RealD has lost some top execs recently — and it may not be entirely coincidental. Yesterday was the last day for COO and General Counsel Craig Gatarz. He was right behind SVP Marketing and Communications Rick Heineman, who quietly left in June. CEO Michael Lewis says that they “have been valuable members of the RealD executive team” and that he wishes them “luck in their new endeavors.” Gatarz, he adds, has a “true passion… for early stage companies so we are supportive of his desire to return to these roots.”
That likely isn’t the end: I hear that another senior exec is preparing to bolt.
Company morale took a hit in March with the retirement of Joe Peixoto, who was RealD’s President of Worldwide Cinema. The former top exec at United Cinemas International and Canada’s Famous Players chain helped to introduce RealD’s 3D technology with Disney’s Chicken Little, and drove many of the company’s deals with exhibition chains. Read More »
The country’s leading 3D provider charged in a U.S. District Court in California that Volfoni’s SmartCrystal Diamond 3D process for theaters violates RealD‘s U.S. patents. But the Paris-based 3D technology company seemed to take a victory lap in its release today about RealD’s decision to drop its suit. Volfoni said it denies that there’s a problem with U.S. patents and “asserts that RealD has no corresponding international patents for the U.S. patents at issue in the lawsuit.” So was it a victory for Volfoni? Not so fast, RealD says. It decided to drop the suit “only after Volfoni made specific representations and warranties that it had not sold or distributed, and is not selling or distributing, the Smart Diamond Crystal product in the United States.” If that changes, then “RealD has reserved the right to continue the suit against Volfoni in the same court, at the company’s discretion.” And it could take the fight overseas: RealD says its XL Cinema System has patents in Europe, China, Japan, South Korea, Australia, Brazil, Canada, India, Mexico and Russia “and intends to vigorously enforce its international intellectual property rights for all RealD products in order to stop copying and unlicensed use of its inventions by others.”
Wanda Cinemas said today it will install RealD-equipped screens in 780 theaters in China over the next three years, doubling the 3D supplier’s footprint to more than 1500 in one of the world’s fastest-growing (and most underserved) movie markets. The deal, announced on China-based Wanda’s website and first sniffed out by film blog Celluloid Junkie, will be officially unveiled next week at CinemaCon, we’ve been told (the release on Wanda’s site is dated for March 24, the start of the Las Vegas confab). Wanda Cinemas is a unit of real estate behemoth Dalian Wanda Group, the conglomerate that owns U.S.-based AMC Theatres after a $2.6B acquisition in 2012 that made it the world’s largest cinema owner. It has plenty of screens to outfit and its ambitions are big: it broke ground on the $8.2B Qingdao Oriental Movie Metropolis complex in September, and also has plans to build a $4.9B Cultural Tourism City in Wuxi with theme park and movie elements. Cinemas are being built at a breakneck pace in China, where annual box office receipts are expected to overtake North America’s by 2018. It will double U.S. results by 2023 according to analysts.
Related: CinemaCon: Will Confab Be A Calm Moment Before An Exhibition Industry Storm?
There’s nothing wrong with 3D movies that can’t be fixed if directors pay more attention to details in the productions, studios do more to promote them, and theaters offer them on additional screens. At least that’s the way RealD CFO Drew Skarupa described things in his appearance today at the MKM Partners Investor Day Conference. The 3D technology company has been in Wall Street’s dog house lately as the percentage of box office sales for 3D films has declined. The format accounts for about 33% of domestic sales for films that offer the option, down from 43% last year; elsewhere the take rate has fallen to 47% from 61%. Skarupa acknowledges that some 3D films don’t take full advantage of the extra dimension, usually because they’re converted to 3D after being shot in 2D. Although “conversions have gotten better and better,” they aren’t as good as films shot in 3D. For example Warner Bros’ upcoming Gravity is “a must-see in 3D. It’s a made-for 3D movie.” But persuading filmmakers to change will be “an evolution. It’s not going to happen overnight.” RealD is trying to help by advising some directors and “giving them ideas about the shot.” Meanwhile the company wants studios to step up their marketing — it has “come down a bit.” And theaters need to “increase those [3D] show times” especially on weekend evenings. RealD’s exit surveys found that about 25% of movie-goers love 3D, and an equal number dislike it. The remaining 50% “we call the swing vote, it’s heavily influenced by showtime and marketing…It’s important for us to focus on that 50%.” Read More »
UPDATE, 1:15 PM: RealD shares closed -8.9% at $6.89, a new all-time low.
PREVIOUS, 12:10 PM: The 3D services and technology company is still in Wall Street’s dog house: Its stock is off more than 8% in mid-afternoon trading — and touched a new all-time low of $6.91 — after it reported that moviegoers spent about $165M last month at theaters it serves, with 40% from domestic screens. That’s short of the $173M that Stifel analyst Benjamin Mogil predicted. It also disappointed B. Riley’s Eric Wold, who expected $200M after he upped his stock recommendation to “buy” last month. The problem, he says, is that “overseas consumers are clearly mimicking the increased choosiness for the 3D format that we began to see with the domestic market back in May.” He just lowered his financial estimates for RealD. But he’s sticking by his stock rating. The current price “more than reflects recent weaker-than-expected 3D demand trends,” he says. It will take a while before investors will be able to see improvement. There are only two major 3D releases this month: Sony’s Battle Of The Year and Cloudy With A Chance Of Meatballs 2. The big tests will come later with Warner Bros’ Gravity and The Hobbit: The Desolation of Smaug, and Disney’s Thor: The Dark World. RealD’s shares have lost about 54.6% of their value since June 11 as Wall Streeters became nervous about the prospects for 3D, and … Read More »
RealD‘s shares are touching all-time lows, falling 4% to $7.71 in mid-day trading, after Stifel analyst Benjamin Mogil downgraded the 3D technology company to “hold” from “buy.” The company is at an “inflection point,” he says. It continues to build 3D screens domestically on top of the 13,100 at 2,900 locations it had at the end of June. That’s worrisome because “there are few weekends where 3D screen capacity is an issue” and “given declining 3D demand appears to us to be unnecessary.” The danger is that exhibitors will feel empowered to bargain for lower equipment rental rates when their contracts with RealD are up for renewal. Lots of its contracts with theater owners including Regal, AMC, and Cinemark will expire before the end of 2018. In addition, RealD is investing to bring 3D to home viewers. But execs have not “articulated any timelines/benchmarks for these initiatives…nor have they articulated how much money whey are willing to spend.” That’s a problem because investors “have limited visibility on where the home market technology stands from a commercial perspective.” It might make sense for RealD to go private, Mogil says. But that would be difficult. Insiders own just 15% of the shares, and privatization “would crimp investments in the home [3D initiatives], a key for management’s growth platform.”
Channel 4 Imports ‘Hostages’, ’100′, ‘Tomorrow People’, ‘S.H.I.E.L.D.’
Britain’s Channel 4 has acquired a quartet of U.S. shows that will air in early 2014, including three from Warner Bros International Television: Hostages will air on Channel 4, while The 100 and The Tomorrow People will air on sister channel E4. Also coming to Channel4 is Marvel’s Agents Of S.H.I.E.L.D., the new series from Marvel Television and ABC Studios. It premieres on C4 in the fall, soon after its ABC launch in the U.S. In a new commission, C4 has ordered Making Liberty, a three-part series based around the luxe Regent Street department store. Rize USA is producing the series that focuses on the store as it preps for the Christmas season. It will air in the fall.
‘The Young And Prodigious Mr Spivet’ Premiere Will Close San Sebastian
Amélie director Jean-Pierre Jeunet’s latest film, The Young And Prodigious Mr Spivet is set to world premiere at the San Sebastian Film Festival. It will close the proceedings on September 28. Helena Bonham Carter, Judy Davis, Kyle Catlett, Callum Keith Rennie, Robert Maillet and Dominique Pinon star. Gaumont backed the 3D movie about a 12-year-old child prodigy who lives on a ranch in Montana. His great talent for cartography and inventions soon is rewarded. A scientific institute announces that he has won a prestigious award, and he sets out across the country to collect it. The Weinstein Co. acquired the pic in Cannes. Read More »
Here’s more sign of trouble for the 3D movie business. The stock price for the 3D technology company dropped about 12% in initial trading this morning after it reported that films on its screens generated $291M at global box offices in June, with 54% from U.S. venues. That’s a much lower number than analysts expected, and means RealD’s box office results are down about 10% in the quarter vs the same period last year. The problem is that consumers are “becoming increasingly choosy about which 3D movies they will pay a premium for given the significant ramp in 3D titles available,” says B. Riley analyst Eric Wold who just lowered his stock price target for RealD to $15 from $16.25. He’s given up his belief that 3D sales were missing the mark because theaters had too few 3D screens. Wold says that he has “confirmed with 4 of the top 5 domestic exhibitors that no additional 3D screens are needed to meet demand.” And he warns that this “could be a leading indicator of international trends.” RealD’s June report also rattled Stifel analyst Benjamin Mogil. He expected to see $463M from global box offices, with 46% from the U.S. — and just lowered his stock price target to $15 from $20. He had recommended the shares in the belief that the company would see strong growth overseas while the domestic market remained stable. The latest numbers “fly in the face … Read More »
B. Riley & Co analyst Eric Wold favors the second part of the equation, but says consumer pushback may also account for the disappointing 3D ticket sales that just led him to downgrade tech company RealD to “neutral” from “buy.” That contributed to a 6.2% drop in the company’s share price in early trading. Wold notes that 3D accounted for 31% of the domestic box office for Disney/Pixar’s Monsters University this weekend, making it “the lowest of any animated title in history” behind Brave‘s 34%. And Paramount’s World War Z, with 34% of box office from 3D, was “the lowest of any action movie in history” after Paramount’s Captain America with 40%. These aren’t blips: The 3D domestic attach rates (the percent of total box office) “have been stabilizing in the 30%-45% rate — which, unfortunately, has become a trend” with all movie genres, Wold says. Consumers may be fed up paying an extra few bucks for 3D, although Wold notes that “we are not seeing this with IMAX screens.” Read More »
RealD is moving into IMAX territory with its new premium large format brand LUXE: A RealD Experience. The company presented the initiative to exhibitors gathering in Barcelona today at CineEurope. LUXE auditoriums will start to roll out this winter in Europe with Russia’s Karo Film and Bulgaria’s Arena Cinmea among early adopters. Some existing large format theaters will be re-branded while new theaters will also be upgraded. They’ll each be equipped with wall-to-wall/floor-to-ceiling screens of at least 16 meters in width; ultra bright 2D and 3D; enveloping audio and luxury seating. Expansion to other territories is planned further on down the line. “The studio and exhibition communities have long called for a PLF unification strategy to best capitalize on the profit potential of this fast growing premium cinema segment,” said RealD Europe managing director Robert Mayson. “RealD is uniquely positioned at the intersection of content, exhibition and technology, allowing us to best serve the industry and moviegoers alike with a singular premium cinema experience we believe will become synonymous with out of home entertainment at its finest.”
StudioCanal Seeks Original ‘Wicker Man’ Materials For 40th Anni Reissue
UK distributor StudioCanal has launched a worldwide appeal to locate original film materials relating to the 1973 horror classic The Wicker Man. This year is the Robin Hardy-directed film’s 40th anniversary, and StudioCanal is aiming to release the most complete version of the film possible. The Christopher Lee starrer originally was released with minimal promotion as the second feature of a double bill with Don’t Look Now. The version shown was significantly shorter than Hardy’s original. The negatives then disappeared from storage at Shepperton Studios and allegedly were used as landfill in the construction of the nearby M4 highway, and are considered lost forever. The company is appealing to film collectors, historians, programmers and fans to support the campaign and come forward with any information relating to the potential whereabouts of original materials.
Londoño Upped At Fox International Channels
Fox International Channels has appointed Diego Londoño as COO of its European and African units. He will take over the new post immediately and retain his role as president of FIC Italy and Germany. The appointment adds decision-making responsibilities across pan-European and African programming, production, branding, communications, research and strategy to his responsibilities. Londoño, a 15-year veteran of FIC, will be charged with strengthening and expanding the company’s portfolio and exploring new growth areas.
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K5 In The Ring With ‘Cutie And The Boxer’
K5 International has boarded director Zachary Heinzerling’s Cutie And The Boxer which is screening this week in Tribeca. Heinzerling won the U.S. Documentary directing prize in Sundance for the film which is his feature debut. The movie is a New York love story about life and art that explores the chaotic 40-year marriage of renowned boxing painter Ushio Shinohara and his wife and artist Noriko. It will be released Stateside by Radius-TWC in August. King Records will distribute in Japan with Parco and Madman in Australia.
Steve Buscemi, Anika Noni Rose Join ‘Khumba’
South Africa’s Triggerfish Animation Studios has added the voice talent of Steve Buscemi and The Good Wife’s Anika Noni Rose to its 3D animated feature, Khumba. They join Liam Neeson, Laurence Fishburne, AnnaSophia Robb, Jake T. Austin, Loretta Devine and Richard E. Grant. Khumba tells the story of a half-striped Zebra who is blamed for a severe drought by his herd. He teams up with a sassy wildebeest and a self-obsessed ostrich to go in search of the magic waterhole where legend has it the first zebras got their stripes and meets an array of wacky characters on the adventure. Edward Noeltner’s Cinema Management Group has international sales. Millennium Entertainment will release in the U.S. later this year. Buscemi and Rose’s deals were brokered by WME and Ned Lott on behalf of Triggerfish Animation. Buscemi is also repped by The Gotham Group. Read More »
The 3D version of F. Scott Fitzgerald’s classic, which was just tapped to be the opening night film at this year’s Cannes Film Festival and which Warner Bros plans to release in the U.S. on May 10, will provide an early indication of whether the extra dimension appeals to audiences who like dramas — and not just animation, action, and fantasy fans. “We’re really excited to see what the data points are,” RealD Chief Financial and Operating Officer Drew Skarupa said today of The Great Gatsby at the Piper Jaffray Technology, Media and Telecommunications Conference. The 3D technology company is also eager to see additional films that appeal to overseas audiences. When a movie is available in 2D and 3D, about 60% of international sales go to the 3D version as opposed to 45% in the U.S. That’s a problem because “the press and the Street tend to focus on the domestic numbers.” What accounts for the difference? “We’ve seen direct correlations between the number of 3D showtimes and box office,” Skarupa says. “We’d like to see in the U.S. markets a greater percentage of 3D showtimes.” Read More »
Documentary Makers To Pitch BFI For Funding
The BFI Film Fund will dish out funding to documentaries via twice-yearly public pitch sessions, in London and at Sheffield Doc/Fest. Documentarians will pitch ideas to a panel of senior execs “from within the BFI Film Fund and wider documentary funding community”, with selected candidates benefitting from a day of expert-led development to help them focus pitches and strengthen ideas. Documentary filmmaking in Britain is on a high after a string of high-profile successes like Man On Wire and Senna, as well as this year’s Oscar- and BAFTA-winning Brit-produced Searching For Sugarman and the BAFTA-winning The Imposter. “Documentary is the punk of the film industry,” said the BFI’s Lizzie Francke. “We’re absolutely committed to supporting the UK’s visionary documentary filmmakers and we’re pleased to be working with Sheffield Doc/Fest on this new way to deliver support directly to the sector.” – Joe Utichi Read More »
UPDATE, 2:30 PM: RealD chairman Michael Lewis mentioned more than once during the post-earnings conference Disney’s plans to restart the Star Wars franchise, saying the recent decision to postpone 3D rereleases of Star Wars prequel movies doesn’t bother the company, which relies most on new tentpole product. It also announced new deals for as many as 300 screens with two exhibitors in Russia as part of an international expansion, and hinted that there may be more news about Latin America by next quarter. CFO/COO Drew Skarupa said year-end guidance is now about $10M-$15M less, which the company expects to push into fiscal 2014 when more 3D product comes online.
PREVIOUS, 1:21 PM: The 3D licensor reported its fiscal third-quarter earnings today, marking a loss of $4.2 million, or -8 cents a share, compared with a gain of $2.8 million, or +5 cents, a year ago. The drop comes despite a tax benefit of $2.2 million during the quarter that ended December 31. RealD’s total revenue came in at $46.9 million, a year-over-year dip from $49 million, though licensing was up 7%. Both earnings per share and revenue were about on par with analyst expectations. Read More »
The 3D movie company’s stock is up 1.6% in mid-day trading after it increased the repurchase effort it announced in April to $75M from $50M. The change “demonstrates our confidence in RealD’s future and our commitment to maximizing shareholder value,” says CEO Michael Lewis. RealD says that as of Friday it had spent $46M to repurchase about 4.7M shares, leaving it with about 50M. The company’s stock price is down 26.6% since early July, and fell steeply at the end of that month when RealD reported fiscal Q1 earnings that were well below analyst expectations. The company notes that 3D films it expected in the current fiscal year, ending in March, were pushed into its next fiscal year; those films include Warner Bros’ The Great Gatsby, Universal’s 47 Ronin, and Sony’s Battle of the Year: The Dream Team. A few weeks ago Barrington Research’s James Goss upgraded RealD to “outperform” from “market perform” saying that the stock was trading at ”an attractive entry point for longer-term investors” who believe that the company can grow overseas, and that Hollywood will increase its output of 3D films.
Phil Rosenthal, David Wild To Pen 2012 Environmental Media Awards
The Environmental Media Association says Everybody Loves Raymond creator Phil Rosenthal and TV writer David Wild will team up to pen the 22nd annual Environmental Media Awards. The pair first worked together on America: A Tribute To Heroes telethon in 2001. Wild’s TV writing credits include the Grammy Awards and The Primetime Emmy Awards. Rosenthal directed and stars in the feature documentary Exporting Raymond. The awards will be held September 29 at Warner Bros Studios in Burbank.
Russell Brand, Christopher Eccleston Sue Over Phone-Hacking
Russell Brand and Christopher Eccleston have added their names to the list of News Of The World litigants. News Corp’s News International, which published the now-defunct paper, is now facing about 174 invasion of privacy claims over alleged phone-hacking claims. Those cases are expected to go to trial next year, The Guardian reports. Along with the British actors, there are politicians, local TV personalities and the filmmaker Christopher Terrill. Read More »
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.
NATO Says Safety Is “A Priority For Theater Owners”
Cinemark Says It’s “Working Closely” With Aurora Police
MPAA’s Chris Dodd: “Shock And Sadness” Over Theater Shooting