Cinemark CEO ‘Optimistic’ Theaters Fully Operational by Summer

With 75% of Cinemark’s U.S. theaters operating at the end of 2020 due to ongoing pandemic government restrictions, CEO Mark Zoradi expects all remaining screens to be in service by the summer. Cinemark operated 531 theaters and 5,958 screens in the U.S. and Latin America through Dec. 31, 2020.

Speaking on the company’s Feb. 26 fiscal call, Zoradi said he believes screens in Los Angeles and San Francisco can open in the coming weeks, and combined with pending studio releases Cruella (Disney), F9 (Universal), Infinite (Paramount), Minions (Universal) and Top Gun: Maverick (Paramount) in the spring and summer portend a return to normal in Hollywood for the exhibitor business.

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Cinemark CEO Mark Zoradi

“We’re optimistic that we’re going to be able to light up these theaters again come this summer,” Zoradi said, adding the company has been successful adapting to government restrictions and implementing sanitation and safety features in theaters.

“Since we re-opened in June [2020], we have consistently received 96% guest satisfaction scores on Cinemark protecting their health and safety,” he said.

Zoradi said the chain has generated more than 2 million moviegoers through about 150,000 “private watch parties” attracting an average of 13 attendees per group.

“During Q4 alone, private watch parties represented more than 24% of our attendance and box office,” he said, adding that more than 50% of the quarter’s watch parties consumed library content — driven by Warner Bros./New Line’s 2003 release Elf.

“This library content could be watched at home for free on the sofa, but instead, consumers chose to pay $99 to see it in the theater,” Zoradi said. “This reinforces what we recently stated, ‘people are yearning for normality, escape and fun out-of-home opportunity.'”

During Q4, attendance topped 6.6 million patrons, with the average ticket price at $7.42 and concession revenue per patron of $4.75. Admissions revenue reached $49.1 million, concession revenue $31.5 million, and total revenue approached $98.2 million in the period. Net loss in the quarter topped $239 million ($617 million in the year) on revenue of $686 million. That compared with a profit of $191 million on revenue of $3.3 billion in the 2019 fiscal year.

Cinemark Upbeat on Theatrical Comeback Following Vaccine Deployment

Cinemark Holdings, the third-largest movie theater operator in the U.S., has what No. 1 exhibitor AMC Entertainment doesn’t: $750 million in free cash for sustaining operations. That much was disclosed Dec. 16 at the MKM Partners Virtual Investor Conference by Cinemark CFO Sean Gamble, who said the chain with 4,500 screens across 345 theaters has enough cash to fund operations — without consumers — into 2022.

No. 1 exhibitor AMC Theatres is looking for $750 million from the sale of stock and debt to sustain operations past next January. AMC, like Regal and Cinemark, saw its business shut down overnight in March following government-mandated closures to stop the spread of the coronavirus. Screens in major markets of California and New York remain mostly shuttered.

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Gamble said Cinemark also expects to get $100 million in tax refunds from the CARES Act, the bipartisan pandemic stimulus bill approved earlier this year.

CEO Mark Zoradi said the chain’s first priority entering 2021 is rebuilding the balance sheet, and not acquiring assets from fiscally distressed competitors such as AMC. News reports suggested Cinemark was looking to acquire select AMC screens.

“We are going to be very careful in taking cash that we have on hand … and risking it with acquisitions where we’re not certain what that particular outlet is going to do in a post-pandemic environment,” Zoradi said. “Until a landlord actually owns a property, it obviously is not appropriate for us to be negotiating with that landlord prior to that moment.”

The CEO, like others in Hollywood, said he was “shocked” by Warner Bros.’ decision to release its entire 2021 theatrical slate concurrently into homes through HBO Max. Zoradi said he remained positive Disney would not replicate Warner’s move following discussions with Disney CEO Bob Chapek.

“It’s a bit of an anomaly [in movie distribution] we’re seeing right now,” Zoradi said.

Cinemark CEO No Fan of Shortened Theatrical Window

Following AMC Theatres’ landmark decision to allow Universal Pictures to distribute movies into consumer homes just 17 days after their theatrical debut, rival chain Cinemark is questioning the move indirectly.

Headquartered in Plano, Texas, Cinemark operates 554 theaters and 6,132 screens in the U.S. and Latin America. Speaking on the Aug. 4 fiscal call, CEO Mark Zoradi said theatrical exclusivity for new studio movies must be maintained despite the current COVID-19 environment that has seen the exhibition business shuttered since mid-March.

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Saying the company wouldn’t comment on the strategies of its rivals, Zoradi said an exclusive theatrical window is critically important to the industry.

“While we have publicly stated that we’re willing to have conversations with our studio partners to evolve windows, we’re mindful that an overly aggressive shortened theatrical window could have an adverse impact to the mid-to-tail-end of a film’s life,” he said.

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Key to the AMC/Universal deal is the exhibitor’s revenue-sharing agreement on sales/rentals of titles into the home entertainment market.

Mindful of incremental revenue possibilities via transactional VOD following a fiscal quarter that saw Cinemark generate just $37,000 in ticket sales over 90 days, Zoradi said he remains open to change during the pandemic and beyond.

“We will be very careful and methodical about how we approach any change to the theatrical windows,” he said. “We continue to carefully analyze and research this matter. And we will endeavor to ensure any modifications are in the best interests of the overall industry, our company and our shareholders.”

Cinemark Posts $170 Million Q2 Loss

When your movie theaters generate just $37,000 in revenue over 90 days, the bottom line turns crimson. That’s the fiscal scenario exhibitor Cinemark disclosed Aug. 4, reporting a second-quarter loss of $170 million on revenue of $8.9 million. How bad was the quarter? Concession revenue ($124,000) topped ticket sales by 235%.

During the previous-year period, Cinemark generated nearly $102 million in net income on revenue of $958 million. The dreary quarter underscored ongoing challenges exhibitors face with business models shuttered due to the coronavirus pandemic.

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Built into the fiscal loss was a restructuring charge of $19.5 million. The charge was a result of a permanent reduction in headcount and permanent closure of certain underperforming theaters.

Headquartered in Plano, Texas, Cinemark operates 554 theaters and 6,132 screens in the U.S. and Latin America. CEO Mark Zoradi claims consumers are champing at the bit to return to movie theaters, citing an internal survey that that found 97% of respondents had “high satisfaction” how the company would protect their health and safety.

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“We greatly look forward to initiating the rollout of our theaters, beginning Aug. 21 as we welcome our employees and guests back to our theaters for great cinematic storytelling,” Zoradi said in a statement.