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Saturday, November 27, 2010

Columbia City Cinema Won't Go Quietly

Posted by on Sat, Nov 27, 2010 at 9:56 AM

Seems that Seattle is experiencing an epidemic of small movie theater closings. The Uptown, The Neptune (maybe!), and maybe old news, but new to me: Columbia City Cinema is on the ropes too.

columbiacity.jpg

The owners of the Columbia City Cinema aren't going without a fight, though. They've decided to let the community put its money where its mouth is by offering 480,000 shares of common stock* at $1 a share (minimum purchase is 100 shares). The owners say they need to sell 50,000 shares by January 1 or they will close.

Despite the horrific font crimes being committed in their offering brochure, it's a pretty cool idea. If you live nearby and you want to still have a movie theater in the neighborhood in 2011, you can be a part owner. Capitalism!

*UPDATE: As some of you have pointed out in the comments, it's not really accurate to call this stock, as it's not an officially registered public offering and comes with some noteworthy restrictions (most importantly, there's no market for this stock, so you can't sell it). It's more like a donation with some (very small) potential for a share of profits should they ever make any. In any case, and as always, caveat emptor.

DOUBLE UPDATE! Further in the comments, the mighty fixo smartens everybody up by pointing out that the restrictions on what you can do with this stock don't make it a scam, or any less accurate to call it "stock." It's clear from their statements and brochure that they're using this as a fund-raising effort (which is what stock offerings are for), and they're not making any promises that it will be a great financial investment, but rather an investment in the life of the community.

 

Comments (19) RSS

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Canuck 1
Is that Optima??

(...that was for you, Fnarf.)
Posted by Canuck on November 27, 2010 at 10:04 AM · Report this
2
The Columbia Cinema's website doesn't make buying shares easy. The "offering brochure" says to "read the subscription agreement online at columbiacitycinema.com. Then fill out the enclosed form and send it in with payment ..." There's nothing called a "subscription" anywhere on their website. Nor is there an "enclosed form" in the offering brochure. There are forms on their website, but none of them say they're for buying stock. Ah well.
Posted by idaho on November 27, 2010 at 10:32 AM · Report this
Rotten666 3
What a joke. This is not the first time they asked for a community hand out. They pulled this stunt less than a year ago. NOBODY WANTS TO SEE FIRST RUN FILMS AT THE CCC.

The CCC has had plenty of opportunities to adapt their business model to the realities of running a cinema in that particular neighborhood, but have stubbornly refused to do so. And don't get me started on the sheer fucking nerve of a for-profit business asking for a handout. Many of us in the neighborhood are sad to see it go, but things are tough all over. We hope that someone with real business acumen will take it over and make the cinema profitable for once.

I mean, have you seen their website?

Posted by Rotten666 on November 27, 2010 at 10:33 AM · Report this
4
I found it! You have to scroll down on the main page. D'oh!
Posted by idaho on November 27, 2010 at 10:43 AM · Report this
5
That place is a fucking joke. They have proven yet again that they either lack the business acumen to keep the place open, or that the community cannot sustain a movie theater.

Is this "stock offering" even legal? Something tells me the SEC hasn't heard about it. Is there a corporate board? Are they going to be producing annual reports? Where is the IPO filing?

If you are looking to give your money away in the Valley, give it to the Rainier Valley Food Bank or another organization that needs it. These jokers need to move on.
Posted by meks on November 27, 2010 at 10:45 AM · Report this
6
Don't worry, 3 & 5, the agreement covers your problems with the place: 3.f. says "Risk of Loss: The Subscriber is aware that there is no assurance that the Company will be operated profitably."
Posted by idaho on November 27, 2010 at 10:48 AM · Report this
Rotten666 7
@6 Sounds like a sound investment.
Posted by Rotten666 on November 27, 2010 at 10:59 AM · Report this
8
Too bad the brochure is all about how cool it would be to own shares in a movie theater Helping keep a community movie theater open is cool. Blindly investing in a bankrupt theater only to postpone its closure by a year, not so cool.

CC Theater folks, if you're serious about this, have the brochure briefly cover: how it got so far in debt, what's being done differently (and why those changes didn't avoid this problem), and how you'll raise the other $430k - or whatever portion is required to pay down enough debt to ensure it's a going concern - after escrow is broken for the $50k.

Explain why those problems won't recur (and the cases where they will - be totally transparent). The brochure feels like trolling for inexperienced money.

Plus you're unlikely to raise $480k from accredited investors without covering that, and to investors, not seeing it is a big red flag. There are too few investors to do it with $100-$500 token amounts.

Actually, if you're hoping for lots of small investments, skip the equity and call it what the brochure makes it sound like: a donation with benefits. I could see a pretty neat Kickstarter project here - donate to keep a movie theater open, get [some novel thing that only an insider can have] and cheaper seats. It worked for Glif.

And good luck.
Posted by troy on November 27, 2010 at 11:19 AM · Report this
Eli Sanders 9
I've enjoyed the Columbia City Cinema, and was intrigued, but this seems like a pretty unusual kind of stock to me. Read the "Restrictions on Transfer":

"The Subscriber understands and acknowledges that there is no public market for the Securities, that the Securities have not been registered under the Act, the Washington State Securities Act or the securities laws of any other state, and that the Company has no obligation, either to the Subscriber or to any other person or entity, or current intention to register the Securities, and accordingly that the Securities must be held indefinitely..."

I don't see any dividend (save for the discount you get on movies for buying "stock").

So...

Since you can't resell this stock, how is buying it any different than making a donation? (And, by the way, the minimum stock purchase amount is not $1, it's $100.)
Posted by Eli Sanders http://elisanders.net/ on November 27, 2010 at 11:29 AM · Report this
stinkbug 10
From the brochure: "We’ve gotten so far behind we need to sell $50,000 worth of stock by January 1, or we close. And we need to sell a lot more after that." (bold mine)

So assuming they meet the $50K goal by 1/1, they could say "we need $100K more by 2/1 or we close"? What exactly does "we need to sell a lot more" mean?
Posted by stinkbug on November 27, 2010 at 12:07 PM · Report this
Demetria 11
This sounds familiar, like when televangelist Oral Roberts flogged his fundraising scam by whining that the Lord had decided to call him home if viewers didn't send enough money.
Posted by Demetria on November 27, 2010 at 12:25 PM · Report this
Cornichon 12
My thought: Dick's Drive Ins should buy all three of the going-out-of-business theaters and convert them to community performance centers.and event venues, with caterng by a certain hamburger chain. Or else Starbucks.
Posted by Cornichon http://cornichon.org on November 27, 2010 at 5:31 PM · Report this
Packeteer 13
This is not a "stock" in any way. These assets are completely illiquid and are basically useless. These have no value even if the business does well in the future. The point of owning a business is not just for the profit sharing, it is also the fact that you own part of a business and can sell it off later if you need/want to. What a fucking joke, no wonder they are going out of business.
Posted by Packeteer on November 27, 2010 at 6:10 PM · Report this
watchout5 14
Why don't they just sell discount cards? They shouldn't call something stock if it has almost 0 of the properties of stock. For this confusing mess, no soup for them.
Posted by watchout5 http://www.overclockeddrama.com on November 27, 2010 at 7:57 PM · Report this
Free Lunch 15
If being an owner came with benefits - even, say, $1 off the ticket price for $100 investors - then I'd be willing to throw that money away. It's probably doesn't speak well of me, but I like to feel appreciated.
Posted by Free Lunch on November 27, 2010 at 10:55 PM · Report this
fixo 16
I am not looking at the brochure, but restrictions on resale and disclosures like that are a feature of virtually every offering of securities you'll ever see, other than fully registered offerings of stock in widely held public companies. In fact, they are mandated by federal and state securities laws as conditions of offering securities without the onerous and expensive registration and disclosure requirements of mounting a "public offering." If you ever see an offering without those features, you should be even more skeptical.

But the existence of legally-imposed resale restrictions has nothing to do with whether a security is "stock."
Posted by fixo on November 28, 2010 at 7:24 AM · Report this
Rotten666 18
@17 Ahem.

Do you or don't you want a first run cinema that isn't owned by a giant corporation that could give a rat's ass about you or your community?

Giant corporate cinemas don't beg for handouts from the community. And should I really give a fuck if it is an independent operator or an AMC that is showing the same tired shit at this particular spot? The corporate bogeyman trope is lazy mi amigo.

Do you think losing the cinema will have a detrimental effect on our little business district?

Uh, have you been to a movie there recently? I have never see a flick that was more than a third full. The closing of the CCC will have no affect on the viability of the adjacent businesses.

If the cinema goes under, and then someone else decides to move in and have a cinema there, they would still have to raise the capital to pay for the new sprinkler system before they could even open the doors.

What's your point? Someone will eventually have to put a sprinkler in there so the locals should foot the bill for the clowns that run the theater now? Get the fuck outta here.

The writing has been on the wall for a long time. Real managers would have addressed the fundamental cash flow problems long ago without begging for a handout. If you donate money to the CCC you're an idiot. Like @5 said, donate to people in real need by giving to the Rainier Valley food bank.

Posted by Rotten666 on November 28, 2010 at 4:43 PM · Report this
19
http://www.youtube.com/watch?v=Az6vux4i8…

The moving image I'm watching today with its sound track electric jazz plugged into stereo amp.

McMennamins to the rescue....
Posted by Wells on November 28, 2010 at 5:55 PM · Report this
Posted by meks on December 7, 2010 at 7:11 PM · Report this

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