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At least three analysts have already reduced their earnings forecasts for the top publicly traded exhibition chains after Q2 ended with industrywide box office sales -2.9% compared with the same period last year. “We had originally built in flat- to modestly-higher trends in overall second quarter Box Office results,” Barrington Research’s James Goss says this morning. As a result, he cut his earnings-per-share projection for Regal by 40% to 15 cents, with Cinemark -30% to 33 cents, and Carmike -27% to 33 cents. He says the current quarter might also fall short of last year, which included Paramount’s Transformers: Dark Of The Moon, Warner Bros’ Harry Potter And The Deathly Hallows Part 2, Paramount’s Captain America: The First Avenger, and Sony’s The Smurfs. But he’s impressed with the opening performance for Sony’s The Amazing Spider-Man and Universal’s Ted, and seems optimistic about Warner Bros’ The Dark Knight Rises, Sony’s Total Recall, and Universal’s Bourne Legacy. That could result in “an upside surprise” in Q3 leading into a strong Q4, he says. With Q1′s 20.7% improvement over last year, domestic box office sales for the first six months are +7.3% over the first half of 2011 — and he expects the full year’s results to be up as well.
Barclays’ Anthony DiClemente also tweaked his numbers this morning, taking his estimate for Regal’s Q2 EPS down 16% to 16 cents, and Cinemark -8% to 34 cents. He remains bullish about the industry, though. “Bigger picture, we believe the exhibitors should be favored in times of macro uncertainty given that they operate in an acyclical industry and given that moviegoing remains one of the cheapest forms of out-of-home entertainment,” he says.
These reports follow one last week from Wedbush Securities’ Michael Pachter, who was disappointed after projecting a 1.9% pickup in box office sales in Q2. He took his Q2 EPS estimate for Regal down 35% to 20 cents, Cinemark -7% to 43 cents, and Carmike -10% to 26 cents. In addition to the lower-than-expected Q2 sales, he expects theater chains’ film rental costs to be higher than expected “due to a higher concentration of total box office within the top ten movies” — and especially Marvel’s The Avengers.
For more estimates listed by title, see box office results here...
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Not to worry because some theaters are now building in fog machines, vibrating seats and other elements from South Korea to enhance the movie going experience.
Of course, better films mights also do the same thing, but why take the hard road to bring in audiences? Hollywood is convinced they only need to add better gift wrapping to enhance the same old crap movie making. So, theaters are left to find their own market drivers. Exhibitors are stuck with whatever product is available.
Now, dropping the prices for admission and snacks might also be a boon as folks are getting tired of paying so much so often for so little.
Fog machines? If the fog contained anesthetics, one could comfortably sleep through some of the movies.
That is, if your seated neighbor doesn’t eat his popcorn, stinking with artificial butter, too noisily. Or if the feet of the guy behind you don’t stink too much (as he took off his sweated-through running shoes).
Two movies to save the exhibition business?
Vicious cycle. Just look at the public theatre chains’ Balance Sheet. Look at liabilities/debt – and see for yourself. Regal alone owes $ 2 BILLION to their banks. Carmike owes, Cinemark owes, AMC is now Chinese – owned, so they are off the hook. Same old same old: corporations continue in business owing BILLIONS – and the only way out is – if they are acquired. Lovely.
What this doesn’t mention is it seems some studios are trending towards lower budgeted fair that may seem like modest box office but are actually quite profitable. The fact that wall street only looks at total gross only incentivizes the studios to swing for the tentpole fences more often.
Theaters and studios need to change the mold…why is Spiderman the same price as To Rome With Love?
With DVD releases just a few months away, why go see Rock of Ages in theaters when a September DVD is coming soon? I will pay $10-$15 for The Hobit, but I wouldn’t pay more than $7 for smaller films that I can see on DVD…
It’s time to revamp the system to make non studio and epic films different prices. People will always pay to see the big movies, but I think this would help the independent and smaller studio films.
Think of it like a restaurant…you pay a lot less for a hamburger than you do a steak…
Releasing movies same day On Demand is really the future of the business. It will also greatly enhance the types of movies that will be made as more adult fare will find a larger audience. The moviegoing experience for many of us is just not worth it. Much rather see the movie on the flat screen in my living room.
Seeing how Spider-man opened behind previous installments, despite higher ticket prices, that’s not exactly something to hang ones hat on.
These are all excellent comments. Hollywood has done business the same way forever. REACT TO EXTERNAL FACTORS FIRST; THINK LATER. They panic immediately initially; chase the latest success story/model until it’s beaten to death; and the people push back giving them new marching orders. It may be liberal socially but in terms of conducting business they are very Romney Republican. The Wall Street prognosticators are as in the dark as the exhibitors : terms and conditions subject to blind bidding. If I were Comcast rather than sell the Ziegfeld and the Clearview theaters I would make movies glamorous again and build a luxury chain with some of what Hollywood should be supporting : special movies; exclusive engagements; lengthy films with intermissions; the vending of programs and souvenirs…stadium seating is the ultimate luxury? The A.M.C. Empire 25 in New York has a $40 per ticket screening. So you can lay around inside for the line to form; get your specially “washed” glasses (if applicable;” and generally feel like you’re at a “door-buster” at Wal-Mart.
With TASM, Brave & Ted currently leading the way performing and the likes of Ice Age 4, TDKR, Total Recall, The Bourne Legacy & Expendables all soon to follow, the box office should be fine. Plus there’s a stronger slate of films to close out this year than last year, so this will be a record breaking year at the box office when it’s said and done.
Hollywood has adopted a policy of high profits at low risk. That is why this summer has been full of comic book movies, pointless remakes and money-grabbing sequels. It may be great for fanboys but it’s not desirable for the industry in the long term.
@Mark: Cablevision owns Clearview and is trying to sell that chain.