MEGAPLEX MADNESS : THEATERS SET TREND IN NIGHTLIFE.

Byline: Dave McNary Daily News Staff Writer

Movie theaters, repeatedly written off as yesterday's entertainment, have found new popularity and profits by erecting huge megaplexes and borrowing the concept of one-stop shopping from retailers.

Major chains are in the midst of a building boom, putting up shiny new facilities with top-quality screens, plush seats, state-of-the-art sound and bounteous concession stands.

Clustered near shopping centers, megaplexing is the latest wrinkle from one of America's most durable businesses, one which has survived assaults from radio, free television, cable TV and home videos.

``The basic idea is that people want to be able to go out to dinner, go shopping and go see a movie without having to get back in their cars and drive up to 10 miles for each activity,'' said Dick Walsh, senior vice president of AMC West.

Megaplexes - theaters housing 16 or more screens - are the hottest concept in the business, which will easily top last year's record-setting domestic ticket sales total of $5.43 billion by about $250 million by the end of the year. Ticket sales are expected to go past 1994's figure of 1.29 billion, which had been the highest total in 35 years.

The facilities offer so-called stadium seating designed to enhance sight lines, and feature cup holder armrests, 42 inches of leg room, electronic ticketing, multiple concession stands and screens at least 20 feet high - curved to match the film projector's lens. Unlike many multiplexes opened over the past two decades, there are no shoe box auditoriums of 50 seats and tiny screens.

``The movie chains, I believe, are sensing an evolution into acting like the anchor store of a shopping mall,'' said Mark Kissel, president of a leasing consulting firm in Rockville, Md. ``I really think the idea of the megaplex makes sense because it can work in just about any shopping center.''

Kissel says the trend of building showcase theaters is a natural response to competing with the emergence of video stores as a staple of the retail scene. The goal is to offer moviegoers more ``bang for the buck'' - that is, giving them the option of not just more films at more times, but other spending opportunities.

``It's an interesting resurgence because with video becoming a force, I think a lot of people thought cinema would not be a factor any more,'' Kissel said. ``The megaplexes have recently become a very compelling formula for developers due to the notion of extending the consumer's stay at the center.''

AMC Entertainment Inc. of Kansas City, Mo., has been leading the charge, armed with the slogan ``We're changing the way you see movies.''

Montgomery Securities, which recently issued a buy recommendation on AMC stock, said developers have started approaching AMC with attractive leasing development offers because of the traffic such megaplexes generate. It estimated AMC's cash return on investment during the first year of operation of such a facility would top 40 percent - an impressive figure that will enable AMC to put more funds into expansion.

Walsh said the chain gave the industry a wake-up call when it opened the 24-screen Grand in Dallas in May 1995 as the nation's first megaplex and Montgomery estimated AMC's first-year cash return on investment was 34 percent. By May 1996, AMC had launched eight more megaplexes, including the Promenade 16 in Woodland Hills.

Since then, AMC has kept up its aggressive expansion strategy, prompting rivals such as Mann Theatres, Edwards Cinema, Cineplex Odeon and a partnership between Magic Johnson and Sony Corp. to open more megaplexes and multiplexes while revamping existing facilities.

Analysts voiced initial concerns that moviegoers would be overwhelmed by the plethora of choices, but Walsh noted that per-screen averages at AMC megaplexes have topped internal forecasts and are well-above industrywide figures.

``With a megaplex, you go from being a neighborhood theater to a destination,'' he said. ``We've found that customers will drive by an existing location for what we're offering.''

But some believe the boom in new complexes is too much too soon.

``The trend is contagious,'' said John Krier, president of industry tracker Exhibitor Relations Co. ``They're all doing it and I think it's madness. The overall profit margins are getting a little thin but it won't stop until someone starts getting hurt economically.''

Walsh, however, believes that the explosion in new theaters is partly a delayed reaction to the lag in construction during the late 1980s and early 1990s.

``We had high interest rates and a sluggish economy, so developers were having a hard time getting financing,'' he said. ``Now, with inflation in check, real estate has turned around, we're playing catch-up and the market is absolutely ready.''

The number of screens jumped from 26,689 at the end of 1994 to 27,834 at the end of last year and should wind up this year around 28,500, according to Krier. ``We keep thinking it's going to slow down, but it really hasn't,'' he said.

Some executives at Hollywood studios, who had been complaining for several years that there were not enough screens for the growing number of films, agree with Krier and say they are concerned that the megaplexes may create a screen glut. But others say the building boom reflects moviegoers' higher expectations and the pent-up demand for new theaters.

``There can never be too many screens,'' said Thomas Sherak, senior executive vice president at 20th Century Fox. ``And the more improvements in the experience for moviegoers, the better off we are.''

Phil Garfinkle, senior vice president of Entertainment Data Inc., said megaplexes offer a better product to the public at the same price. He noted that none of the operators are charging more for tickets than less well-equipped rivals.

The average ticket price, which rose to $4.35 last year from $4.19 in 1994 (including $1 and $2 discount houses), is expected to increase slightly this year, according to the National Association of Theater Owners.

There are currently two AMC megaplexes in the San Fernando Valley - one in Burbank, where it went to 28 screens from 18 last year and its Promenade 16 in Woodland Hills.

Additionally, Mann opened a state-of-the-art Village 8 in Westlake Village last month. It was one of six complexes Mann opened in the last year. Now, the company plans a 16-screen facility at the former General Motors plant in Van Nuys for late next year. And retired basketball superstar Magic Johnson is planning a 16-screen facility on Van Nuys Boulevard in the spring of 1998.

Mann, a joint venture owned by entertainment giants Viacom Inc. and Time Warner Inc., announced last week it would also open an eight-plex in Agoura Hills and a four-plex in Glendale next year.

``Everyone is moving very aggressively in this industry,'' said Rich Given, director of marketing for Mann. ``The beauty of the multiple-screen theaters is the additional selection moviegoers get. It's just a matter of offering more convenience.''

Edwards announced plans for a 13-plex last week on Town Center Drive in Valencia - a dozen new auditoriums and an Imax 3D theater - near another Edwards 10-plex. It also will build a 10-plex in Canyon Country.

Finally, CinemaStar Luxury Theaters has started flexing its muscle this year by opening a 14-plex and a 10-plex in Riverside. The Riverside complex features a souvenir stand and three auditoriums doubling as classrooms for the nearby University of California campus. Both have gleaming marble lobbies and Star Loft coffeehouse outlets selling espresso and pastry.

CinemaStar also is slated to open two similar theaters in Mexico, starting with a 10-plex in Tijuana.

The Promenade AMC theater offers a separate guest relations desk for distributing pre-ordered tickets and dealing with questions and complaints, much like a concierge at a hotel.

But the Promenade does not offer everything imaginable for moviegoers. For example, it has no espresso sales like Universal City's 18-screen Cineplex Odeon.

Chains have generally avoided opening new facilities close to each other, except in one notable instance in Ontario. AMC will open what it bills as the world's largest theater Friday at the Ontario Mills mall near the junction of Interstate 10 and Interstate 15. The Edwards chain will open a 22-screen megaplex a week later 200 yards away across a service road.

Studio executives have warned that they will cut back on the number of films released next year, which jumped from 353 in 1994 to 410 last year and an estimated 433 this year. But the Montgomery analysts say the studios are bluffing and that even if some majors do actually reduce production, others such as DreamWorks SKG will fill the void.

Jack Kyser, an analyst with the Los Angeles Economic Development Corp., said megaplexes are here to stay.

``On a small screen, you notice how cheesy special effects are,'' he said. ``If you want the real impact, there's nothing like seeing it on a big screen.''

As for older theaters, Kyser predicts they will either rebuild or go out of business. ``It's what you call creative destruction,'' he said.

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Photo, Chart

Chart: (Color) BIG SCREEN GETS BIGGER

AMC Entertainment Inc. has been the nation's most aggresive movie chain in opening ``megaplex'' theaters with 16 or more screens. The following summarizes openings and expansions in the past year in Southern California and plans for the next two years.

Photo: (Color) AMC Managing Director James Kinsey, left, and General Manager Joseph Miraglia direct the Promenade 16 in Woodland Hills.

Gus Ruelas/Daily News