Friday, May 23, 2008

Detroit Free Press - AMC theaters pass pinch of corn prices onto moviegoers

AMC theaters pass pinch of corn prices onto moviegoers

KANSAS CITY, Mo. - The rocketing price for corn already is hurting Americans at the grocery store and the gas pump. Now it's going to hurt us at the multiplex, too.

Partly because of the rising price for popcorn, on Thursday Kansas City-based AMC Entertainment Inc. announced that beginning today it will increase its ticket prices from $9 to $10 for weekend show times after 4 p.m. at its five Kansas City theaters.

Also beginning today, AMC's popcorn price will jump 25 cents nationwide.

There are 10 AMC theaters in metro Detroit.

An economics professor at the University of California-Santa Cruz predicted this week that movie ticket prices might leap as much as 30% because of the cost of popcorn. In fact, Ricard Gil concluded, the success of a movie theater now rests largely on the price of popcorn.

In a study, Gil pointed out that concession sales allow theaters to keep down the cost of a movie ticket by nearly 25%. And popcorn accounts for a third of those sales.

In a Los Angeles Times interview, Regal Entertainment CEO Mike Campbell said that if theaters didn't charge what they do for concessions, "movies would cost $20."

Gil, interviewed before the AMC announcement, said that a big release - like this weekend's "Indiana Jones" movie - would be an ideal time to introduce higher-priced tickets.

"You'll show up at the theater and find you're paying 25 to 50 cents more for a ticket. This means that the most valued customers, the ones who come out to see a movie on opening weekend, will end up paying the most."

AMC based today's increase on dozens of economic factors, not just the price of popcorn, company spokesman Justin Scott said.

"We evaluate our concessions prices in the fall and in the spring. ... No one factor influences any of our pricing modifications."

Memorial Day traditionally is when movie theaters jack up prices.

But why not raise concession prices and leave ticket prices alone?

"It's not one or the other, concessions or tickets," Scott said. "A lot of factors are considered to find the right balance."

The once-humble corn is in huge demand as a food additive (corn syrup), livestock feed and as a biofuel source. In three years, corn prices have soared from $2 to $6 a bushel. A big factor is the Bush administration's support for corn-based ethanol, said Mary Haffenberg, spokeswoman for the Chicago Board of Trade.

"It used to be that only 5%of our corn crop went to ethanol. In the next few years it will be more like 30%," Haffenberg said. "That has an effect on food costs, since corn that used to be fed to livestock is now diverted to biofuels."

And while the United States is producing more corn, demand still outraces supply.

"We're seeing a sort of perfect storm of factors bringing up corn prices," Haffenberg said.

The USDA predicts that corn supplies will plunge to a 13-year low in 2009.

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