Indie cinemas condemn royalty charges

Independent cinemas have warned their viability is being threatened as a result of proposed changes in the way they pay royalties to the Irish Music Rights Organisation (IMRO).

IMRO is seeking to replace a tiered system of royalty payments with a 1 per cent levy on the gross box-office takings of every cinema in the country.

Cinemas in towns of less than 15,000 inhabitants currently pay a fee of €425 per screen per annum, while those in bigger urban centres with four screens or less pay 0.6 per cent of gross box-office takings. The bigger multiplexes pay 1.5 per cent.

IMRO is also proposing to backdate the payments for five years when the measure was originally proposed.

Smaller cinema operators who attended a meeting hosted by IMRO today said the proposal amounted in some cases to a five to sevenfold increase on their existing royalties payments.

Martin Barrett, the operator of Eclipse Cinemas in Bundoran, said the proposed levy was on 1 per cent of the gross, but the cinema owners had to operate on half that figure once they paid the distributors.

“This is going to absolutely crucify us. We just can't afford it. They are looking for 1 per cent of the whole damn lot,” he said. “There is great community value in having a cinema in a town. This has the potential to rob it of that. There are a number of cinemas in which there is a family holding the cinema together, the husband, the wife and the children are running the place. They are just barely getting a wage.”

Kieran Gleeson, the owner of the Classical Cinema in Listowel, said the proposed charges were unfair given that larger multiplexes would be paying less under the new scheme. "These increases are coming during harder times. It is going to be very difficult," he said.

Paul Anderson, the managing director of the Ward Anderson Group, the country's largest cinema operators, said they would have to pay €260,000 extra this year, wiping out the profit in seven of their smaller cinemas.

Mr Anderson said the proposed imposition of the new tariff would have a serious impact on the smallest cinemas operating on tight margins. “Ireland has a great tradition of cinemas in small towns. These cinemas never wrote this into their equations or into their business plans. Now they are being hit by a 400 per cent to 500 per cent increase,” he said.

IMRO chief executive Victor Finn said they had received a “clear message” from smaller operators who attended the meeting in Dublin.

“We are actively engaged at examining how we can address the issue from the smaller cinemas point of view,” he added saying that they were currently engaged in a consultation exercise with the industry and nothing had been decided.

He explained that the desire to have a general rate was to ensure consistency across the industry. “We have an obligation to treat all cinema operators in a fair and consistent manner,” he said.