‘Paranormal Activity’ producer branches out into haunted houses

In the underground dressing room of a dilapidated theater in downtown Los Angeles, a Hollywood art director is telling a chilling tale.

“It was closing night in the 1930s, and the owner’s wife desperately wanted to be the magician’s assistant,” said Thom Spence, a burly man with two earrings, long sideburns, a mustache and a soul patch. “But after Magi the Mysterious put her in the vanishing box, she never came back.”

In less than a month that story will come to life at the 88-year-old Variety Arts Theatre under the direction of film producer Jason Blum — not as a play, movie or TV show, but as a haunted house.

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Most film producers devote their energies to strengthening relationships with studios that get movies made and pay the bills. But as studios make fewer movies and cut the amount they spend on deals with producers, some filmmakers are seeking other ways to grow their businesses. Some are producing television shows or digital series, while others are creating social media presences.

Blum, who has prospered over the last few years with the low-budget horror hits “Paranormal Activity” and “Insidious,” is producing a live show and branding it with his own company name: The haunted house will be called the Blumhouse of Horrors.

“This is a way to better associate Blumhouse with scares and develop a direct relationship with our fans,” the boyish producer said Tuesday, the first day of setup at the Variety Arts Theatre, the historic Figueroa Street venue whose 1,100-seat main room once featured stars such as Al Jolson and served as the set for Wes Craven’s horror movie “Scream 2.”

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Surrounded by fake swords, skulls and an old baby carriage, Blum could have been on the set of one of his films, such as next month’s “Sinister” or “Paranormal Activity 4.” Putting the haunted house together, he said, was much like producing a movie.

Blum is spending several hundred thousand dollars on the haunted house, not much less than the cost of his low-budget horror movies. The house opens Oct. 4 and runs through Nov. 3, with tickets going on sale Thursday.

About 50 cast members and a behind-the-scenes crew of 25 — many of them veterans of Blum’s movies — are being hired to scare fans on a tour that will go through the inner bowels and upper floors of the six-story Variety Arts before finally reaching the stage, which hasn’t hosted a live show behind its hole-ridden curtain in many years.

Art director Spence is essentially serving as writer/director for the haunted house, which features the sort of narrative arc that horror fans have come to know on the big screen. He’s even supplying many of the props.

“It comes from 20 years of hoarding,” said Spence, who served as co-art director on “Insidious.” “I’ve got 7,000 square feet of storage space in Torrance.”

Elaborate haunted houses are nothing new in Southern California. Knott’s Berry Farm and Universal Studios Hollywood transform every fall into a series of mazes meant to scare patrons and drum up business after the summer season.

Although tickets to Blumhouse are $29 — or higher, with VIP extras — the haunted house is not primarily a money-making enterprise. Even if it’s entirely sold out, the Blumhouse of Horrors revenue will be minuscule compared with Blum’s share of profits on “Paranormal Activity 3,” which grossed $206 million worldwide last year.

“We’re not projecting to lose money, but that’s not the primary motivation,” Blum said while relaxing on the third floor of the theater, site of an abandoned 1980s nightclub now serving as mission control for the haunted house. “This is a good investment in the long-term growth of my business.”

If fans like the Blumhouse of Horrors, after all, they may remember the name and be more likely to turn out for Blum’s next movie or tune in to his next TV show.

And like any good producer, Blum is thinking multimedia. The story of a magician who absconded with a beautiful woman more than 80 years ago and still haunts the theater owned by her husband could live on past Halloween.

“There may be a movie or a TV show or a reality idea here,” Blum said.

ben.fritz@latimes.com