planned to have installed eight digital projectors and two 3-D screens at a cost of roughly $500,000.
"From all standpoints, digital is cheaper, more efficient and better than film," he said. "The public can tell the difference."
The making of a film buff
Sheehan's life story seems like the stuff of movies. He became an usher at the age of 18 and, in a way, never left the theater.
He was a college freshman at the time, studying history at Stonehill College in Massachusetts.
"I made a dollar an hour," he said. "The year was 1965. It was good money in those days. Halfway through a history degree, I realized I would like running the theater, so I switched to business."
It turns out the company he was working for, General Cinema, was on the verge of becoming a national chain. After graduating, Sheehan "volunteered" to move to California, where the company had been building several new theaters. He was 22 when he became assistant manager of a new facility in Hayward, Calif., quickly working his way up to manager.
In 1972, totally enthralled by the movie-going experience, he pounced on an opening in L.A. The position was for a film buyer — the person who negotiates with distributors, selects and books films for the big screen. Sheehan spent five years in the position, ascending to General Cinema's western vice president of film.
In 1977, he made the jump to Mann Theaters, becoming president and chief operating officer of the large regional chain. For the next two decades, he worked similar leadership roles on both the exhibition and distribution side of the film industry, all along nurturing a desire to start his own company.
"I wanted to go out on my own, buying, developing and operating my own theaters," he said.
In 2005, Sheehan realized his dream. He opened his first two theaters in the Bay Area. As business grew, so did his holdings. He owned five theaters in California when he decided to sell more than two years ago. His wife had passed away, and he decided to focus on his two Internet businesses, Wild Birds Forever and Candles Forever, which he still operates.
But he couldn't resist the lure of the silver screen, especially when a unique opportunity presented itself:
"This place (Ironwood) was 4-5 months from closing if Silver Point Capital hadn't come through the bankruptcy and hadn't lined things up the way they did."
Ironwood Cinemas opened its doors in 1998, just when Hollywood was entering a new era of movie-making. Blockbusters that year included "Armageddon," "Saving Private Ryan," and "There's Something about Mary." But behind the scenes, technological changes were dramatically shaping the industry. DVDs began replacing VHS tapes, and digital cameras began replacing film.
In 2007, Galaxy Theaters at Casino Fandango opened its doors in south Carson City. It was a $15 million project, a 10-screen digital multiplex with stadium seating.
Looking back on that time, Sheehan said Ironwood Cinemas, still relying on traditional film projectors, took a huge hit and never really recovered.
"It lost that high school audience that was within walking distance to the theater," he said.
In 2011, Ironwood Cinemas went into bankruptcy. Connecticut-based Silver Point Capital acquired the operation, but, as Sheehan pointed out, "didn't know anything about theaters and didn't want to learn."
"They gave me a call out of the blue," he remembered. "They asked me if I knew the theater. I said it was a beautiful theater in a great town, but the rent was high. They asked me what it would take to get me in there. I gave them a figure, what I was willing to pay for rent, and there was silence on the other side."
That silence translated to acquiescence. Sheehan and two other partners formed Fog City Cinemas, doing business as Ironwood Cinemas, to operate the new business.
Bill Longen hails from San Francisco, where the company originated, and handles "the tech side" of the firm. Richard Blacklock hails from Los Angeles and is the company's programmer and film buyer.
After the sale, Sheehan relocated to Minden to be managing partner. Silver Point also offered the building.
"We're still in escrow," said Sheehan. "Fourteen months we've been here, and we've made small changes. The theater was in good shape, but we did upgrade the sound system and the concessions stand. We steam cleaned the carpets and seats and put in new light bulbs and new tile. In the industry, we call that the low-hanging fruit."
The high-hanging fruit was digital conversion.
"Every time we play digital rather than film, the film company saves a lot of money, about $900," Sheehan said.
As part of a national digitalization campaign, the movie industry has been offering a rebate program that pays small exhibitors approximately $705 for each digital film played. Given the standard lease time of 2-6 weeks per title, Sheehan estimated Fog City Cinema will recoup the cost of the conversion within six years.
Going forward, Sheehan said, Ironwood Cinemas will be in a good position to compete with Galaxy or any other digital operation, especially with gas approaching $4 a gallon.
"We only have one chance to impress people," he said.
A changing industry
If Sheehan, a veritable film veteran, is nostalgic about film projectors, film reels, and spot-riddled screens, he doesn't show it. He passionately argued that digital is better on every front.
"Film is made out of polyester," he said. "After six weeks, it's scratched. Against the heat of a 2,500-watt Xenon bulb, it does fade. It's like leaving your car on the beach for two years."
Besides durability, digital filmmaking is more economical all around, Sheehan continued.
"It's economical for studios to release movies in digital, and it's economical for directors to film digitally. Directors are constantly going through miles of film that will never be used," he said.
He argued digital is even better for independent and art-house filmmakers, who can record their movie on a hard drive for about $400 versus $1,300 for a film print.
For exhibitors, it means getting 2-D and 3-D discs together, with Spanish subtitles already included, compared to purchasing separate prints for each showing.
"The savings are enormous," Sheehan said.
When asked if traditional film still produces higher quality shots, as some auteurs have argued, Sheehan pointed out the highly specialized, German-made port glass that will be installed in front of every digital projector.
"It's about $1,000 a pane," he said. "But the quality of color going through the screen is incredible. The blues are bluer, the reds are redder."
Yet despite every advantage, digital technology cannot save a bad movie, Sheehan pivoted with a grin.
"It all comes down to one thing," he said. "Bad movies are bad movies. Good movies are good movies. The industry is getting better. They're not just making movies that appeal to teenage girls and boys. They've realized baby boomers are starting to go to the movies more often."
Record ticket sales in recent years also belie the notion that home viewing is replacing the multiplex. It's an argument Sheehan has heard before.
"Theatrical movies are the engine that pulls the entire ancillary chain of Netflix, DVDs, all that," he said confidently.
Plus, there's another draw:
"We think we have the best popcorn in the Valley," Sheehan said. "Apart from the fact that we use the best raw corn available, we cook the kernels in coconut oil and don't over season the corn. We also pop our corn fresh at least three times a day, and more as needed on the weekends."
Ironwood Cinemas is located at 1760 Highway 395 in Minden. For more information, call 782-7469 or visit ironwoodcinemas.com.