The Circle Theatre chain, a Washington institution started in 1957 by law-student movie buffs Ted and Jim Pedas, agreed yesterday to be purchased for $45 million by Cineplex Odeon Corp. of Toronto, a large chain known for its lavish theaters.
The Pedas brothers, who declined to comment on the sale, also will receive $1 million a year for six years as consulting fees and payments to ensure that they do not compete in the theater business.
In recent years, the Pedases have branched into movie production and distribution. Sources said they planned to continue in those fields.
The purchase makes fast-growing Cineplex Odeon the biggest name on Washington movie marquees. A year ago, the company bought another chain of local theaters, Neighborhood Theaters Inc., and this week it will open a six-screen theater complex on upper Wisconsin Avenue.
The purchase of the 80-screen, 22-theater Circle chain -- which is expected to be completed next month -- will give Cineplex Odeon 170 screens at 50 locations in Washington, Maryland and Virginia. About half of them are in the District and its suburbs. Nationally, Cineplex Odeon has more than 1,500 screens at nearly 500 locations.
Garth H. Drabinsky, a former entertainment lawyer, launched Cineplex in 1979. The company's explosive growth -- much of it through acquisitions -- has brought him the nickname "Darth Grabinsky."
With Drabinsky's passion for pizzazz and his emphasis on quality -- from marble floors to state-of-the-art cinemas to real butter on popcorn -- industry observers expect the powerful Cineplex Odeon to make its presence felt in the lucrative Washington movie market, which for years has been dominated by the Circle and K-B Theatres chains.
"Drabinsky is dedicated to first-rate projects," said Douglas Gomery, a University of Maryland professor of film and a trustee at the American Film Institute. "He'll set great standards."
Gomery also noted that those standards don't come cheap. In New York, for instance, Cineplex Odeon created a furor when it increased its ticket prices from $6 to $7, and Loews Theaters quickly followed. Drabinsky said in an interview yesterday that he has no such price hikes planned for the Washington area.
Drabinsky said Washington ranks behind only New York, Los Angeles and Chicago as a major movie-going city. "It will always rank high because of the stability of the economy, and it has a strong educational and institutional base," he said.
The Pedas brothers started the Circle chain in 1957 when they were law students at George Washington University. Tired of the tepid fare at the Circle Theatre on Pennsylvania Avenue near the GWU campus, the brothers bought the theater. They turned it into a repertory house whose frequently changing double bills were a staple of the local movie scene until the Circle was torn down last year to make room for an office building.
The Pedases added theaters to the Circle chain over the years, usually buying rundown local movie houses and refurbishing them. In recent years, though, the company has been building new theaters, including a six-screen complex in the Shirlington neighborhood of Arlington that opens this week. The chain's growth has helped fuel a movie theater boom in Washington in recent years, particularly on Wisconsin Avenue.
Cineplex Odeon's acquisition of Circle will leave the K-B chain in distant second place in the Washington movie market. K-B has 52 screens at 17 area theaters.
K-B President Ron Goldman predicted that despite Cineplex Odeon's formidable size and resources, his chain will fare well in the competition. "I just think a local independent chain operating in a small geographic location can hold its own against any larger theater chain ... because I think we're more closely attuned to our public," Goldman said. "And, I might add, we have no intention of serving real butter."
Gomery said, "I would think that K-B would be scrambling like crazy. Instead of facing an equal Washington competitor, they will be facing Hollywood." Entertainment conglomerate MCA Inc., which also owns Universal Pictures, a major movie and television production company, owns 45 percent of Cineplex Odeon.
Goldman noted that with the involvement of MCA and other movie companies in the theater business, the industry "has come full circle." In the 1930s and 1940s major film companies owned theaters as well as producing and distributing films.
The Justice Department later blocked such vertical integration, arguing that it was leading to predatory practices that were driving other competitors out of business. But the standards have been relaxed in recent years and movie studios have gone back into the theater business.