Deregulating Washington’s Movie Theater Industry

Deregulating Washington’s Movie Theater Industry
State lawmakers are working to remove seating and screen requirements for serving alcohol at those venues. At SB 5161's first public hearing in the House, theater owners argued the bill would bring much needed revenue to theaters while they compete with modern in-home entertainment alternatives. Photo: Ian Poellet

Local theater business owners are praising SB 5161, which they argue would offer a better return of investment for their venues and help those businesses better compete with in-home entertainment options. The bill passed the Washington State Senate floor last month and is now in the House. Industry representatives testified this week that current restrictions on alcohol sales in theaters should be loosened. Without a change, the owners worry the seating and screen limits will encourage competitors to come forward and offer what they cannot.

Theaters Competing With In-Home Entertainment 

At a Monday, March 13 public hearing, prime sponsor State Sen. Karen Kaiser (D-33) told the House Commerce and Gaming Committee, “Our theaters…(are) competing now with online streaming and other methods of at-home communication.” She added they “are really struggling in terms of their revenue, and this is a help and enhancement for their customers that might help those businesses.”

Under current law, theater owners wanting to serve alcohol in their establishment must obtain a spirits, beer, and wine theater license, which costs $2,000 annually. To be eligible, the theater must prepare, cook, and serve in-theater meals, provide tabletops for dining, and have 120 seats per screen or less. Alternatively, a venue owner operating with four screens or less can purchase a beer and wine license for $400 a year.

SB 5161 would remove the requirements that a theater needs both tabletops for serving in-theater food and 120 seats or less to serve alcohol. Also, owners operating four screens or more at a venue would be allowed to obtain a beer and wine license. If the theater is frequented by minors, the owner must first submit an alcohol control plan to the Liquor and Cannabis Board for approval.

The State Senate approved the measure on Monday, February 27 in a 36-13 vote. Lawmakers voting for its passage included Keiser, and State Sens. Jan Angel (R-26) and Vice President Pro Tempore Jim Honeyford (R-15). Members voting in opposition included State Sens. Steve O’Ban (R-28), Democratic Caucus Vice Chair Lisa Wellman (D-41), and Democratic Caucus Chair John McCoy (D-38).

Allowing Theaters To Expand Seating

“I think it’s a positive thing not only for the theaters, but also for the citizens right now that can’t get in because they are full,” said Angel.

During executive session on the Senate floor, she argued the bill takes into account potential abuse by the public, and will strengthen local theater businesses.

“This bill has accommodations for how it will be managed with minors in the theater, how food will be managed, and there are very strict violations and fines if they don’t follow these rules. I think the sideboards are on this bill, it will help…if the theater just wants to enlarge the number of seats that they have, they will be able to do that now,” said Angel.

Providing A Return on Investment

After moving to the House, the bill’s sponsor and theater owners testified during public hearing this week on the importance of the bill for competition and increasing revenue, especially for the smaller venues.

“We are not adding alcohol to movie theaters, it’s already there,” said Frank Lewis, Director of Alcohol Operations for AMC Theaters. “What we are just asking for is to amend to where we do not have the requirement for table tops, which is additional cost.”

The ability to sell alcohol also helps those businesses stay afloat and take on additional expansion costs, he added.

“The big thing with this is it actually helps bring back the older customers…so, for the (small theater owners) who are investing…$1 million for recliners per screen and for us larger operators that do the same thing, there has to be return on investment.”

“The first reaction might be that this is about expanding alcohol consumption in movie theaters and actually I just want to make it clear that it really isn’t; it’s a competitive bill,” Ray Hallet told committee members. He is owner of Hallet Cinemas in Walla Walla and Sunnyside.

Local Theaters ‘Vulnerable’

Hallet’s theaters have both 12 screens and two auditoriums with 299 seats, which excludes him from applying for either alcohol license.

“We are vulnerable in Walla Walla and Sunnyside to another operator that could come in to the area and build an auditorium that is less than the 119 seats and put us literally out of business…it’s not a protectionist bill, it really opens it up so that” theaters” in the medium sized towns…can compete without our hands tied.”

Bryan Cook echoed Hallet’s comments. He is Vice President of Sun Basin Theaters in Wenatchee and Port Angeles. “For us, it’s just strictly a competitive situation that we have to have a level playing field to be able to compete in today’s world,” he said.

However, State Rep. Cindy Ryu (D-32) expressed concern the bill would remove the niche attributes of smaller theaters.“The other competition I foresee…is between small theaters that have used the existing law and then to open up to multiplexes…the ability for the small theaters to compete with the multiplexes kind of disappears,” she said.

Ryu asked Keiser if she would be open to having the fees apply to each screen and not just the whole complex. Keiser responded that she was open to talking the option over with industry representatives.

Kim May is General Manager of the Gate Harbor Galaxy Theatres, which currently operates under an alcohol license. The location’s team is currently building an IMAX theater which will have 300 seats, which would disqualify them from serving alcohol in that auditorium under current law. May argued the bill would give customers the amenities they already enjoy in the new expansion, and also would curb illegal activity.

“We’ve seen a very big decrease in the amount of alcohol that has always been snuck in…we don’t see any of that anymore. Now people are paying a much higher premium to get that alcohol at the theater and it is in a much more controlled environment,” she added.



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