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The Movies in Russia: A Happy Ending After All


American Paul Heth landed in Moscow in April, 1993, with $600 in his pocket and a thirst for adventure. The California-born film buff quickly noticed one thing about the Russian capital: For all the signs of Westernization, Moscow was a letdown for moviegoers, with crummy one-screen cinemas dating from Soviet times. Where, he wondered, was the surround sound? The big tubs of popcorn? The plush, comfortable seats? That gave Heth an idea: If no one else would build decent cinemas, he would do it himself.

Cut to October. That's when Moscow inaugurated its first English-language theater, the American House of Cinema, which Heth set up after scraping together the few thousand bucks needed to convert a conference hall at Moscow's Radisson-Stavyanskaya Hotel. Ten years and two more cinemas later, Heth is dreaming bigger. "I had a vision of building a Western-style cinema chain with multiple locations," says the 40-year-old soldier-turned-entrepreneur. That vision is about to become a reality, with the Sept. 19 opening of KinoMir Delux -- the largest movie house in Russia, with 11 screens and 3,250 seats.

To be sure, Heth isn't the only one looking to lure Russians to the box office. About 20 multiplexes are set to open in Moscow in the next couple of years, many of them at the gleaming shopping centers cropping up all over the capital. The potential seems limitless: Only 8% of Russians go to the movies at least once a year. The country has just 0.16 cinema screens per 100,000 inhabitants, compared with 5 in Western Europe and 14 in the U.S. "The theatrical exhibition business is an underfinanced sector of the economy," says Stanislav Pribylov, general director of Cinema Park, a new chain financed by Prof-Media News & Publishing Holdings, an arm of Interros Co., a Russian conglomerate with interests ranging from metals to agriculture. Prof-Media is plowing $100 million into Cinema Park.

That's an unexpected plot twist: Until a few years ago, most investors would rather wager their money on casinos or nightclubs for the new elite than on movie houses for the rank and file. And no wonder: Although Russia had a rich film culture during its Soviet days, the economic turmoil of the 1990s made a trip to the movies a luxury few could afford. By 1999, ticket sales had slumped to $10 million a year. Many cinemas closed, while those that remained open could not afford to upgrade or expand. Now, in this era of economic stability and rising incomes, Russians are rekindling their love affair with the silver screen. Box-office sales have surged more than tenfold since 1999 and are on course to reach $1 billion a year by 2010, predicts Prof-Media.

Foreign companies are already lining up. National Amusements Inc., the owner of America's No. 6 cinema chain and controlling shareholder of U.S. entertainment giant Viacom Inc., has teamed up with Heth to build four or five multiplexes in Moscow and St. Petersburg at a cost of $60 million. The first, the KinoMir Delux, is inside a shopping complex owned by Swedish furniture chain Ikea located on the southern outskirts of Moscow. Heth first approached National Amusements with the idea of building Russian cinemas back in 1994, but the U.S. company turned him down. However, National Amusements President Shari M. Redstone changed her mind after visiting Russia last year. "I was very surprised," she says. "Russians clearly love entertainment. They love going to the movies -- and American movies -- and they love having a night out."

To cater to this nouvelle vague of film buffs, existing chains are sprucing up. Karo Film is modernizing a number of its 15 theaters and adding new ones, such as Moscow's nine-screen Formula Kino, which it inaugurated last year in partnership with another local chain, Imperia Kino. Meanwhile, Prof-Media's Cinema Park is gearing up for the opening of its first Moscow multiplex in December. "Each year, box office sales have been doubling, so it would be very difficult to find a more dynamic sector," says Vadim Goryainov, director general of Prof-Media. Popcorn, anyone? By Jason Bush in Moscow


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