Final Regulatory Assessment and Final Regulatory Flexibility Analysis Final Rule - Nondiscrimination on the Basis of Disability by Public Accommodations - Movie Theaters; Movie Captioning and Audio Description

This section shows the results for the primary analysis using 7-percent and 3-percent discount rates.  First, the total costs of the rule are presented by cost category and by venue type in Section 4.1.1.  Next, a detailed breakdown of the upfront costs (equipment acquisition and installation) is presented in Section 4.1.2.  The ongoing annual costs (replacement, training, and maintenance and administrative costs) are presented in Section 4.1.3.

Total costs in the primary analysis are calculated by venue type and include the cost categories listed below:

• Captioning Hardware Acquisition Costs;

• Audio Description Hardware Acquisition Costs;

• Captioning Device Acquisition Costs;

• Audio Description Device Acquisition Costs;

• Installation Costs;

• Replacement Costs;

• Training Costs; and

• Maintenance and Administrative Costs.

The total costs in the primary analysis are calculated based on the data and assumptions presented in Chapters 2 and 3.  As described in Section 3.2.2, the primary analysis incorporates the Medium Accessibility baseline, which is based on data available in NATO’s 2015 Accessibility Survey.²⁷  Table 4-1 below shows the total costs in the primary analysis by cost category.  The total cost impact of the rulemaking over the 15-year period of analysis is $88.5 million when discounted at 7 percent, and $113.4 million when discounted at 3 percent.

This section breaks down the upfront costs incurred by all movie theaters subject to the rulemaking.  Movie theaters incur the majority of the upfront costs during the first two years of the analysis (Table 4-5) leading up to the 18-month compliance date.  However, the cost estimation also includes the costs incurred by new auditoriums opening after the 18-month compliance date.  As a result, equipment acquisition and installation costs are incurred over the entire 15-year analysis period in the primary analysis.  Table 4-4 shows the total equipment acquisition and installation costs incurred over the 15-year period of analysis by venue type.  Overall, the upfront costs to movie theaters are expected to total $34.2 million when discounted at 7 percent.

Table 4-4 : Total Upfront Costs by Venue Type in Primary Analysis, Discounted at 7 Percent ($ millions)

Table 4-5 shows the upfront costs incurred during the first two years of the analysis.  In the primary analysis, movie theaters with auditoriums subject to the rulemaking must comply with the rule’s requirements by the end of 2017.  As a result, movie theaters with auditoriums currently exhibiting digital movies will purchase and install the necessary equipment in 2016 and 2017.  As described in Section 2.1.2, the analysis assumes that 33 percent of these auditoriums will purchase equipment in 2016 and 67 percent will purchase equipment in 2017.  Overall, the upfront costs are expected to total $25.6 million over the first two years of the analysis, with $8.9 million incurred in 2016 and $16.6 million incurred in 2017 when discounted at 7 percent.

Table 4-5 : First Two Years of Upfront Costs in Primary Analysis, Discounted at 7 Percent ($ millions)

The ongoing annual costs are costs that movie theaters incur in addition to the upfront costs.  The ongoing costs quantified in the cost estimation include equipment replacement, staff training, and maintenance and administrative costs. 

Table 4-6 shows the replacement costs associated with each type of equipment necessary to provide closed movie captioning and audio description.  Replacement costs are expected to be $36.1 million over the 15-year period of analysis when discounted at 7 percent.  As detailed in Section 3.6.2, a portion of the required captioning devices are replaced every year and make up the majority of the equipment replacement costs in the primary analysis ($26.6 million).  Audio description devices are also replaced every year, but because these devices are less expensive on average than the captioning devices (Section 3.4), the associated replacement costs are much lower ($4.2 million).  Captioning hardware has the second highest replacement cost at $5.2 million over the 15-year analysis period, and audio description hardware has the lowest replacement cost at $0.1 million.  As described in Section 3.3.2, generally one unit of audio description hardware is required per movie theater complex in order for a movie theater to provide audio description in all of its auditoriums.  Also, the additional cost for audio description hardware is substantially lower than the cost of captioning hardware (Section 3.4).

The total costs estimated in Section 4.1.1, 4.1.2, and 4.1.3 represent the costs to all movie theater auditoriums exhibiting digital movies.  This section presents the estimated total costs that the average movie theater within each venue type will incur over the 15-year period of analysis.  The cost estimation in this section assumes that the average movie theater will purchase captioning and audio description equipment in 2016 and will maintain operations throughout the period of analysis.  For the purposes of this section, the average movie theater is not a theater already equipped to provide closed movie captioning or audio description before the rule goes into effect.

Table 4-8 presents the undiscounted upfront costs incurred by the average movie theater within each venue type.  The average upfront costs to a Megaplex movie theater that is not already equipped to provide closed movie captioning or audio description are approximately $27,358.  The largest expense associated with this rulemaking for a Megaplex movie theater is purchasing the captioning hardware for each auditorium.  The upfront costs for the average Single-Auditorium movie theater are $3,562, with the largest expense being the acquisition of captioning devices.  The upfront costs for the average Multiplex and Miniplex movie theaters are $18,309 and $9,834, respectively.