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Why Did the ArcLight Fade Away? Inside the Sad Final Chapter of the Pacific Theatres Chain

ArcLight CEO Chris Forman built the Pacific Theatres chain and also shut it down. What was behind the decision and does it have a future?

6/16/2021 10:00:00 AM

ArcLight CEO Chris Forman built the Pacific Theatres chain and also shut it down. What was behind the decision and does it have a future?

On April 12, Pacific Theatres issued a terse, five-sentence statement announcing that it would not reopen its theaters, which include the much-loved ArcLight Cinemas chain. On one level, it was not…

chain.On one level, it was not a surprise. The pandemic has forced several other regional theater circuits into bankruptcy.But the Pacific announcement was odd. Some of the other chains — such as Studio Movie Grill and Alamo Drafthouse — announced plans to reorganize and keep operating. Pacific didn’t do that. It didn’t declare bankruptcy. It just… disappeared.

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That fed rumors that the closure was just a ploy. ArcLight’s Cinerama Dome has stood proudly on Sunset Boulevard since 1963. It hosted premieres and made cameos in “Entourage” and “Once Upon a Time in Hollywood.” Surely it had to be profitable? If it could fail, then moviegoing itself was in peril. An online campaign begged some deep-pocketed studio to save it.

Chris Forman, the CEO of parent company Decurion, has kept silent. He is the third generation of the Forman family to operate the Pacific chain. He has run the company for nearly 30 years, and it was his exacting vision that created the ArcLight experience. headtopics.com

The ArcLight Hollywood was a revelation for cinephiles when it opened in 2002. Tickets cost $14 — the highest in the city. You could buy alcohol. The ushers would show you to your reserved seat. There were no ads, and only a few previews. Before each show, the ushers — cinephiles themselves — would ritually note that the picture, sound and room temperature had been set to precise specifications. Patrons were invited to alert the staff to the slightest flaw in the projection.

Los Angeles movie fans were devastated to learn of the closure. “It’s a sacred venue,” tweeted director David Ayer.Over the last two decades, Forman expanded the ArcLight brand across the country. When the pandemic hit, he had just opened the newest location in Boston. It was also his decision to shut down the chain for good. The Dome and ArcLight Hollywood may reopen — more on that later — but Pacific Theatres really is gone.

Why?The answer lies in Forman’s personality — unusual for the theater business — and in the way in which he inherited the company built by his father and grandfather.Varietyspoke to many who know Forman in some capacity or other — family members, industry figures, and employees (a term he dislikes). They described him as an intellectual, a perfectionist, and someone who was not naturally suited to the glad-handing of the business world.

“He is someone who is always seeking, always trying to find out who he is,” said Michael Ray, a retired professor at the Stanford Graduate School of Business. “He is definitely what you would call a new paradigm leader.”Forman’s great-grandfather was John Danz, a Russian Jew who started a nickelodeon in Seattle in 1913. Danz’ son-in-law was William Forman, who learned the business and then struck out on his own, launching a chain of drive-ins in 1946. William Forman was a fantastic success, and handed his son, Michael, a real estate empire with holdings in the Pacific Northwest, Hawaii and across Southern California. headtopics.com

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As the drive-in business faded away, the Formans found themselves sitting on dozens of 25-30 acre parcels ideally suited for infill development. The company converted most of them to shopping centers, office parks, and distribution facilities. The parent company — the

Decurion Corporation— owns hundreds of millions of dollars of commercial property through its real estate arm, Robertson Properties Inc.Chris Forman always knew that he would inherit the family business. But as a young man, he was more interested in loftier things. He studied classics at Harvard and philosophy at Oxford. When the time came to work at Decurion, he found it mundane and pointless by comparison.

“I was, well, miserable,” Forman said at the 25th reunion of his Stanford business school class, in 2014.He went to Stanford to fill the gaps in his education, and to learn the tools of business — finance, budgeting, planning — so the old-timers at the company couldn’t push him around.

He returned to the company, feeling an obligation not to squander the family legacy. But as he tried to deploy his business school ideas, the old-timers rejected them. That wasn’t how the company worked, and they didn’t see a need to change.That sent Forman on a journey to discover his purpose in the company, and the company’s purpose in the world. Everything that followed stemmed from Forman’s effort to find meaning in his work — to make it more than drudgery. headtopics.com

He turned to Jim Collins, a consultant who had written about “visionary” companies, and who would go on to write the bestseller “Good to Great.” Collins and his co-author set up a corporate retreat to help identify the company’s values.“The real breakthrough came when we recognized Decurion’s purpose, that is, answered the fundamental question of why the company existed,” Forman said in the Stanford talk. The formulation evolved over time, but it settled on “to provide places for people to flourish.” By “flourish,” Forman meant “to become fully oneself.”

He would work with many more consultants and gurus to put those ideas into practice. One of them was Michael Ray, who taught a popular course at Stanford on creativity in business, and whose work focuses on asking “Who is my Self?” and “What is my Work?” Forman also got deeply into meditation and Iyengar yoga, and attended two silent retreats with Shinzen Young, an American who had become ordained as a Japanese monk.

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It was the late 1990s, and such things were just starting to gain a foothold in the business world.“I think Chris was unusual, but also not out of step,” Ray said. “Maybe he was a little ahead of other people.”Another major influence was Kaz Gozdz, a consultant who has a Ph.D. from the California Institute of Transpersonal Psychology and who helps companies become “learning communities.”

When they met, Gozdz said that Forman was facing the challenge of transforming a sleepy, poorly run family business into an enterprise that could attract top talent.“I made a proposition that if you transform everything about the company and make it run excellently, you could use the running of the business in order to teach people and grow people to evolve into their whole and best self — while you ran the business better than the rest of the industry,” Gozdz said. “Chris’ personal standards of excellence were a focal point.” He said he found Forman to be “extremely gifted.”

Forman worked with Gozdz and others to develop a 10-week training course for Decurion employees. He hired Bryan Ungard, an IT consultant with a black belt in aikido who would become the company’s chief purpose officer. Ungard helped refine the course and co-authored a book with Forman called “The Practice of Self-Management,” which relies heavily on ideas of mindfulness in order to develop awareness and empathy.

“It’s really an unusual way for a company to go about business,” said Geoff Campbell, who helped edit the book. “But I think if more companies did it, we would have a better society.”Campbell said that Ungard did most of the talking during their sessions. Forman spoke up only rarely.

“He was almost a Yoda-like figure, in that he didn’t say a whole lot, but when he spoke it was important,” Campbell said.One of the values Forman emphasized was “uncompromising excellence”: “If we can’t be proud of it, we don’t want to do it.” Another was “clock building” — that is, managing the company so that it could endure for future generations. He also emphasized treating people as an end in themselves, and not as a means to an end, and developing each employee to their full potential. He embraced one of Gozdz’ key ideas: that profits and human growth were inseparable parts of the same whole.

Last year, just as the company was being hammered by the pandemic, Forman filed incorporation papers for a new nonprofit: The Decurion Institute for Wholeness and Development.Several former employees, who asked not to be identified, said they got a lot out of the training.

One employee said that when he first started, he was reluctant to give up two hours a week to sit in a class on personal development. He had moved from out of state, and thought the whole thing sounded very…California.But he was informed it was the most important thing he could learn on the job. And he realized the company was incurring a significant payroll expense, flying some people in from Hawaii, so that everyone could participate in the class.

“The bigger picture was how do you grow as an individual. That leads back to improving the company,” the employee said. “I was so fortunate to have experienced that type of culture.”Others were a little puzzled.“We’d be in meetings where it was hard to know what the right answer was,” one employee said. “It was just frustrating figuring out which direction they wanted you to go.”

Michael Forman had turned over the reins to his son in 1994, but continued to advise the company as its chairman until his death in 2019. In the industry, he was seen as more personable, and more of a traditional theater operator. He had a hard time grasping what his son was up to.

“He didn’t understand, but he fully supported it,” Gozdz said. “He gave Chris the leeway to do what he thought was right.”According to court records, Michael’s entanglements did cause some headaches for the company. Over the years, he used the company to give nearly $700,000 to a younger woman — not his wife — with whom he was having a long-term relationship. He dumped her in 2012, and the company then tried to get the money back, with interest, ultimately seeking to foreclose on her Trump Tower condominium. That failed and the woman countersued, claiming she was owed money for consulting work she had done at Michael’s request. The suit was settled after Michael’s death.

Few in the theater industry knew anything about that. Nor did they know much about Chris’ search for meaning in the business world. What they did know was that Chris was not like his father. He was not a natural showman. He was seen as aloof.“Chris has never been enamored with the theater business,” said one industry insider.

He does love movies though. Two of his favorites are “Brazil” and “The Hudsucker Proxy,” because they explore themes of dehumanization in capitalism.And he also created the ArcLight — clearly the work of an aesthete. In interviews, he has said that he developed the ArcLight concept out of frustration with the poor quality of Pacific’s theaters. The goal was to build something within Pacific that would be shielded from Pacific’s culture, much as General Motors had done with its Saturn division.

The ArcLight Hollywood set a new standard for film presentation, but it was not an instant hit. Attendance was disappointing, and Forman faced pressure to turn the theater into something more conventional.“Chris was pretty amazing in his leadership,” Gozdz said. “He said, ‘No, we’re going to stay with what we intend to do. It’s going to take time to show audiences what it’s like to be treated differently.'”

It did become successful over time. But then other chains began to copy ArcLight’s innovations. The Landmark chain borrowed many of its best ideas. Reserved seating is now a standard feature even at places like AMC. Many chains have installed reclining seats. Alamo Drafthouse provides more food and beverage options.

At the same time, industry insiders say that ArcLight fell behind. Some of its older locations need significant investment to keep up. The company was planning to start that process when the pandemic hit, according to multiple sources.The company had also embarked on a costly national expansion. In Boston, the company spent $20.4 million building a theater at a massive complex adjacent to TD Garden. According to a lawsuit filed by Graycor Construction, the general contractor, Pacific approved nearly $5 million in overages, but then refused to pay about $3.5 million of that. Pacific countersued, alleging that Graycor had failed to competently supervise the project, and had allowed the opening date to slip by two months.

The theater opened in December 2019, but insiders say business was still lackluster when it was forced to close three months later, never to reopen.Like nearly all theaters across the country, Pacific stopped paying rent to its landlords in March 2020. Other theaters have worked out forbearance agreements, under which they agree to repay a portion of the back rent over time.

Pacific did not do that. Instead, one by one, landlords have gone to court to seek judgments totaling $58.5 million for past and future rent. Multiple sources said that several of the leases were unfavorable to Pacific, and it did not make business sense to try to arrange a repayment plan.

Two sources also said that Pacific, unlike other theaters, had failed to make its last regular payments to film distributors. At the very least, that would complicate those critical relationships if it tried to reopen. (The company declined to comment.)

It’s at least conceivable that Pacific could have reorganized and come back as a smaller, cheaper operation. But it was never Forman’s ambition to run a mediocre movie chain. That would have conflicted with a core value: “If we can’t be proud of it, we don’t want to do it.”

Pacific Theatres at The Grove shopping center in Los AngelesAPOf the 17 theaters in the Pacific and ArcLight chains, the company owns the land under just two of them: the Pacific location in Chatsworth and the ArcLight Hollywood. The rest are leased. AMC has said it is interested in picking up some of the locations. On Tuesday, movie ticketing sites appeared to indicate that AMC had taken over the theaters at the Grove and the Americana at Brand shopping malls. (AMC and Caruso Affiliated, which owns the malls, declined to comment.)

Matthew May, a realtor who represents the Sherman Oaks Galleria, said he has fielded several inquiries. “There’s tremendous demand for that location,” he said.So what happens to Pacific Theatres, and the ArcLight Hollywood? The most likely scenario is that the landlords obtain judgments but are unable to collect, aside from repossessing the projection equipment and the popcorn machines.

Robertson Properties — and its sprawling real estate empire — is likely to be shielded from any liability, so the Forman family will be just fine.“Based on the theater landscape, and the uncertainties, and the challenges even pre-pandemic, I think the company just made a decision,” said one former employee. “It had to be a very tough decision. They’re always thinking about what’s the best way Decurion could position themselves in the long run.”

Gozdz concurred.“The ArcLight was Chris Forman’s contribution to the industry,” he said. “But at some point, it’s a lot of work, and it’s not a greatly profitable business… He has the acumen to think about the financial picture, and the social picture, and the industry. What’s the really long play?”

That doesn’t mean that the Forman family is out of the theater business for good. Two sources toldVarietythey expected that Forman would reopen the Hollywood location and the Cinerama Dome — and make it once again a venue of uncompromising excellence.

“It’s iconic,” May said of the Hollywood location. “It’s amazing branding. There is huge equity in being the operator of that building.”Forman may be able to pull that off. But even if he does, the theater business — or any business — will always be a means to a higher end. The Decurion website used to say that the company is “defined more by why it exists and how it operates than by what businesses compose its portfolio.”

Forman used to publish his philosophical musings on the company blog. He expounded on his view that profits and human flourishing are intertwined. But he also explored the possibility that he was wrong — that his approach to business might not be profitable.

What then?“We would continue to act from our values,” he wrote, “but in a realm other than business.” Read more: Variety »

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