ADS INFILTRATING THEATERS; NUMBER ALLOWING PRE-MOVIE SALES PITCHES RISING ANNUALLY.

Byline: Dave McNary Daily News Staff Writer

U.S. movie theaters, once an island of commercial-free tranquillity, are becoming like the rest of the world: littered with ads.

About 14,000 of the nation's 31,000 movie screens show some sort of pre-movie advertising - separate from slide shows of ads and the half-dozen trailers for coming attractions. The number of screens allowing the ads is more than double the number four years ago, and an additional 3,000 screens are expected to start showing ads by the end of next year, according to leading ad broker Screenvision Cinema Network.

Ironically, the one place moviegoers won't see more ads is the home of the movie studios: Los Angeles. Theaters don't run many ads in L.A. because Hollywood executives don't like them or are, at best, indifferent.

Audiences, on the other hand, have become more tolerant of such ads partly because marketers are soft-pedaling their wares, said Howard Lichtmann, executive vice president of the Cineplex Odeon chain. The executive has rejected ads that push too hard.

``What you're trying to do is create an image,'' he said. ``In a movie theater, it's not about hard-sell advertising and being in people's faces, but about being entertaining.''

Lichtmann points out that pre-movie ads are an expected part of the filmgoing experience around the globe. ``So what we're seeing is that American theaters are closer to what was happening in the rest of the world in terms of acceptance and the caliber of advertising,'' he said.

Ironically, at the same time commercial ads are increasing, theater owners usually refuse to run public-service ads such as anti-smoking spots, saying the audience wants to escape rather than be preached to.

The stakes are growing. Revenues from ads shown at U.S. chains currently generate about $100 million annually, or less than 2 percent of the take from ticket sales but double the revenue of four years ago. That figure should rise significantly as high-profile advertisers such as General Motors, Sears Roebuck, Intel Corp., Coca-Cola and Ralph Lauren/Polo look for ways to distinguish themselves from the usual ad clutter.

Sears, for example, has run ads for its River Canyon Blues jeans and Circle of Beauty cosmetics and seen them do well enough to explore a new campaign by the end of the year if it can find the right films, said spokeswoman Paula Davis. ``You have to strike the right balance with the audience,'' she said.

Advertisers are highly motivated to pursue the theater market because it is an effective way to reach audiences that have nowhere to go and tend to be heavily populated with free-spending teen-agers and young adults.

``You have the ability to generate very strong recall,'' said Dennis Fogarty, chief executive officer of Screenvision. ``What that means is that three-quarters of the people who see an ad before a movie can recall it, compared with 15 percent if they see it while they're watching prime-time TV. So the movie theater is really the place you can be effective.''

New York-based Screenvision now has packages of three one-minute ads playing in about 8,000 theaters, Fogarty said. Fears that audiences would react by hissing or walking out have not materialized.

Fogarty also noted that chains are under financial pressure because of the wave of megaplex construction and see ads as a bonus in revenue.

``Commercialization has been proven to be safe,'' he said. ``A lot of the chains seem to be dabbling with it, whether with or without a broker, and I don't think they'll reverse that posture.''

Los Angeles-area audiences are less likely to see the ads than other areas of the nation, said Fogarty, because Hollywood studios don't like them. ``Some of the exhibitors are a little less aggressive about running ads in L.A. because of the proximity of studios,'' he said.

The strongest opposition comes from Walt Disney Co., which contractually bars ads in front of its films except for trailers; Warner Bros., which has a similar stance but will allow public-service announcements; and AMC Entertainment, which bans nontrailer ads except for a few seconds of a pitch to visit the concession stand.

``People still are looking for a different experience in a theater than what they get at home,'' said Richard Fay, head of AMC's film marketing arm. ``Maybe you could get additional revenues, but at what cost? You have to ask yourself how much of the audience, particularly people who are occasional moviegoers, are turned off.''

Phil Barlow, head of Disney's distribution arm, is sympathetic to the need for exhibitors to boost revenues but added: ``That way of making money is parasitical. It's a bait-and-switch to lure the public in and then put a commercial in front of them.''

Disney's representatives usually find between eight and 15 instances annually of theaters running ads before Disney movies, Barlow said. Such contract violations, he believes, are the result of inexperienced managers and projectionists rather than chains trying to skirt the rules, and have not resulted in any cancellations or legal action.

Barry Reardon, Warner's distribution chief, insists the studio won't change its policy and contends the pre-movie ads remain unpopular. ``I've seen the audience boo, because you can get the same thing at home,'' he said.

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Chart: (Color) ADS COMING TO A THEATER NEAR YOU

SOURCE: Screenvision Cinema Network

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