Like it did with the first round of lawsuits, the theater chain has quickly responded to the most recent legal actions against it for the July 20 shooting at its Aurora, Colo, cinema. Late last week, Cinemark filed motions (read two of them here and here) to dismiss the October 11 civil complaints from parents of victims of the midnight The Dark Knight Rises screening shooting. The exhibitor seeks to have the claims dismissed because each one “fails to state a claim upon which relief can be granted as a matter of law,” arguing that what happened was not its fault. “It would be patently unfair, and legally unsound, to impose on Cinemark, a private business in the entertainment industry, the duty and burden to have foreseen and prevented the criminal equivalent of a meteor falling from the sky,” said Cinemark’s lawyers in their October 18 motions. The shootings by alleged gunman James Holmes left 12 dead and 58 wounded.
Four more lawsuits have been filed against the theater chain by families of those killed in the July 20 shooting in Aurora, Colorado. The deaths occurred during a midnight screening of The Dark Knight Rises. Like the first lawsuits against Cinemark filed over three weeks ago, this week’s actions cite the lack of proper security at the chain’s Century 16 location. Two of the wrongful death suits (read them here and here) were filed by the mothers of shooting victims Matthew McQuinn and Alexander Boik. “Plaintiff prays for judgment in her favor and against the Defendant in an amount which will fully and fairly compensate her for damages, losses, and injuries, both past and future,” says both suits. Both also say “the amount in controversy herein exceeds the sum of $75,000.” The shooting left 12 dead and 58 wounded. Cinemark responded to the September 21 suits from Denise Traynom, Brandon Axelrod and Joshua Nowlan by saying that it was not responsible for the tragedy and sought to have the suits dismissed. Attorney Jerome Malman represents Boik’s mother Mary Theresa Hoover, McQuinn’s mother Jerri Jackson and Rena Medek, whose daughter Micayla was also killed in the theater. Attorney Sandra Hagen represents Dion Rosborough, Jon Boik, Tony Briscoe and Ryan Lumba in their combined suit.
The movie theater chain says it is not responsible for alleged gunman James Holmes’ fatal rampage at the Century 16’s midnight screening of The Dark Knight Rises on July 20 in Aurora, CO. “Plaintiff’s claims against Cinemark are grounded in nothing more than allegations that a random unbalanced individual randomly chose this theatre on this random night at this random time to randomly murder and injure other human beings. Random acts, by very definition, are not legally foreseeable,” the company said in a motion to dismiss (read it here) filed yesterday. Last week, audience members Denise Traynom, Brandon Axelrod and Joshua Nowlan sued the chain for failing to provide adequate security at the theater on the night that saw 12 people killed and 58 wounded. Cinemark says besides not being able to foresee Holmes’ actions, the suits should be dismissed because they fail to state a claim on which relief can be granted. The plaintiffs say that in each case damages exceed $75,000, and they are asking for a jury trial.
Three of the audience members at a July 20 midnight screening of The Dark Knight Rises today sued the theater owner. A pair of lawsuits (read them here) claim that Cinemark failed to provide adequate security at its Century 16 location in Aurora, Colorado for the opening night of The Dark Knight Rises. “The gunman made one or more trips from his car through the open exterior door of Auditorium 9, bringing his arsenal and ammunition through that open door. Throughout that time, no employee or security personnel contacted him, deterred him, monitored him or stopped him from that re-entry,” the suit filed by Denise Traynom and Brandon Axelrod says. Joshua Nowlan, who along with Axelrod received gunshot wounds, also filed a similar suit today. The shooting by James Eagen Holmes killed 12 people and left 58 wounded. “There was no alarm activated during the many minutes while the gunman was stockpiling his arsenal, and inside the theater shooting people,” one of the lawsuits states. “There was no action taken by theater employees to safely evacuate the many people left in Auditorium 9,” it further claims. Asking for a jury trial, the suits say that in each case the damages exceed $75,000. Plaintiffs are represented by Deirdre Ostrowski, Michael Keating, William Keating and Christian Habas of Denver firm Keating Wagner Polidori Free.
The exhibition chain has been receiving crisis management advice from Abernathy MacGregor Group, and continues to stick by its strategy of refusing to publicly discuss last month’s shootings at a Cinemark-owned theater in Aurora or the fallout from it. In a conference call with analysts this morning, CEO Tim Warner thanked officials and ordinary citizens who helped during and after the shootings — but said he wouldn’t discuss it further “out of respect to the victims and their families.” The company framed the issue the same way when it told analysts on the call to “please refrain from asking questions” about the matter. They followed instructions and didn’t inquire about one of the most important issues involving Cinemark and the exhibition industry. Separately, The Denver Post reported this morning that the chain declined to say whether there was an alarm that was disabled on the rear door that the accused shooter, James Holmes, used to enter the theater.
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.
Cinemark, which owns the theater where this morning’s shooting took place, is -3.2% in early trading. And others are down as well: The largest chain, Regal, is -3.3%, and IMAX is -1.8%. Smaller chains are also off more than the market. Marcus and Reading are both -0.8%. In addition, companies that serve theaters are being hit. Ad sales company National CineMedia is -1.8% and 3-D technology firm RealD is -0.5%. The one big exception is Carmike. It’s up 2.0% following a Bloomberg report last night that said it could be a takeover target.
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
Men In Black 3 opens Friday and it’ll be on plenty of 3D screens despite disagreement between exhibitors and Sony Pictures Entertainment over who should pay for 3D glasses. Movie studios have been footing the bill for the glasses but Sony’s announcement last year that it would end payments with the release of MIB3 rankled major exhibitors. As discussions continue neither side is budging — at least publicly. Sony is keeping quiet but Bloomberg reports that executives from Regal Cinemas and Cinemark have said they won’t give in, and the National Association of Theatre Owners indicates nothing has changed on either side. The movie is obviously booked into theaters in 3D and 2D because as the saying goes, the show must go on. So will that surcharge for 3D tickets, which theaters and studios split as they do regular ticket prices. Meanwhile negotiations continue although Sony has already made clear it doesn’t intend to continue paying for the glasses indefinitely.
The pacts with Cinemark and Regency Cinemas add 1.400 more screens to Fandango‘s paperless ticket service, more than doubling its offerings after the company already had deals with Regal Entertainment, Reading Cinemas and Hollywood Theatres. That brings the total screens using the service to more than 2,600. Fandango said 23% of its ticket sales are mobile-based. With paperless tickets, users receive a barcode on their phones, which can be taken directly to the theater’s ticket-taker. The news comes the same month the online ticketseller reported a record 127% increase in sales during first-quarter 2012, and just ahead of the year’s first tentpole summer movie, Marvel’s The Avengers, which opens May 4.
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‘Dirt! The Movie’ In China
Bill Benenson and Gene Rosow’s Dirt! The Movie — the story of Earth’s most valuable and underappreciated source of fertility — is one of only a pair American documentary films chosen for the Beijing International Film Festival. Benenson is attending with his wife and executive producer Laurie Benenson. The second edition of the festival opened Monday amid a movie industry boom in China with box office revenue totaling in excess of $2 billion for the first time in 2011, and China just overtook Japan to become the largest foreign market for American films, according to the MPAA.
Cinemark Promotes Steve Bunnell To SVP Global Content
Movie exhibitor Cinemark has promoted Steve Bunnell to SVP Global Content Programming. Bunnell, who joined the company in 2009 to oversee film buying in the U.S., will manage film buying and programming efforts for Cinemark’s U.S. and Latin American markets. Bunnell will be a key figure in Cinemark’s global ambitions as the “industry embraces digital technologies, satellite delivery and alternative content,” according to CEO Tim Warner. With 456 theaters and 5,152 screens in the U.S. and Latin America as of December 2011, Cinemark soon add 17 theaters in the U.S. and Internationally.
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Cinemark Holdings saw its profit fall 52% during the fourth quarter even though revenue grew, as higher costs washed out an 8.5% gain in concessions sales. The Texas-based exhibitor — which operates 456 theatres with 5,152 screens in 39 U.S. states, Brazil, Mexico and 11 other Latin American countries — reported income of $18.3 million, or 16 cents a share, less than the 19 cents analysts expected. Operational costs rose to $474.4 million, up from $457.3 million, and the quarter included a loss on marketable securities and an early retirement of debt. Revenue was up 2.1% to $535.9 million. Admissions revenue fell 1.4% overall despite an 8.4% revenue hike at the company’s Latin American venues, while overall attendance at the chain grew 2.3%. Cinemark said it plans to open 11 theaters and 117 screens this year.
Although he just retired as CEO of Cinemark, Alan Stock won’t have to worry about being able to afford the large sized popcorn when he visits the theater. His new job as a consultant for the No. 3 exhibition chain will pay him $1.3M for the rest of 2012, $1M for 2013, and $333,675 for the first four months of 2014, the company says in an SEC filing. He’ll also continue to participate in Cinemark’s welfare benefit plans and insurance programs. He can’t join or assist a competitor during the consulting period, but can invest in up to five theaters as long as they’re at least 25 miles away from a Cinemark venue. He’s subject to a confidentiality agreement “during the Term and thereafter to the fullest extent permitted by law.” Stock and Cinemark also agreed not to say anything nasty about each other. The company said yesterday that Stock wanted to retire, and has been replaced by Tim Warner.
PLANO, Texas, February 15, 2012 – Lee Roy Mitchell, Chairman of the Board of Cinemark Holdings Inc announced today that Tim Warner, who led the Company’s expansion throughout Latin America as the President of Cinemark International before becoming President of the domestic circuit in 2006, has been promoted to the position of Chief Executive Officer. The appointment follows notification by Alan Stock, who has served as Chief Executive Officer since December 2006, of his decision to step down from his current leadership position and retire from Cinemark. Mr. Stock will serve in a transitional role at Cinemark through May 1, 2012 and continue in an advisory role as a consultant for the Company for a two year period thereafter.
B. Riley analyst Eric Wold says it will in a major look-forward report today for the film business. He predicts 4% growth in box office sales this year — the result of a 1% uptick in attendance and a 3% rise in average ticket prices. What makes him so confident, especially following the 3.9% drop in 2011? Wold says that more consumers would have gone to the movies last year if Hollywood hadn’t released so many dogs. He dismisses another theory: that tickets are becoming too expensive. If that were the case, he says, then we would have seen soft numbers throughout the year — instead box offices set records in Q2 and Q3. He’s also optimistic about 2012 because there’ll be at least 25 sequels of films that collectively generated $3.64B at box offices. Sequels typically deliver about 6% less in ticket sales than the originals. But even if 2012′s films slip 20%, consumers will spend 12% more than they did for sequels in 2010. That could “set up 2012 for a potential rebound,” Wold says. He’s also encouraged to see that there’ll be at least 40 wide-release 3D
The weak box office sales this past weekend made it clear that the year is going to end with a whimper. Regal’s shares fell 8.7%, making it the biggest loser among the theater chains followed by Carmike (-4.9%) and Cinemark (-2.9%). Companies closely aligned with theaters also suffered: 3-D technology provider RealD fell 6.2% while ad seller National Cinemedia was off nearly 3%. “The hoped-for 4Q11 box office pop is slipping away,” says Lazard Capital Markets analyst Barton Crockett. Ticket sales so far this quarter are down about 6.9% vs the same period last year, he says. He predicts the quarter will end down 1.9% following an expected surge of Christmas weekend turnout for Paramount’s Mission: Impossible Ghost Protocol as it goes into wide release, Warner Bros’ Sherlock Holmes: A Game Of Shadows, Sony’s The Girl With The Dragon Tatoo, Fox’s Alvin And The Chipmunks: Chipwrecked, and Paramount’s The Adventures Of Tintin.
Big Media 3Q Corporate Earnings Roundup: Are CEOs Really Worried About Recession? Or Just Looking For Convenient Excuse?
Three months ago, when Big Media CEOs wrapped up their 2Q earnings, they were still relentlessly upbeat about the business. Any worries about the economy? Not then. But the messages they delivered over the past few weeks, as they discussed 3Q, were different. Although they’re still optimistic — remember, they’re paid to be salesmen — now and then you could hear expressions of concern about where things are headed. It stood out when Viacom CEO Philippe Dauman noted that “ad sales growth will face some headwinds.” Other CEOs who are known for speaking bluntly warned that other shocks may bedevil the business. For example, Dish Network Chairman Charlie Ergen said that his satellite company — and others in pay TV — have to fight harder against rising programming costs because “there’s a limit to the price increases that could be passed on to consumers.” Time Warner Cable CEO Glenn Britt warned that premium channels such as HBO, Showtime and Starz “are clearly impacted by the economy as consumers try to cut back.” Either they’re genuinely worried, or they want a scapegoat to blame for things that are going bad, or may soon do so. Whatever the case, we can expect to hear a lot more about the economy when it’s time for the post-mortem on the all-important 4Q earnings.
As for industry performance matters, parents of movie studios had their usual mixed results to brag about or explain away: Time Warner benefitted from Harry Potter And The Deathly Hallows Part 2. Viacom was up on Transformers: Dark Of The Moon. And News Corp beat its chest about Rise Of The Planet Of The Apes and X-Men: First Class. But Disney’s Cars 2 was no match for last year’s Toy Story 3. Comcast’s Universal Pictures had nothing to compare to last year’s Despicable Me. Lionsgate suffered from Conan The Barbarian and Warrior. And DreamWorks Animation’s Kung Fu Panda 2 didn’t contribute as much in the quarter as Shrek Forever After did in the same period last year.
Over at the TV networks, Comcast’s NBC underperformed the Street’s already modest expectations. Execs at almost all the companies were eager to talk about the cash they expect to collect soon from political ads — as well as their favorite new ATM machines: retransmission consent deals and digital streamers including Amazon, Hulu, and Netflix. Speaking of Netflix, CEO Reed Hastings once again tried to reassure investors that he’s focused on “building back our reputation and brand strength” after his decision in July to slap a 60% price increase on customers who wanted to continue to rent DVDs and stream videos. In 3Q Netflix lost 57.7% of its market value and 800,000 subscribers. And since that customer loss was bigger than projected, Netflix shares continued to fall — they’re now down 67.3% since July 1.
Here are some other themes from the latest earnings reports:
Ad sales: They’s good, but for how long? Most television networks report that scatter prices are comfortably above the upfront market from this past summer. CBS chief Les Moonves says prices in 4Q are up by “mid-teens” on a percentage basis, while Discovery says it sees least high single digit percentages. But Disney’s Bob Iger noted that scatter prices have “slowed slightly these last few weeks.” Kurt Hall of National CineMedia — the leading seller of ads in movie theaters — was far more direct when he spoke to analysts after ratcheting down his company’s financial forecasts. “I’m sure that the broadcast and cable guys are sitting there now counting their lucky stars they got their upfront done before August,” he told analysts. “There’s a lot of uncertainty.”
UPDATE, 6:40 AM: CEO Alan Stock made his comment in a conference call with analysts who asked what he’d do if Sony continues with its plan to stop paying for 3D glasses — leaving it to exhibitors to manage the expense. ”We think the way the glasses model works in the U.S. is a great way to work it,” he said. He added that there’s still a lot of time to negotiate before next summer, when Sony wants the change to take place. “I’m pretty confident we can work out a solution,” Stock says. “If we can’t, we’ll have to head in a different direction.” Regarding Universal’s plan, which it canceled, to show Tower Heist on cable VOD just three weeks after opening in theaters, Stock says the studio “thought they had something the exhibitors would comply with.” After Cinemark threatened to boycott the film, “there hasn’t been any further discussion of that particular test, or anything else they’re working on.”
Theater owners seem resigned to the fact that Universal will run a premium video-on-demand test of its upcoming film Tower Heist – but are determined to push back the date, now scheduled for just three weeks after November, 4 when it opens in theaters. Negotiations continue as exhibition companies link arms: Three small regional theater chains have joined Cinemark in refusing to book Brett Ratner’s caper movie starring Eddie Murphy and Ben Stiller if Universal proceeds with plans to offer it for $59.99 three weeks after the debut to roughly half a million cable homes in Atlanta and Portland, Ore. California-based Regency Theatres, Galaxy Theatres and Detroit-based Emagine Theatres as well as some small exhibitors representing some 50 screens around the country have also refused to book the movie, the LA Times reported. Exhibition companies feel that they already swallowed a bitter pill earlier this year when four studios announced a deal with satellite broadcaster DirecTV to make some movies available via VOD for $29.99 — but 60 days after their theatrical debut. Theater owners wanted to draw the line at 90 days. Anything less, they feared, would encourage many ticket buyers to wait and watch hit films in the comfort of their living rooms.