In a Q2 earnings call held this morning, CEO Mark Zoradi announced an updated reopening timeline for Cinemark theaters that will see the majority of locations reopen their doors throughout the month of August. Further, Zoradi responded to the AMC/Universal agreement that could see a significant decrease in the theatrical exclusivity window.
Currently, Cinemark has 15 “test-and-learn” locations open in the United States: Five in the Dallas Fort Worth area, which opened on June 19 and have since dialed back to weekend-only operation, and an additional ten locations more recently reopened in Ohio, Utah, Florida, Colorado, and Connecticut. With the shift of Tenet‘s U.S. release to September 3, Cinemark will now be opening the bulk of its remaining U.S. locations in three phases throughout August: approximately one-third on August 21, one-third on August 25, and one-third on August 28.
AMC and Regal have also pushed back their release dates to coincide more closely with the Labor Day weekend reopening of Tenet in the United States, AMC to “mid-to-late August” and Regal to August 21.
The “big hole” in Cinemark’s reopening timeline, Zoradi acknowledges, is California, which with 67 locations marks the second-largest state for Cinemark after Texas. Over the weekend, California surpassed New York as the state with the highest number of Covid-19 cases. If the September 3 release date for Tenet proves too early for California theaters, Zoradi notes, perhaps those locations will be able to open their doors in “mid-September, and then we’ll prepare to do so at that time.”
Cinemark also operates theaters in 15 countries within Latin America. Though there has been no date given as to a planned reopening in those markets, Zoradi expects that an eventual reopening will come “in relatively short sequence” following the resumption of operation of the majority of Cinemark locations in the U.S.
In crafting its new reopening schedule, Cinemark relied in part on internal research showing that “approximately half of our surveyed consumers report that they would feel safe returning to the theater within one month,” said Zoradi. Within three months, that number rises to 75 percent. In that initial period of resumed operation, Cinemark will continue to screen repertory content, as it has been doing in its “test-and-learn” locations in the past weeks. Specifically, said Zoradi, “we will go into the fall with some of the higher-profile library content, because it’s playing so well. Indiana Jones and Jurassic Park are two top performers.” As more first-run content is released, repertory programming will be phased out.
On the subject of first-run content, AMC raised eyebrows in the exhibition community late last month with the announcement of a deal that would see the window of theatrical exclusivity significantly shortened—from a 2019 industry average of two months, 21 days to a minimum of 17 days, or three weekends—for Universal titles. “Consistent with our past practices, Cinemark does not comment on the actions of our competitors,” noted Zoradi, continuing:
“That said, we believe an exclusive theatrical window is critically important. While we have publicly stated that we are willing to have conversations with our studio partners to evolve windows, we are mindful that an overly aggressive, shortened theatrical window could have an adverse impact on the mid- to tail-end of a film’s life. Our industry delivered $11 billion domestically and $42 billion globally in 2019, with consistent annual growth of approximately 2 percent per year since 2015. Furthermore, the global theatrical proceeds often represent 50 percent or more of a film’s overall revenue. As such, we will be very careful and methodical about how we approach any change to the theatrical window. We can 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.”
Zoradi declined to provide specifics during the earnings call on what an “overly aggressive” window might look like, clarifying that Cinemark will be having those discussions with “individual studio partners.”