And just how he is going to do that? Do you think he these movies just sitting around in their big reel cannisters? He can't run down to the local Blockbuster and pick up My Fair Lady...why he would be direct violation of that little FBI warning we all fast forward through (when you can). And if he is going to show the movie for free to get around that...then what? Lose money because he has to pay for electricity and wages?
Buy or lease publicly displayable copies. The arthouse movie theaters in Tucson do it all the time, they alternate between new "artsy" releases and old "classics" (sometimes artsy sometimes not). There are perfectly legal and apparently not difficult ways to get a hold of old movies and show them in your theater.
He is likely a member of the movie theatre owners and operators which already pays royalties on the films they run. In addition, a majority of the films from the 30s to the 70s have fallen into the public domain.
People will likely line up for blocks to see some of those films, so it is unlikely he will suffer any loss by doing that.