Daron Letts
Northern News Services

Yellowknife (Aug 10/05) - Facing sagging box office sales and competition from other media, Capitol Theatre had to do something.

It's following the lead of other Canadian theatres and diversifying its revenue sources. The Capitol Cafe opened on Monday morning in the theatre lobby to serve muffins instead of movies.

Revenues at the theatre fell 20 per cent in June and 14 per cent in July. The theatre isn't making money, said manager Jay Pickering.

"It relates directly to a drop in patronage," he said. "People just aren't coming to the movies. It's been the worst summer we've had in a long time."

Bellanca Developments Ltd. took control of the theatre in 1999 from the independent Magic Lantern chain in Edmonton and spent $1.2 million in renovations and equipment upgrades.

"For the first four years we did remarkably well, but this year sales are falling," said Pickering.

He adds a crop of bad movies are partially to blame for the slump.

"Product has a lot to do with it," he said. "I hate to say it, but it's been a North America-wide phenomenon. Hollywood has got to step up to the plate."

Revenue losses at other North American theatres are as high as 26 per cent, he said. The 1948 U.S. Supreme Court Paramount decision prevents movie distributors from fixing box office prices. But Pickering said Hollywood protects its bottom line through other means.

"Unfortunately, Hollywood's response to a drop in revenue is to up the percentage we have to pay for the film," he said. "Hollywood never takes the hit."

About 70 per cent of Capitol's box office take is paid back to the film companies.

In addition to increased fees for first-release reels, the theatre is facing a 25 per cent jump in fuel costs. High oil prices are boosting weekly freight and wholesale product expenses, as well.

After recent flooding in the building, the theatre installed a new water system and last year's brown outs destroyed more than $7,000 of equipment.

Dropped ticket prices

Unlike Hollywood, Capitol is taking the hit. The theatre dropped its adult evening ticket prices to $11 from $13 in May with no plans for an increase. The concession prices haven't changed in two years.

In addition to a year of bad Hollywood movies, the theatre is competing with other media technologies, Pickering said. The summer target market ranges from 17 to 25 years of age. The average age in Yellowknife is in the early 30s. These are the ages most likely to take advantage of competing entertainment such as DVDs and video games.

Capitol offers an Adobe digital screen in their largest theatre, with 2,000 watts of sound pumped through eight channels.

"It's far superior than anything you'll find at home," he said.

Pickering, who also teaches auto mechanics, welding and computer applications at St. Patrick high school, isn't out of touch with his young target market. In fact, teenagers and 20-somethings run the theatre.

Capitol employs 23 minimum-waged part-time staff, many of them high school students on their first job and graduates saving for university. The roster is usually as high as 35 employees. The average tenure is three years, with some employees staying as many as six years. In addition to Pickering, there are two other full-time positions.

"We fight for our living day to day," he said. "But trust me, we have no intention of closing the theatre down. We just have to make it clear that Yellowknife needs to support local business."

Pickering said the theatre uses local suppliers whenever possible, including freight companies and food and beverage services.

The new cafe serves coffee, cappuccino, espresso and snacks from 7 a.m. to 4 p.m., as well as during regular movie showings.