THIS PAST TUESDAY the ninth, our venerable Landmark/Seven Gables theater chain likely changed hands in Delaware federal bankruptcy court. Its prior owner, Dallas-based Silver Cinemas International, bought the chain in ’98 for $65 million. Since then, the movie exhibition industry has fallen on hard times, with numerous companies entering Chapter 11 bankruptcy protection. SCI joined those ranks in May. Its Landmark circuit is the only asset expected to sell for good money, since the rest of SCI’s screens tend to be discount houses showing second-run titles. (SCI hopes not to be sold piecemeal, but the court decides what’s best.) Meanwhile, an ominous DCLU change-of-land-use sign has appeared on the U District’s almost 13-year-old Metro Cinemas, as the building’s owners consider more profitable tenants for the space.

What gives? The most popular explanation is overscreening. Nationwide, the number of movie screens roughly doubled to over 37,000 in the last 20 years; ticket sales increased only 43 percent during the same period. While Seattle figures are guesswork, our statewide screen count has increased from 487 to 822 between 1986 and 1999, while theater sites have remained flat, echoing national trends, according to the National Association of Theater Owners.

Over the last five years, exhibition companies raced to build lavish “megaplex” facilities, typically with raked stadium seating, better snack bars, and nicer interiors. They spent wildly, taking on too much corporate debt, and ironically cannibalized business from their own existing older multiplexes (which they’ve had trouble closing because of long-term leases that Chapter 11 can allow them to escape). Some analysts now predict that as many as 15,000 screens need to be closed to end the glut and restore profitability to the industry.

Meanwhile, in downtown Seattle, the death knell of local cinemas has been ringing steadily for the last five years, with competition and excess capacity being the principal culprits. The City Centre Cinemas brought two new screens to the retail core in ’89. The Newmark’s five screens lasted from ’91 to ’97. The Meridian added 16 more in the fall of ’96; Pacific Place contributed another 11 in ’98. As a result, the UA70/150 closed in ’98; the King gradually went dark during the ’90s; and the Cinerama would’ve likely been razed for its real estate value were it not for Paul Allen’s philanthropic purchase in ’98.

SURPRISINGLY, Landmark looks pretty stable amid this volatility, even as its parent company suffered. It’s the preeminent art house chain in the United States, with 53 theaters and 167 screens in 11 states. Here, generally known as Landmark/Seven Gables (since locally owned Seven Gables sold to California-based Landmark in ’86), there are 28 screens in nine locations. Moreover, LSG doesn’t face that much local competition beyond the Grand Illusion and Little Theatre for specialty films. For example, Crouching Tiger, Hidden Dragon is playing at only one non-LSG venue, the Uptown (albeit on all three screens). LSG has a Seattle exclusive on O Brother, Where Art Thou? as well as a lock on profitable long-runners, such as Best in Show and You Can Count on Me. Yet Steven Soderbergh’s Traffic, which has the potential to be a mainstream hit, is playing on several rival screens, while the Metro has to fill some of its 10 tiny theaters with mainstream fare also showing elsewhere.

With a central urban population just over half a million, Seattle’s considered the third- or fourth-largest market for Landmark, which claims to be profitable. From California, the company’s Michael Williams boasts, “In our niche we are the biggest player. We see this as a growth industry.”

The aging, charmless Metro may be a different story. Williams concedes the marketing appeal of posh new megaplexes that are costly to build and less space efficient than the frugal Metro. He cites upgraded seats and sound equipment at the theater, but admits that it could never be megaplexed. Still, with the Neptune and Varsity in close proximity, he declares, “We own the U District.”

LSG’s district manager Teri White says of the threatening DCLU placard, “The first we knew was when the sign went up,” adding that there’s been no subsequent contact with the Metro’s landlord. Its lease is subject to renegotiation under Chapter 11, she explains.

Has the Metro been hurt by the shift in recent market forces? “The downtown theaters have certainly had an effect on us,” she concedes, while maintaining that the U District can continue to support a multiplex. “It’s still a good market; we want to stay at the Metro.”

SEATTLE MOVIEGOERS may well wonder, “What does it mean to us?” The loss of one U District multiplex with difficult parking—although recently improved with the Trader Joe’s garage—doesn’t seem that earth-shattering. And undeniably, newer venues like Pacific Place are much nicer. Carless U-Dub students wouldn’t be happy, but movies may soon be streaming to their dormitory desktops. Collectively, however, LSG’s nine theaters could be jeopardized, or strengthened, by a variety of sale scenarios.

According to Francesca Dinglasan, senior editor at Boxoffice Magazine, “The industry is so unattractive” that potential investors are few. “There’s going to be consolidation all around,” she says of the beleaguered exhibition biz. “Can it stand alone again?” she asks hypothetically about Landmark. “There’s just generally less of an audience,” she says of the aging of the baby boomers, which—along with VHS and DVD—has eroded interest in foreign and art house cinema.

If big corporations don’t bite, she notes, some private boutique options might be available. Given the recent demise of a proposed Sundance-branded art house cinema chain, Robert Redford could be a Landmark suitor. “Because when you attach that name,” Dinglasan continues, “that might raise some potential interest”—and financing. She also cites the high-end model of NYC’s trendy Angelika Film Center: “It’s because it’s an upscale venue. Seattle is a pretty sophisticated market too.” In other words, we could expect to pay New York prices—$10 a ticket—if an investor wanted to take LSG in that direction.

Moreover, Variety reported last month that of the handful of potential bidders for SCI, only one was an entertainment company. The rest were financial concerns, raising the possibility that an investment partnership could buy the whole, then strip its assets—LSG included. Dinglasan concludes, “Everybody’s guess, including mine, is that they’d be more successful trying to sell them off piecemeal to independent operators or on a market-by-market basis.”

IRONICALLY, THAT MIGHT return us to the Randy Finley days of the autonomous Seven Gables chain, which he built from scratch in the early ’70s. Or the right national company with the right brand cachet might find value in the entire LSG circuit. Names like Miramax, HBO, and Fine Line come to mind. (Old federal antitrust laws against studios owning theaters have relaxed in recent years; the new Bush era will only bring further deregulation.)

Who else could purchase the chain? We’d like to see movie-loving Paul Allen step up to the plate, but a spokesman says LSG isn’t in his investment plans. Still, if no buyer emerges this week for either SCI or Landmark, the latter’s value may drop. (Variety mentioned the figure of $40 million.) A savvy bargain hunter in real estate and cable, Allen could then reconsider his options. He’s already sunk millions into the DreamWorks SKG studio, burned cash in the short-lived entertainment Web site Pop.com, and probably spent around $5 million to purchase and renovate the Cinerama. Clearly, the guy loves movies, and all or part of Landmark’s chain could be his for the taking—because if you want to be a mogul, you gotta have someplace to put on a show.