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Santa Monica's Third Street Promenade is a retail relic. Can it be saved?

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Santa Monica's Third Street Promenade is a retail relic.  Can it be saved?

Once Santa’s Monica’s signature destination for shopping and dining, the Third Street Promenade is showing its age.

Its decline has left the promenade’s landlords and city officials trying to counter years of stagnation, public safety concerns and fast-changing retail norms in an attempt to breathe new life into it.

The climb back to commercial viability is steep. Foot traffic at the pedestrian mall that teemed with locals and tourists during its heydey in the 1990s has been thinning for years, dropping by more than a third since 2019. “For rent” signs front a discouraging number of empty stores.

A visitor walks past a shuttered Market Pavilion now surrounded by cyclone fence on the Third Street Promenade.

(Genaro Molina/Los Angeles Times)

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The reasons for the Promenade’s troubles are many and layered. While, like many shopping districts and malls, it took a beating during the pandemic as shoppers stayed at home, its economic troubles predate COVID-19.

The Promenade, which has had few improvements since a renovation 35 years ago, was allowed to grow “tired and old,” real estate consultant David Greensfelder said. Its scale also presents challenges, as the mall’s unusually large stores are hard to fill in an era when many big retailers are reducing their footprints.

And issues and perceptions around public safety are also at play.

The Promenade’s reputation took a hit in May 2020 when protests in response to the murder of George Floyd devolved into violence and ransacking of stores. Over 100 businesses, many of them on or near the Promenade, were damaged or destroyed, said Santa Monica Mayor Phil Brock. In the years since, crime trends have been mixed in the city with robbery and shoplifting rates up slightly last year compared to 2022 and declines in several other categories. High-profile robberies in the region and an increase in the number of people living on the street in Santa Monica, meanwhile, have contributed to the sense among some that the Promenade is unsafe.

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“We’re not only trying to fight the actual crime that’s occurring because it is, but we’re also trying to rehabilitate this perception of safety in Santa Monica,” said Santa Monica Police Lt. Ericka Aklufi.

Signs in a store window warn "Silent alarm notifies police dispatch."

A passerby is caught in the reflection of an empty storefront available for rent on the Third Street Promenade in Santa Monica.

(Genaro Molina/Los Angeles Times)

On a recent weekday, “Optimus Crime,” a large mobile police command center that bears a resemblance to a Transformer, was parked at a crosswalk on the Promenade. Nearby, a banner hung over one of the mall’s vacant storefronts proclaiming, “Santa Monica is Not Safe.”

For the record:

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7:47 p.m. July 17, 2024An earlier version of this article said that John Alle manages 15,000 square feet of space on the Promenade; some of that space is elsewhere.

John Alle, who co-founded the Santa Monica Coalition about two years ago to bring attention to public safety issues in the city, manages about 15,000 square feet of commercial real estate, including the storefront where the sign hangs.

He claims rampant theft and near constant presence of homeless people forced one of his tenants in the building to leave. And although the sign likely is counter-productive to bringing people to the Promenade, Alle said he hopes the public shaming will prompt tourists and other visitors to demand the city do more to help the Promenade.

He added, “I don’t think it’s going to deter shopping. There’s not much shopping going on there.”

The high-profile success of the promenade in the 1990s also planted the seeds of the current struggle to keep stores occupied, experts said.

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Third Street for decades was Santa Monica’s main commercial strip, but by the late 1950s it was laboring to keep up with new regional shopping centers. After a lengthy renovation in 1989, when the mall was renamed as the Third Street Promenade, real estate developer Shaul Kuba and his partners started acquiring troubled properties on the Promenade at a deep discount and set out to find a flashy national tenant that could serve as a bellwether.

People in Adirondack chairs listen to a saxophone player.

Aaron Cohen plays the saxophone on Third Street Promenade earlier this month.

(Zoe Cranfill / Los Angeles Times)

They managed to land a Disney Store, and the match was lit, Kuba said. “That opened the door for a lot of other retailers — J. Crew, Banana Republic, Old Navy.” The Promenade began to thrive after a long stretch as a retail backwater.

But in recent years these “big box” stores have been hurt by competition from online sellers and narrowly-focused specialty retailers.

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They have adapted by opening fewer, smaller stores, which is a problem for the Promenade. As tenants have departed, they have left behind uncommonly large spaces because of Third Street’s history as a prime retail venue serving large stores.

“I think every landlord is hoping a big box is coming back, and sometimes they do, but really, across the country retailers are shrinking,” said retail property broker Christine Deschaine of Kennedy Wilson.

Out of necessity, landlords are getting creative in an effort to fill the space and adapt to the changing expectations and habits of consumers, who now rely heavily on online purchasing. Shoppers, said Lars Perner, who teaches clinical marketing at USC’s Marshall School of Business, want a unique experience, an antidote to the big chains that provide mass-produced products.

“The idea that you’re getting something special is what draws crowds,” Perner added.

What was once a JCPenney and later Banana Republic is now a roomy, upmarket John Reed Fitness gym. Pickleball is played at a hybrid clothing retailer, sports club and restaurant Pickle Pop, which occupies 10,000-square-feet that was a former Adidas store. The top floor of a shuttered food court will be transformed into a “golf experience” that may include miniature golf, Deschaine said.

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Other large store spaces may be carved into units for smaller tenants, as has been done successfully on nearby 2nd Street, Deschaine said.

Some noteworthy retail tenants are already on the way, she said, including a technology company she declined to name that has agreed to take a prime space at the Broadway entrance to the Promenade. Also generating buzz is the pending arrival on the Promenade of Raising Cane’s Chicken Fingers, a Louisiana fast-casual restaurant chain.

Restocking the Promenade with tenants is a tall order in part because of its overall size, said Devin Klein, a property broker with JLL.

People walk past a "Santa Monica is not safe" sign.

A sign in a Third Street Promenade storefront warns, “Santa Monica is not safe.”

(Dania Maxwell / Los Angeles Times)

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The Promenade and Santa Monica Place mall next door have a combined total of more than 1 million square feet, he said, about twice as much as the Grove shopping center in Los Angeles.

At its low point during the pandemic toward the end of 2020 and into 2021, vacancy on the Promenade rose to 30% to 35%, Klein said, and is now between 20% and 25%.

That improvement can be attributed to some property owners accepting that they can’t demand as much rent as they used to get when the market was hotter and landlords came to believe they could charge tenants “Rodeo Drive rents,” said Brock, Santa Monica’s mayor.

He added, “We were never Rodeo Drive.”

“Landlords have really started to play ball with retailers and adjust their rent according to the market,” Klein said, “which has allowed more spaces to to get leased.”

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Over the past several years, Santa Monica city officials have tried to make it easier to open and run a business on the Promenade.

It has eased restrictions on the types of operating permits it issues in an effort to reverse a past in which it “micromanaged a little bit and maybe went overboard” on what businesses could set up shop, said David Martin, the city’s Community Development director.

People on bicycles near Third Street Promenade.

Shopping traffic has long been in decline on the Third Street Promenade.

(Zoe Cranfill / Los Angeles Times)

For example, a quota on how many restaurants are allowed on a city block has been eased and a cumbersome entitlement process that effectively prevented pop-up events has been removed.

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“We are trying to make sure that the city process is as clear as possible, as fast as possible, and then leave it to the market to bring in the kinds of businesses that the public is demanding,” Martin said.

For several years, Santa Monica city officials have had a blueprint to dramatically transform the Promenade itself, which hasn’t seen meaningful changes in decades.

A proposal, dubbed Promenade 3.0, was devised in 2019 at the behest of the city and Downtown Santa Monica Inc. a nonprofit that works with the city to manage the downtown area. The plan by architecture firm RIOS would cost about $60 million and is intended to make the Promenade more engaging to visitors so they linger and shop more.

A primary goal would be to stop funneling people through the middle of the street and encourage them to circulate in a loop pattern. Curbs might be eliminated to make it feel less like a closed street. Rooftop restaurants would be encouraged. Additions could include beer gardens, water features, a viewing tower and small pop-up retail stations to incubate new stores.

The proposal was stalled by pandemic-related challenges including plummeting city tax revenue that could have helped fund it, RIOS architect Nate Cormier said.

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Martin said that property owners on the Promenade could possibly fund the initiative, but there’s nothing in the works.

“The idea of completely redoing the Promenade like was done in like the ’80s, that’s not currently on the table,” he said.

Nevertheless, the city’s seaside location will continue to make it a draw for visitors and businesses, encouraging recovery of the Promenade, Klein said.

“You can never change the fact that it’s still one of the prettiest areas in the world,” he said. “There’s always going to be some kind of a bounceback when you have this kind of real estate. Let’s face it — you’re a couple blocks from the ocean.”

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California's billion-dollar hydrogen hub project is approved — but not without controversy

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California's billion-dollar hydrogen hub project is approved — but not without controversy

The leaders of California’s embryonic hydrogen hub announced Wednesday that they have signed a contract with the U.S. Department of Energy worth billions.

The California hub is part of a $7-billion federal project to build the infrastructure for a “clean” hydrogen economy to replace fossil fuels and reduce greenhouse gas emissions. The California hub — known as ARCHES, or the Alliance for Renewable Clean Hydrogen Energy Systems — will net $1.2 billion of that federal money, with plans to bring in another $11.2 billion in private investment. California was awarded hub status in October.

Aggressive and impactful reporting on climate change, the environment, health and science.

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Private participants include oil and gas companies, labor unions, fuel cell makers, electric utilities, truck manufacturers and more.

A hydrogen hub is a network of hydrogen production plants, trucks and pipelines for distribution, and customers that include long-haul fuel cell trucks and buses, port equipment and electric generators.

ARCHES is the first of seven U.S. regional hubs to sign a contract with the Department of Energy.

In a news release, ARCHES Chief Executive Angelina Galiteva called the hub “a monumental step forward in the state’s effort to achieve its air qualify, climate and energy goals, while improving the health and well-being of Californians, and creating green jobs across the state.”

ARCHES board member Bill Burke was even more effusive: The hub’s creation serves as “a testament to our collective dream of a sustainable future where clean energy and equal opportunity uplift every community and provide equitable advancement for the future of our workforce. Together, we are planting seeds of change and nurturing a brighter, more inclusive tomorrow.”

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Whether ARCHES can deliver remains to be seen. Clean hydrogen is enormously expensive, with prices far too high to compete against fossil fuels in a competitive market economy. The aim is to subsidize the cost of hydrogen fuel until the industry reduces costs and grows big enough to stand on its own. Galiteva said hydrogen fuel prices could be competitive by 2032.

Some environmentalists are wary of hydrogen, claiming it’s not as clean as its proponents make it out to be. That issue is sure to be debated as ARCHES moves forward. Depending on how the hydrogen is made, it could provide cleaner energy alternatives for hard-to-decarbonize sectors, such as steelmaking and cement production.

California’s hydrogen projects will be located around the state, though heavily concentrated in the Central Valley. Trucks and pipelines will carry hydrogen to end users.

The money will be handed out to dozens of individual, although tightly coordinated, projects. They’ll include 10 hydrogen production sites, truck fueling stations, replacement of diesel-powered cargo-handling equipment at the state’s major ports and experimental prototypes for uses such as ocean shipping.

ARCHES said 220,000 well-paying jobs will be created, with special attention to disadvantaged communities. The hub “will create thousands of union careers while providing continued employment for for existing skilled and trained union members,” said Chris Hannan, president of the State Building and Construction Trades Council of California and a member of the ARCHES board.

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Reduction in local pollutants will result in $2.95 billion per year in decreased healthcare costs, ARCHES said.

ARCHES is not a government body but a public-private partnership. It’s registered as a limited liability company, or LLC, with four partners: the California Governor’s Office of Business and Economic Development, the University of California system, the State Building and Construction Trades Council of California and the Renewables 100 Policy Institute.

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Column: Why hugely profitable corporations won't spend enough to keep hackers from stealing your private info

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Column: Why hugely profitable corporations won't spend enough to keep hackers from stealing your private info

AT&T is one of America’s largest telecommunications companies. Last year it recorded a pretax profit of nearly $20 billion on $122.4 billion in revenue.

So why, you might ask, has AT&T been so pathetically sloppy about protecting its customers’ private information that the data of nearly all those customers — 110 million users — ended up in the hands of a “financially motivated” hacker group?

The breach was revealed on July 12, although it mostly occurred in 2022; AT&T attributed the reporting delay to requests from federal authorities to keep it under wraps while they investigated its national security significance.

Protecting your data is one of our top priorities.

— AT&T, after disclosing that personal data of as many as 110 million customers was stolen by hackers

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This breach, cybersecurity experts say, is especially alarming because of the nature of the stolen data. It’s not merely financial data such as bank account or Social Security numbers that might enable hackers to raid a victim’s bank account or engage in identity theft to open new accounts.

In this case, it included information about what numbers were called by hacked users and the numbers that called them; the length of calls, and location data — where you might have been when making or receiving a call. The data the hackers snarfed up came from May through October 2022 and Jan. 2, 2023.

“Telecom providers hold some of the most sensitive information on consumers — a map of their daily lives — where they are, who they’re talking with, their social graph, everything,” says cybersecurity professional Brian Krebs.

The latest disclosure of a hack at AT&T might be considered a signpost for “the year of the megabreach.”

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It follows AT&T’s announcement in April of an earlier, unrelated breach that may have compromised the Social Security numbers, PINs, email and mailing addresses, phone numbers, dates of birth and AT&T account numbers of 73 million current and former AT&T customers.

Both AT&T incidents pale in comparison with a massive data breach earlier this year at UnitedHealth Group, the nation’s biggest health insurance and health provider conglomerate. According to congressional testimony by UnitedHealth Chief Executive Andrew Witty and company news releases, a ransomware attack on the company’s Change Healthcare subsidiary has affected as many as 1 in 3 Americans.

Change Healthcare manages patient payments and reimbursements to medical providers. The ransomware hack crippled medical services nationwide and resulted in the exposure of patients’ treatment details and billing information, including credit card numbers. Patients reported that pharmacies were refusing to fill prescriptions because they couldn’t access insurance approvals, risking the patients’ health.

UnitedHealth said it paid a $22-million ransom in bitcoin, but couldn’t be sure that all the hacked information was returned. It also said that it advanced about $9 billion to providers to cover their expenses before their billing could be restored.

The company told Congress that it already had in place “a robust information security program with over 1,300 people and approximately $300 million in annual investment,” but of course those figures are meaningless — the question is how much it would cost to actually have a “robust” program in place, since $300 million obviously isn’t enough.

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The breach occurred, according to testimony and statements by the company, because UnitedHealth tried to integrate Change Healthcare’s technology system with its own without first ensuring that Change’s system would require multifactor authentication, a basic security feature that requires users to enter an algorithmically generated code along with their password to gain access to a system or account.

The hackers breached “a legacy Change Healthcare server” that didn’t meet the parent company’s standards, the company said — but it used the noncompliant equipment anyway.

Data breaches affecting hundreds of thousands or millions of consumers have become such familiar features of the consumer landscape that the guilty companies respond with a standard playbook replete with promises to customers.

They point out all the data that wasn’t compromised — AT&T told customers that the latest debacle didn’t involve “the content of calls or texts, personal information such as Social Security numbers, dates of birth, or other personally identifiable information.” That’s a bit like airlines following up reports of deadly crashes by pointing out how many planes land and take off safely every day.

The companies typically offer aggrieved customers free credit monitoring and identity theft protection for a period of time; at UnitedHealth, that period is two years.

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Whether those services are useful is open to question — after a 2017 data breach at the credit reporting firm Equifax exposed the personal data of 143 million Americans, the identity theft service LifeLock trumpeted its protective services (at $29.99 a month). What LifeLock didn’t make very clear was that the services it was selling were actually provided byEquifax.

The breached companies also attest to their determination to get to the bottom of the hacks, and to their commitment to customer security. AT&T’s recent breach disclosure included this pledge: “Protecting your data is one of our top priorities.”

If there were a trophy for flagrant lying in marketing materials, this would be a strong contender. Under the circumstances, it’s either blatantly untrue or reflects a critical flaw in the company’s fulfillment of its priorities. I asked AT&T what steps it has taken to discipline or remove any executives charged with fulfilling such a crucial priority, up to and including the CEO. AT&T didn’t respond directly to this or other questions I submitted, but referred me to its news release and a customer Q&A on the topic.

AT&T says the breach occurred in a company connection to a third-party cloud data service called Snowflake, to which it had entrusted its customer data. As it happens, some 165 of Snowflake’s corporate clients may also have been targeted by the hackers who struck AT&T. An ongoing investigation by cybersecurity experts suggests, however, that the fault isn’t Snowflake’s — it’s the fault of those clients, who didn’t observe best security practices.

That points to several issues that contributed to AT&T’s breach — and similar breaches around the corporate world. One is why AT&T is hoarding so much information about its users in the first place.

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“To have years of call histories, text message histories and location data makes you a massive target for hackers,” says Albert Fox Cahn, executive director of the Surveillance Technology Oversight Project, a New York nonprofit.

“Why does AT&T keep so much information on so many users?” Cahn asks. “They have a perverse incentive to hold on to as much of our data as possible, to think about new ways to mine it for value. When they do that, we’re the ones put at risk.”

In any event, if AT&T is going to store data this sensitive, he says, it needs to employ more rigorous safeguards to protect it.

Yet in corporate America, cybersecurity has been an afterthought, if it receives any thought at all. “These companies at some point decide that it’s really expensive to care a lot more about security when there really aren’t a lot of consequences for screwing it up,” Krebs told me. “You might get sued or have to pay a few hundred million dollars in fines, but these are rounding errors on their profits.”

The European Union’s General Data Protection Regulation allows for a fine of up to 4% of a company’s annual revenue for an especially severe breach, but it’s unlikely that such a penalty could be legislated in the U.S. (If it were, AT&T might be liable for a bill of $4.9 billion.)

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Krebs blames indifferent boards of directors for their inattention. Even a data-oriented company such as AT&T has no directors with specific expertise in cybersecurity. Of the nine directors in place as of the 2024 proxy statement, five are credited with experience in technology and innovation, according to what Villanova University business professor Noah Barsky correctly calls “perfunctory” language in their bios in the company’s 2024 proxy statement.

Only one, Stephen J. Luczo, is said to have any particular expertise in cybersecurity, but that’s only as a private equity investor — his background is in investment banking. The board’s newest member, Marissa Mayer, may have cybersecurity experience, but it’s not encouraging: During her tenure as CEO of Yahoo (2012 to 2017), that company experienced an epic data breach that compromised all 3 billion of its user accounts.

“It’s clear that industry is never going to do enough on its own” to protect customer data, Cahn says. The task may have to be placed in regulatory hands. Krebs suggests something akin to a cybersafety review board to introduce something close to accountability. Cahn suggests rules requiring the proactive deletion of sensitive information such as location data and medical records — “You can’t steal what doesn’t exist,” he told me.

The market may yet exercise its own discipline. UnitedHealth is learning the hard way that carelessness about cybersecurity can have a material effect on earnings. In its second-quarter earnings report released Tuesday, the company said that the full-year cost of the Change Healthcare hack may come to as much as $2.05 per share, an increase of as much as 45 cents from its original estimate. Its second-quarter earnings came to $4.54 per share.

But it’s customers who will really bear the costs. “Most Americans,” Krebs says, “have no choice but to do business with these companies if they want to participate in the modern society.”

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How Neon's 'Longlegs' became the surprise indie horror hit of the summer

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How Neon's 'Longlegs' became the surprise indie horror hit of the summer

The greatest plot twists lie at the end of a long trail of clues, dramatically revealing an answer hidden in plain sight all along.

The marketing campaign for independent distributor Neon’s surprise horror smash, “Longlegs,” took that concept a step further.

Breadcrumbs — in the form of enigmatic trailers, chilling phone messages, encrypted newspaper ads, fake blog posts and other stunts — littered the promotional path to “Longlegs.” And audiences took the bait, handing New York-based Neon its biggest opening ever as well as the best launch for an independent horror flick in a decade.

The R-rated title — which cost less than $10 million to make and promote, according to the studio — premiered at No. 2 last weekend with $22.6 million in domestic ticket sales.

Its performance “seemingly came out of nowhere,” said Comscore senior media analyst Paul Dergarabedian, especially when sandwiched between safer, flashier pushes for major studio films such as “Despicable Me 4” and “Twisters.”

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“If you had talked to people a month ago and said, ‘Is this movie “Longlegs” on your list of films to be one of those sleeper, surprise hits?’ they’d say, ‘What’s “Longlegs”?’” Dergarabedian said.

“Getting audiences on board like this is not easy,” he added. “The way you entice that audience is to do something that goes above and beyond the ordinary … and they certainly did that.”

Helmed by Osgood Perkins (son of the late horror great Anthony Perkins), “Longlegs” stars veteran scream queen Maika Monroe as an FBI agent investigating a series of gruesome homicides. Nicolas Cage plays the film’s titular bogeyman — but you wouldn’t necessarily know that from the marketing materials, which deliberately obscure the actor’s face.

He’s barely shown in the main trailer, which reveals little about the plot. (The studio scrapped its original plan for a more conventional preview after audiences responded enthusiastically to an early, cryptic teaser.)

“It increases the intrigue,” said Monica Koyama, an entertainment marketing expert and communication management professor at USC.

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“I mean, he’s definitely frightening in the film. But … sometimes what’s in your head is scarier than what shows up onscreen.”

Maika Monroe and Nicolas Cage in a poster for Neon’s “Longlegs.” The studio has strategically obscured Cage’s face in marketing materials.

(Neon)

In an added effort to sell audiences on the fear factor, Neon released a recording of Monroe’s heartbeat spiking from 76 beats per minute
to 170 while filming her first scene with Cage as Longlegs. The studio pulled the audio from a microphone taped to Monroe’s chest after a conversation with Perkins — who deliberately separated the actors before shooting that sequence and said Monroe’s heart was racing during the encounter.

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“It’s so simple,” Koyama said. “They gave us data. … ‘We’re saying this is scary. Here’s the actual raw data from the actress.’”

It’s all part of Neon’s ploy to place moviegoers in the shoes of the protagonist.

The success of “Longlegs” is “a testament to the wildly creative, exciting film [that director] Osgood Perkins and his fantastic group of collaborators created,” Elissa Federoff, president of distribution at Neon, said in a statement to The Times.

“We couldn’t be happier with the results, and we look forward to continuing our relationship with Osgood and his team of producers, all of whom have allowed us the freedom to build a campaign we believe in.”

Koyama suspected that Neon intentionally blurred the lines between the horror and crime genres to appeal to a wider audience. She also credited plenty of tried-and-true advertising moves — such as quoting rave reviews calling it one of the scariest movies in years — with getting “Longlegs” over the line.

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“This is going to reignite the creativity within marketing,” Koyama said. “I’m hoping studios will feel more excited about taking chances.”

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