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How your ticket price is divided

From Steve Kraus, Chicago:

This is a bit out of my area of expertise so I hope others with direct knowledge of theatrical booking will correct anything I say that is wrong but I wanted to correct the idea that as much as 90% of the movie ticket price goes to the studio.

When you hear figures that high...80-90 percent, that is AFTER a figure called the House Nut is deducted. The House Nut is supposed to be the operating costs of the theatre. In the case of a multiplex, it's the overall operating expense pro-rated by the seat count of each theatre. The reason I say "supposed to be" is because it's a negotiated figure that may or may not be real.

Anyway, they take the box office gross, deduct the nut, and THEN they split it by the high percentages you've heard, with the percentages usually changing each week, to gradually get less unfavorable to the exhibitor. This figure is then compared to a lesser percentage of the straight box office (without the nut deduction) and whichever is greater is the film rental owed the studio. There was a time in the past when exhibitors had to offer minimum guarantees, adding a third layer to this, but I believe that's gone away now.

To illustrate this, I have open in another window Regal Entertainment's most recent 10K filing with the SEC. For the year ending Dec. 29, they took in $1,842.6M at the box office. They paid out 953.7M as film rentals. Dividing, that means they paid about 51.8% of ticket revenue as film rental. No where near the percentages people sometimes think. Regal is a big company and might be able to negotiate slightly better terms but I believe the rest of the industry would be very similar.

During that same period they took in $708M at the concession counter. Concessions cost them (presumably not including labor) 96.6M for a gross profit of 611.4M. Ticket revenue minus film rentals were 888.9M

The 10K forms may be found on the investor part of their website.

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