The Business of Exhibition
Exhibitors have three main revenue sources: box office receipts, concessions, and advertising (see Exhibit 9). Managers have low discretion; their ability to influence revenues and expenses is limited. Operating margins average a slim 15 percent; net income may fluctuate wildly based on the tax benefits of prior losses. Overall, the business of exhibitors is best described as loss leadership on movies: the firms make money selling concessions and showing ads to patrons who are drawn by the movie.