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Deadline Big Media With David Lieberman, Episode 10

Listen to Episode 10 of our audio podcast Deadline Big Media With David Lieberman. This week, Deadline Executive Editor Lieberman and host David Bloom discuss how Quarter 3 earnings season turned out; whether DirecTV and Dish Network should merge; Cinemark’s smartphone app Cinemode to encourage people not to use their smartphone during movies; and growing uncertainty over Google plans to renew funding deals with more than 100 original-content channels on YouTube.

Deadline Big Media Episode 10 (MP3 format)
Deadline Big Media Episode 10 (M4A format)
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Cinemark To Pay $240M For Rave Cinemas

By | Saturday November 17, 2012 @ 9:02am PST

The price includes cash and assumed liabilities and will give the Texas-based exhibition chain an additional 32 theaters with 483 screens in 12 states All of the screens have digital projectors, and 37% are 3D capable. The group also includes seven IMAX screens and nine premium large format auditoriums. “The acquisition of these high quality assets will further enhance Cinemark’s diversified domestic footprint, including the expansion of our presence in the New England market,” Cinemark CEO Tim Warner says. Over the last 12 months the theaters Cinemark is buying sold 18.8M tickets and generated $228.9M in revenues with $41.7M in cash flow. The companies need to run the deal past antitrust officials before it closes. Akin Gump Strauss Hauer & Feld provided legal advice to Cinemark while AGM Partners and Kirkland & Ellis helped Rave.

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Theaters Need Q4 Hits To Recover From Worse-Than-Expected Q3 Box Office: Analyst

By | Tuesday September 11, 2012 @ 9:20am PDT

Nomura Equity Research’s Robert Fishman and Michael Nathanson slashed Q3 earnings forecasts for exhibition chains Regal and Cinemark after noting that industry sales in the quarter will be -8% vs last year — which is “worse than we expected.” They cut Regal by nearly 49% to 16 cents a share, which they say is 6 cents lower than the consensus forecast from their peers. And they took Cinemark down 22% to 35 cents a share, 7 cents below the Street’s expectations. Theaters were hurt because only about seven films in Q3 are likely to generate $100M or more at domestic box offices vs nine films that did so in the period last year. As a result, the analysts cut their domestic box office projection for the year to $10.6B (it had been $10.9B), which would still be up 4% for all of 2011. They remain optimistic that holiday releases including Lionsgate’s The Twilight Saga: Breaking Dawn Part 2, Warner Bros’ The Hobbit: An Unexpected Journey, and Sony/MGM’s James Bond film Skyfall will contribute to a bounce-back resulting in a 7% increase in Q4 sales vs last year. Read More »

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Cinemark Says It’s “Working Closely” With Aurora Police

Here’s the statement from the exhibition company that owns the theater where the murders took place:

Cinemark is deeply saddened about this tragic incident. Our thoughts and prayers are with the victims, their families and loved ones, our employees, and the Aurora community. We are grateful for the quick and professional reaction of all local law enforcement and emergency responders. Cinemark is working closely with the Aurora Police Department and local law enforcement.

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Movie Theater Finances Will Cool After A Sizzling 2012: Analyst

Don’t become too giddy over the MPAA’s optimistic forecast last week for the theatrical movie business, and the record sales for The Hunger Games. Nomura Securities analyst Robert Fishman warns today in a 91-page first look at the exhibition business that chains are in for a tough couple of years after 2012 is over, with admissions falling slowly but steadily from 2013 through 2016. He says domestic box office sales slid 3.8% last year to $10.2B while attendance dropped 4.2% to 1.3B, and that’s “just the beginning of emerging secular headwinds facing the box office.” MPAA data shows that from 2000 to 2011 the percentage of people who frequently go to the movies dropped to 10% from 30% while the ranks of those who never attend grew to 33% from 26%, Fishman says. The biggest drop was among young people. The analyst also says theaters could suffer as the major studios begin to slash the number of movies they make. Although smaller producers have picked up some of the slack, “we do not think the scale of the majority of these other films will be sufficient” to draw the same number of ticket-buyers who typically turn out to see big studio productions. Fishman also notes that consumers are rebelling against high priced tickets — including for 3D. And he fears that theaters will be hurt by changing release patterns, including premium VOD. “Based on our discussion with different studios,” Fishman says, “we believe there is likely to be another push for premium VOD either towards the end of the year or next year.” Read More »

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Analyst: Studios Have “Little Chance” Of Winning Fight Over 3D Glasses

Sony’s warning that it will stop subsidizing 3D glasses is “bluster over substance,” Lazard Capital Markets analyst Barton Crockett says today. He’s struck that the National Association of Theatre Owners is vigorously opposing the idea while he’s heard no word — publicly or privately — about whether Warner Bros or Paramount might back Sony. “With theaters united and studios split, we see little chance of a studio victory,” Crockett says. What’s more, there’s “little chance” that consumers will be “stuck with big extra charges.” He raises the possibility of a compromise in which theaters would benefit from lower-cost distribution for the glasses, while studios reduce their payments — now at about 50 cents a pair — and consumers kick in about 25 cents a pair. “But even that seems unlikely,” he says. The analyst has a “buy” recommendation on Cinemark and National CineMedia but is “neutral” on Regal Entertainment.

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Cinemark 2Q Earnings Miss On Early Debt Repayment But Revenues Beat The Street

The movie theater chain says its debt-refinancing effort sliced $4.9M from 2Q earnings. As a result Cinemark reported net profits of $40.4M, up 1.8% vs the same period last year, on revenues of $620.6M, up 15.1%. Earnings at 35 cents a share were short of the consensus forecast of 39 cents — but the company beat the $593.6M revenue projection. Admissions revenues increased 15.0% to $405.9 million and concession revenues increased 14.6% to $189.3 million. Cinemark, which has a big presence in Latin America as well as the U.S., says that attendance was up 9.8% in the quarter despite an average 4.6% increase in ticket prices; domestically, tickets were up 2.6% to an average of $6.64. The average consumer also spent 4.4% more than last year on concessions. “This quarter Cinemark generated its highest-ever quarterly worldwide attendance and as a result we achieved our highest-ever quarterly adjusted EBITDA,” says Cinemark CEO Alan Stock. “This record performance extended our domestic industry box office out-performance streak to 11 straight quarters. Our international circuit continues to distinguish itself with attendance growth of approximately four times the U.S. industry rate for the quarter.”

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Investors Slam Movie Theater Chains As Box Office Sales Miss Expectations

Movie theater chains Regal and Cinemark are taking it on the chin on Wall Street this morning after a weekend of disappointing box office sales — and the close of an even more dispiriting quarter. Regal’s stock price is down about 4.6% in early trading. Janney Capital Markets downgraded its stock recommendation to “sell” from “neutral.” Lazard Capital and Merriman Capital also lowered their cash-flow projections for Regal. And Cinemark is down about 3.5%. Janney Capital changed its recommendation to “neutral” from “buy” — with Lazard and Merriman also cutting their forecasts. Analysts say that the 4.4% increase in box office sales in the second quarter vs. the same period last year fell far short of their forecasts: Lazard’s Barton Crockett expected a 10% pickup, while Merriman’s Eric Wold thought sales would improve at least 11%. And the holiday weekend didn’t lift their spirits. Crockett says that the $182 million generated domestically by Paramount’s Transformers: Dark of the Moon in its first seven days was $29 million less than he expected.

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What Will Stop Wall Street’s Anti-3D Debate?

Wall Street’s backlash against 3D movies is growing serious. Just weeks after movie executives and investors wondered how well 3D films would do this summer, they’ve begun to ask much tougher questions including: When will movie theater chains begin to cancel orders for 3D projection equipment? And could continued weakening in ticket sales force AMC Entertainment to shelve its plan to go public and raise as much as $450 million?

Defenders of the technology are urging everyone to wait and see whether there’s an uptick in 3D ticket sales for Paramount’s Transformers: Dark Of The Moon, which opens July 1, and Warner Bros’ Harry Potter And The Deathly Hallows, Part II, which opens July 15.  The films should “help provide for a more positive outlook” for 3D in general and particularly for 3D technology company RealD, says Merriman Capital analyst Eric Wold.

But investors didn’t appear to agree on Friday. RealD’s stock price fell 13.2% to $20.90 the day after executives responded to the Street’s concerns with talking points that simply urged people not to read too much into disappointing 3D sales for just a few films. RealD shares now have lost 41.3% of their value since May 19. “While management dismisses a change in consumer enthusiasm toward 3D, the public is speaking and 3D is simply being overused with ticket premiums far too high,” says BTIG analyst Rich Greenfield — who has a “sell” rating on RealD. Read More »

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Kagan: ‘Rio’ And ‘Fast Five’ Only Clearly Profitable Films In April With Summer Movie Profits Poised To Fall

Don’t be fooled by the headlines this summer that likely will focus on how strong movie ticket sales look compared to last year. Researchers at SNL Kagan predict that domestic box office for the period from late April to the end of August will be up 1.7% to about $4.2 billion. Not bad – especially considering that this year’s figure counts 42 releases vs. 45 last year — right? Not so fast. When Kagan looks at all sources of income including international sales, home video, and TV, it estimates that this year’s crop will generate $4.45 billion in profits on $12.3 billion in revenues. That’s down slightly from last year’s $4.49 billion in profit on revenues of nearly $13 billion. The forecast follows Kagan’s estimate that only 2 out of 16 releases in April clearly will be profitable: Fox’s Rio and Universal’s Fast Five. Three others could be profitable for distributors, depending on the terms of their deals with exhibitors: Universal’s Hop, FilmDistrict’s Insidious, and Summit Entertainment’s Source Code.

While the studios sort through their finances, theater chains will enjoy any uptick in summer sales. Box office revenues in the first quarter for the four biggest publicly traded chains – Carmike, Cinemark, Reading International, and Regal – dropped 17.2% vs the same period last year to about $803 million. Their concession sales were down 12.6% to about $337 million, although sales per customer rose 3.2% to $2.97.

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IMAX CEO Rich Gelfond Hopes Blockbuster Summer Will Bail Him Out After 1Q Slump

Here’s the strange thing about IMAX these days: the large screen exhibitor reported terrible financial results for the first quarter although analysts were projecting it would continue to report a profit. Yet its stock price closed up 6% at $34.24, for a more than 60% gain over the past year. Even this morning, Wall Street  was reassured by the IMAX upbeat projections for ticket sales and global expansion plans. Which is why CEO Richard Gelfond today tells me that 1st quarter financial results are not nearly as terrible as they look.

GELFOND: If you strip out nonrecurring things, it really shows up as a 4 cent (earnings per share) number. That was a little short of expectations among analysts. And I think frankly some of that happened because we incurred expenses in China in building our business there. Some in R&D, and reinvesting in our business. And I think people didn’t understand that the first quarter was devoid of any blockbuster films. For us, if the box office drops 25% — as it did — as long as there are blockbuster films that doesn’t matter. We don’t play a full film slate. We play just a couple of films. But what made the quarter noteworthy was that there were no blockbuster films. That has a big impact on us. Fortunately, starting tonight at midnight, we have Fast Five domestically and Thor internationally. So the blockbuster season … Read More »

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More Theaters Threatening Movie Moguls

By | Friday April 8, 2011 @ 2:45pm PDT

Nikki Finke (who’s just fnishing up her medical leave with a last visit to the doctor) will be posting a complete update on the battle over DirecTV’s recently announced premium plan in partnership with Sony, Warner Bros, Fox and Universal to offer on-demand movies only 60 days after they premiere in theaters. On Wednesday, she revealed that Regal Cinemas warned studio marketers that it will drastically reduce the amount of play time for each of the quartet’s movie trailers in every Regal movie house (just in time for the summer tentpole season, too). The Cinemark chain is following suit with boycotting trailers and signage from the participating studios. Now comes this statement from AMC Entertainment:

We at AMC feel movie theatres are a critically important business to many parties: the 200+ million guests we host year after year who choose to view films on the large screen; the communities of which our theatres are an integral part; the artists who create the movies we show; and ultimately the entertainment industry for which our theatres generate the highest quality source of revenue.

We believe the theatrical experience has a bright future, and we are aggressively investing to prepare for it. We are in the midst of a multi-year, multi-million dollar rollout of digital projection and 3D, IMAX and our own proprietary ETX format. We are also introducing a new guest rewards program, better-for-you items, enhanced food and beverage offerings, dine-in theatre options and alternative, engaging programming for our guests to enjoy in our comfortable,

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