Big-Screen Venture Leads to Big Headache

Fewer than 100 American cities have giant-screen theaters showing documentaries and family films. Last year, the city of Ontario--population 131,000--became home to two.

One of the screens has been funded to the tune of $6.4 million-plus by San Bernardino County, in an effort to make the Ontario Mills mall a family entertainment center.

What the county didn’t count on, though, was Newport Beach-based Edwards Theaters Circuit constructing its own megaplex and Imax giant-screen theater right across the street.

Along with 52 regular movie screens, the two giant screens made Ontario “the popcorn capital of the world,” city spokesman George Urch once boasted. But it also set up the county for a showdown, which it is now looking to end.

Attendance and revenue at San Bernardino County’s UltraScreen, managed by Ogden Entertainment, have lagged projections by 70%. The county had projected attendance of 40,000 per month; that number has been averaging between 10,000 and 15,000. Operating losses are still being audited, but they have topped $1 million, said Norman Kanold, a senior administrative analyst with the San Bernardino County administrator’s office.

Also hurt by the screen’s disappointing performance is the San Bernardino County Museum in Redlands, which is the beneficiary of a percentage of revenue from the theater.

San Bernardino County officials are seeking ways to rescue its investment.

They’re considering either closing the screen or allowing Edwards Theaters--whose Imax screen across the street has fared better--to take it over, assuming the county’s debt service and giving it a small cut of ticket sales in return.

The latter scenario is the most likely, according to San Bernardino County and Edwards representatives. A vote by the county Board of Supervisors on Tuesday will decide UltraScreen’s fate.

Ogden Vice President Jonathan Stern admits that there have been problems with the Ontario development.

“There’s just not enough of a population base to support both theaters right now,” Stern said. “It’s not an upscale enough marketplace to support both. Plus, the market is confused about the two giant screens. It just doesn’t make sense.”

Jeffrey Logsdon, an analyst with Irvine-based Cruttendon, Roth & Co., agrees that building two large-format screens across the street from each other was too much too soon.

“Population trends five or 10 years from now may support that, but not now,” Logsdon said.

Logsdon noted that Ontario lacks the critical mass to keep the giant-screen theater full on weekdays. In areas such as Los Angeles and Irvine, school groups often buy large blocks of tickets during the week.

It’s also tough for other giant screens to compete with Imax, by far the category leader with dozens of screens nationwide and a strong brand name.

“Imax has clearly defined itself in the consumer mind. . . . It has an enormous amount of capital relative to the competition in terms of product and has an enormous amount of marketing savvy,” Logsdon said.

All parties hope that moving Edwards’ Imax operation across the street to the UltraScreen location would be mutually beneficial.

To boost ticket sales, Ogden is in the process of changing the name of its adjacent indoor zoo attraction from the American Wilderness Experience to the American Wilderness Zoo and Aquarium.

“It was a hard message to convey with the other name,” Stern said. “I know we could do better with joint ticket sales to the two [attractions].”

Edwards executives hope the Imax’s move to a higher-traffic location would boost its own attendance. Edwards Vice President Don Barton said its Imax screen would likely be converted to a big screen to show conventional films.

San Bernardino officials, meanwhile, hope to stop the red ink--and end up where they started.

County officials had originally talked to Imax about partnering on a giant screen. That changed when Edwards, which has a multiscreen deal with Imax, chose to build across the street. The county then decided to go forward with the Ontario Mills project, using equipment from Iwerks Entertainment, Imax’s primary competitor.

San Bernardino County analyst Kanold said that under the proposed agreement, Edwards would assume the county’s investment and give it a cut of ticket sales. That revenue, estimated to be about $40,000 per year, would go to the county’s natural history museum.