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Exhibition trade group the National Association of Theatre Owners announced Monday that its 24-year CEO and President John Fithian was retiring.
While that’s not as long as the late Motion Picture Association boss Jack Valenti’s 38-year run at that trade org, who left behind his own legendary streak with the creation of the ratings system, Fithian well deserves to be mentioned in the same sentence. As movie theaters were closed for the first time in their existence due to the pandemic, Fithian and his team tirelessly championed lawmakers from the federal to the city level to get cinemas reopened and the motion picture industry back on its feet. Not only that, but as studios experimented aggressively for a theatrical day-and-date model, Fithian and company behind the scenes poured water on that broken model as the box office returned.
Sure, Halloween Ends is going day-and-date on theatrical and Peacock this weekend, but that’s more about the Comcast streamer’s survival than anything else. For the most part, the studio executives have embraced NATO’s come-to-Jesus that the best amount of money for a film’s financials remains in a defined theatrical window. Streamers like Netflix have heard the call as well and is experimenting with a 600-screen U.S. theatrical Thanksgiving release with the top major chains — AMC, Regal and Cinemark — for Rian Johnson’s critically acclaimed sequel Glass Onion: A Knives Out Mystery. But that’s not all Fithian has had his hands on at NATO, his work with the org going back to his legal consultant days 30 years ago. Fithian officially leaves NATO on May 1. Here’s our convo with him:
DEADLINE: Why is it time to go?
JOHN FITHIAN: When I was first recruited as outside counsel to come on full time, there were doubts among the board members of NATO that I would stay long enough with the job to have an impact. That I’d be here for a few years and leave. That was 1999 and obviously I made it my career to represent theater owners, and I’ve done that because I love them. They’re passionate about what they do. I was a First Amendment lawyer before I came on full time, and I believe in this form of collective gatherings for storytelling very much and that’s why I came to love theater owners and the broader industry.
Why is it time? I always knew I didn’t want to stay forever, there are other things on a smaller scale that I want to pursue; not a full-time gig. But I’ve got some consulting ideas and some board work that I want to do. But it’s time personally, in part because my wife is Greek and it’s time to spend time in Greece.
I just turned 60, and coming out of the pandemic is now the right time to let somebody with more energy and passion to take it on. The answer is I’m ready.
DEADLINE: Before the pandemic, before the shutting of theaters; what are some of the challenges you faced during your tenure at NATO, and what are you happy about in regards to your accomplishments?
FITHIAN: The two biggest challenges to a successful operation of a cinema business have always come from either Washington or Los Angeles.
On the Washington side, which actually during my role as outside counsel, and continued after I came on board full-time, was the desire to regulate violent media, which not only is a massive violation of the First Amendment that’s hugely bad for the business. There were proposals in Congress and states to tax violent media, which means violent media would have an extra ticket tax, to take the rating system and write it into law and to fine theater owners every time they sold a ticket to the wrong person. Or to actually censor the movies we were able to show. It was all a reaction and an overreaction to gun violence in America. Many politicians instead of tackling the gun issue, they wanted to tackle violent media. So, we, as a team – NATO, NATO Members, the MPAA – lobbied for more than a decade, last half of the 1990s, first half of the 2000s, to demonstrate that a voluntary ratings system was the way to go. We had to strengthen all our protocols on enforcement. We had to explain what we were doing to members of Congress, directly to President Clinton and to his successors and work with the Federal Trade Commission on how to have oversight of a voluntary ratings system without actually legislating them. That took years to accomplish, and it was very much an all-industry effort. But certainly protecting the voluntary movie ratings system and avoid government regulation and censorship was a key early NATO accomplishment in the time of my career.
And is the case with all accomplishments, it’s all broad-based with NATO, exhibitors, studio reps, creative community, all working together to preserve the right of free speech in the cinema industry. That’s an example of what we do in Washington.
In Los Angeles, I would take a different historical example, which is the transitioning of film to digital cinema, which was another decade long fight. The incentive for the studios to make that transition prematurely, I might add, was that they wanted to save billions of dollars a year in costs.
The cost to make a film print and distribute it to theaters was very expensive: $2K-$3K per print to get that whole process done. In exhibition, we said not yet. We need two things: We need open standards that will promote operability in these systems, and also make sure that the quality level that we give our patrons is as good or better in digital than in film. Because at the genesis of digital technology, it was inferior film. So we wanted to wait until it was as good as or better. Secondly, we demanded a fair business model. If the cost savings were going to come to distributors, then distributors had to help finance the system. We got major pushback at the beginning of that process and in the end, we prevailed. There were both open standards developed, the equipment got better, the quality levels got better, and the virtual key model was established to have it work that the studios could subsidize the transition to new equipment. We actively participated in that process. We worked with theater owners big and small to have a variety of virtual key models available to all exhibitors of all sizes.
DEADLINE: Was there a point ever during the pandemic when you thought, “Oh, my God, is exhibition done?” Or was there too much of a force out there from the overall industry and its players that was like “No, cinema isn’t going instinct”?
FITHIAN: Every night at about 3 a.m., that thought crossed my mind as it did my amazingly, passionate team of colleagues, and staff, as it did hundreds and hundreds of theater operators here and around the world. There were thoughts of existential crisis and end of businesses daily around the country and around the world. And the exhibitors, big and small, share it with me how desperate that situation was. We had family business mortgaging everything they had to keep their theaters from going under. We had existential challenges of access to capital. We went from a record breaking year in 2019 globally, people forget that, $42 billion to $0 in April 2020. It was a traumatic stop in profitability and the potential to survive financially. It as the biggest existential threat that the movie industry encountered in over 100 years.
DEADLINE: Getting exhibition included on that Covid relief bill was an outstanding achievement. Tell us more about that.
FITHIAN: What we accomplished as organization during the pandemic, wasn’t just about the grant program. The most important thing that we did during the pandemic was establish a set of safety protocols. We call them Cinema Safe. We hired top-notch epidemiologists to create those protocols, we worked hand in hand with our studio partners as they were developing their film protocols for film production, so that the industry could demonstrate that we could safely make movies and show them. Everybody was involved in that process. It was very collaborative across the entire industry. Then we used those safety protocols both in exhibition on our side and in production on their side to go lobby hundreds government officials at the federal level, at the state level, in many cities, and internationally as well. We collaborated with our colleagues all around the world. NATO Cinema Safe protocols were actually adopted by several foreign governments in how to let cinemas open again, and get cinemas open safely again. That was the biggest accomplishment of the pandemic. We had to get cinemas open safely in order to get movies back.
Yes, we also needed to help our workers. We worked with Will Rogers to help develop a multi-million dollar fund to help unemployed theater workers, we lobbied congress on unemployment benefits so that the 150,000 theater employees without jobs could live and come back when the pandemic is over.
The third piece was helping our companies stay alive as viable entities. That took a number of paths. Lots of people know about the grant program established by Congress to help the mid-size and smaller exhibitors. Several billion dollars to sustain them, but we also worked on really important tax benefits that helped our larger companies as well as smaller companies, and we also lobbied across the country state governments to also provide grants to exhibitors of all sizes and tax benefits.
DEADLINE: When New York and L.A. reopened theaters, the vaccine was just rolling out. The industry was confident LA would feasibly re-open, but New York state continued to punish exhibition while other states re-opened cinemas. What made New York finally turn the corner?
FITHIAN: There’s a book to be written about New York so I don’t know how to condense, but Governor Cuomo didn’t want us open. We’ll never know why. It took one of our local theater operators in Albany to take all of the experts from the Governor’s office on a tour of a cinema, to show them how our protocols could work. We had a massive lobbying campaign from local exhibitors all across New York, we involved our federal friends in Congress, but something that really speaks to the unity of this industry is that we had studio executives and creatives helping us explain to the Governor how important New York was to the global film industry: If New York didn’t get open, chances are movies aren’t going anywhere. It was too important of a market. The final straw, I think – we’re pretty sure he understood we had our safety protocols in place because his experts did the tour, but we’re not sure he understood the business impact. So we organized a letter from the Global Cinema Federation, which is a group that we helped put together, that included leading theater operators from all over the world: China, Australia, Europe, Latin America. We had signatures from all over the world, telling the governor that if you don’t get New York open safely, the film market globally is going to die. I think a combination of all those things got him to a point where he gradually opened cinemas.
DEADLINE: The breakthrough of Netflix agreeing to work with the top three exhibitors on the release of Glass Onion: Knives Out is pretty amazing. Did NATO have anything to do with that behind the scenes? Are you hopeful that streamers will come full hog to the table and commit to a wide release in the future?
FITHIAN: Yes and yes. The ways that the issue of film releases work is that NATO has a role in discussing broad based business models and data. We carefully collect data on how theatrical releases with windows grow the business for everybody. In other words, you release the movie theatrically, it does well theatrically, it makes money, but more importantly it establishes the brand of the movie so that it when it hits the streaming service, it gets a bigger pop on the streaming service. It would never be enough for us to say ‘Oh we need movies with windows’. It’s about data that proves a business model that’s good for everyone. So NATO has been very involved with all the major studios, and Netflix, Apple, Amazon about the concept of releasing some of their movies – not saying every streaming movie is appropriate for a theatrical release—that some of their movies can do better both in theaters and on streaming services with an exclusive release first to cinemas. We at NATO have been making that argument and sharing the data with everyone who makes movies for a while. When it gets to the point of a specific arrangement on a specific movie being made, NATO can’t do that. That has to be negotiated individually. We don’t get involved in what the exact window should be or what the exact film terms are. Those individual issues exhibitors have to negotiate. The final end of that Glass Onion process is a negotiated agreement with individual exhibitors. It’s not just the big three that are playing the movie, but mid-sized and independent exhibitors. It’s a strategic test by Netflix by how a theatrical release, exclusively, can play across the country in big, medium, small theaters and big, medium, small towns. Would we have wanted a wider release? Of course. Do we want them to release their grosses? Of course. But this is an important step, nonetheless, and it’s one of several important steps that Netflix is taking. Look at the release of Bardo in Mexico –that’s a release on a 45 day window. That’s an important test as well. What you’re seeing is experimentation, and that’s progress. But we also see progress from Apple, because they won the Best Picture from Oscar, because it played in theaters. We’re hopeful to see more theatrical releases from Apple in the future. I don’t think Amazon has quite figured out what they’re doing yet. They’re analyzing this particularly with their acquisition of MGM.
We’re also very optimistic about increase in theatrical supply from traditional studio partners, from David Zaslav at Warner Bros, from Disney coming back after the pandemic to do big theatrical releases, from Universal doing 20-24 movies a year, and couple that go to Peacock. The vast majority of titles from our partners are released theatrically as well. It’s going to take a while to get back to the right level of film supply because of Covid-induced post production delays and scheduling problems. We’re only operating on 65% to 70% of the movies that we had in 2019. By the end of next year into 2024, we’ll have more movies than we did in 2019. It’s going to take a while to climb back up the hill, but the signals are good that we’re going back to a very strong film supply and level of box office which makes this a strong business.
DEADLINE: What finally convinced the major studios to stop with theatrical day and date? Did it occur organically?: It upset filmmakers and stars, the movies were getting pirated significantly more…
FITHIAN: It’s all of that. It’s certainly that filmmakers want their movies released theatrically. We talked to many of them during the pandemic and coming out of the pandemic about how they want their movies releases. More and more filmmakers are having these discussions before they sign their deals. What’s my window going to be? What’s my release going to be. Those conversation weren’t happening before the pandemic. The data that everybody collected during the pandemic is that theatrical releases with a window make more money and on the streaming service. What we did in taking the piracy data during the pandemic, showed pretty conclusively that day-and-date releases were a disaster due to piracy. The most pirated films during the pandemic were those that were day-and-date because you get a pristine copy online instead of a camcorder rip.
DEADLINE: How involved will you be in choosing your successor? NATO has benefited from someone such as yourself who knows their way around D.C., but is it crucial to have a successor from a studio or exhibition in the next evolution of NATO?
FITHIAN: I’m working with the direction of our executive board, which is the body that makes these decisions, and our Chairman, Rolando Rodriguez. We hired a search firm, Spencer Stuart, very capable executive search firm. They have filled 300 trade association CEO jobs in their history. They know what they’re doing. We worked to develop a job description, which is out now. Then we’ll recruit as many talented candidates both external and internal. But then I step out of the process. It’s not appropriate for me to be in the interview process. I can describe what the priorities of the job are, but ultimately the members do the interviews.
What NATO does in Los Angeles is as important as it does in Washington. The relationship with the studios, the creative community. For example, the transition of digital cinema. That wasn’t a government issue, that was an industry issue. Both of those cities are important. And expertise is important, and few have expertise in both [cities].
DEADLINE: Will a successor be named around CinemaCon?
FITHIAN: Our hope is to have a successor on board before CinemaCon. He or she and I can work together and officially pass the baton at CinemaCon. That’s the goal.