The Magic Touch

Earvin Johnson has worked his wizardry on his urban movie theater chain. But will his mastery continue as he seeks to become the country's leading entertainment entrepreneur?

be as good as he is now.”

Because of the constraint on Johnson’s time, Graves and Johnson mutually agreed to dissolve the partnership in 1992. Johnson went on to form JDC. Today one of his closest advisors is Kenneth Lombard, president of JDC, who oversees the daily operations of JDC and Magic Johnson Theatres. Lombard was formerly executive vice president of the Economic Resources Corp., where his duties included raising venture capital for ERC’s capital fund. Today he acts as Johnson’s point guard, assisting him in landing the next big deal.

Together, the pair say some due diligence and a little homework were what first attracted them to the idea of opening movie theaters. “Approximately 32%-35% of the movie audience is minority, but we have [no theaters] in our neighborhoods,” says Johnson. “We have to drive 30-40 minutes to get to a theater. So it seemed like a natural,” he says. Johnson researched the local Los Angeles neighborhoods and found that the Crenshaw district had a per-household income of nearly $50,000. “So you’re sitting there with almost 2 million people in a four- to five-mile radius. The math was easy,” Johnson says.

The next step was finding a willing, knowledgeable partner with deep pockets. So they contacted Lawrence J. Ruisi, president and CEO of Loews Cineplex Entertainment. “Larry was convinced this was an opportunity for them. But he also realized they needed a strategic partner who knew the community and understood the operating style would be different from your approach in suburban America,” Lombard says. “It affects everything from the different types of food that you offer to how to incorporate security elements in an environment that is safe yet not offensive.”

Ruisi says that in Johnson he saw a potential partner eager to tap into the minority community-an area that Loews was very interested in. “We knew it was an untapped market. But it was one that needed to be approached in a different manner,” Ruisi says. “We wanted the community to accept and welcome the theater that we were bringing to the market. Combining our expertise in how to run and operate a theater and Earvin’s ability to get community support was how it got started.”

Johnson’s willingness to lay his own money on the table, approximately $2.5 million, also facilitated the deal. “He’s a full partner in this business,” says Ruisi. “So he was coming to the table with capital and taking the same risk as we were.”

The way the partnership is structured, both sides must mutually agree on when and where new theater complexes will be developed. Loews and JDC handle the day-to-day operations. However, JDC, which comes in as a tenant once a location is selected, scouts potential sites and deals with local government officials to generate the support to get the theaters built.

“When you sit down and talk to him, what Earvin displays is the ability to listen and learn,” adds Ruisi. “He didn’t walk into this with notions that he knew everything there was to know about

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