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?

running a movie theater. He realized we had a level of expertise. He wanted to learn, and that’s the reason we’ve been successful.”

Successful indeed. Together, Loews and Johnson have built theaters in Los Angeles, Atlanta and Houston. Construction is under way in Cleveland (a theater is slated to open this fall) and Harlem (where one will open next spring). In 1998 total gross revenue for the three theaters was approximately $20 million, of which JDC got 50% of the profits.

Moviegoers have flocked to Johnson’s theaters. But there’s been the occasional bump along the way. For instance, Johnson took criticism last year when he flatly refused to allow the urban-themed film Belly to be screened in his theaters. Citing concerns about potential gang violence, Johnson took a pass on the film. In response, the movie’s African American director, Hype Williams, stopped just short of accusing Johnson of selling out and not supporting black filmmakers.

But for the most part the theaters have been a rousing success. The inaugural theater in Los Angeles is consistently a top-five theater in the Loews circuit and is currently the third highest grossing
theater in the city.

THE MAGIC BRAND
With the theaters in place, the next step was finding other businesses that would complement the theme. Johnson and Lombard didn’t have to look far.

“We built theaters and we waited for quality sit-down casual restaurants to come behind us,” says Lombard. “But what we found was an industry that was very much like the theater industry. Either through the franchise holders or the companies in charge, eateries weren’t willing to commit. We had customers coming in saying they loved the theaters, but they had to go all the way across town if they wanted to get something to eat.”

Lombard says he met with Starbucks chairman and CEO Howard Schultz, and the pair talked about their common interests in doing business in the inner city. After some preliminary discussions, a meeting with Johnson was set up. Johnson recalls flying out to meet Schultz on only a few hours’ sleep. “I laid my plan out to him,” says Johnson. “I told him Starbucks could boom in the urban community and said minorities are driving 40 minutes right now to get to a Starbucks. So you know if you put one right here they’re going to come. He was like, ‘How do you know that?’ And I told him because my theaters are in the same situation.”

Schultz says that, like millions, he watched Johnson play ball and had admired him from a distance. But he had no idea what their initial meeting would be like. “Earvin came in with an astute
understanding of our company and the opportunity that could come about with an alliance. We agreed we could add value to one another,” he says. “There’s a level of integrity that Magic has that transcends sports. Ken and Earvin have exceeded our expectations with their level of commitment.”

The first Starbucks opened last April in the Ladera Center a few miles from the

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