02_Regal-Continental-10-GS-Denver.jpg

by Michael White

As 2014 draws to a close, exhibitors have more to think about-like the potential sale of the biggest U.S. chain-than the disappointing box office returns from this year's movie slate. There is a consensus among exhibitors and Hollywood studios that 2015 will be better, with sales possibly reaching a record $11 billion or more.

With a box office revival a near certainty, other issues loom large for exhibition executives. Perhaps the biggest is Regal Entertainment Group's surprise announcement in October that the Knoxville, Tennessee-based company may put itself on the block.

That's not all. The U.S. Department of Justice has sued to block the merger of the industry's two largest on-screen advertising companies, National CineMedia Inc. and Screenvision LLC. And Imax Corp. and Netflix have challenged the traditional release window between theatrical and home entertainment with an agreement for a day-and-date release of The Weinstein Company's Crouching Tiger, Hidden Dragon 2.

And, not least, exhibitors are busy making improvements, including luxury seating, online ticketing, more big-screen auditoriums, and better food service. The changes promise incremental revenue enhancements that may make exhibitors slightly less dependent on fluctuating box office sales.

Despite the hot-and-cold nature of box office demand, exhibitors have managed to maintain margins through incremental increases in ticket prices and by making cinemas more appealing to consumers, says Gabelli & Co. analyst Brett Harriss. One result is that publicly traded exhibition companies have remained attractive to investors. Growth among companies included in Redwood Capital Group's North American Cinema Exhibitors Index outpaced the Standard & Poor's 500 Index from 2009 to mid-2014. Through November 7, 2014, members of the index, which includes the four largest U.S. operators, Imax Corp., and Canada's Cineplex and Reading International Inc., had a compound annual growth rate of 21.6 percent compared with 14.9 percent for the S&P companies.

"The capital markets are rewarding what are well-managed costs and margins in the context of relatively flat revenue growth," says Gregory Bedrosian, chief executive officer and managing partner at Redwood. "The multiples have ticked up a bit. Stock prices are moving up."

A Regal sale would likely become the biggest the industry has seen, one that probably would surpass the 2012 sale of No. 2 AMC Entertainment Holdings to China's Dalian Wanda Group for $2.6 billion. Regal, with 7,318 screens in 574 locations, would likely fetch a higher price with a market cap of $3.47 billion as of November 10.

Regal announced in October that it hired Morgan Stanley to review strategic options, including a possible sale. The news caught Regal's peers off guard. Among U.S. exhibitors, Cinemark said they would take a look at Regal, though chief executive Timothy Warner stopped short of saying he would make a run at the company. Mexico-based Cinépolis, in the midst of an expansion in India, also has said it would take a look.

"Regal is a very attractive company," Warner said after Regal's announcement. "Like any other acquisition opportunities, Cinemark will evaluate what the announcement means to our company."

"It makes sense for Regal to test the waters to see if there are any buyers before their appetites are satisfied," says B. Riley & Co. analyst Eric Wold.

AMC appears to have little interest in making a run for Regal. That is partly because the company is in the midst of a major campaign to revamp auditoriums with luxury reclining seats and improve food service. In addition, AMC is leery of running into regulatory issues that a combination of the two largest chains might raise, chief executive Gerry Lopez said after Regal announced its plans.

"I've got a company to run," Lopez said when analysts asked about his interest in Regal. "Things are working. Our perspective is that we want-we need-a steady hand on the tiller because we have significantly better weather ahead in 2015. So, we are going to remain focused operating the business, executing against the strategy that so far has delivered great results for us."

Whether Regal is sold, consolidation among North American exhibitors will continue if executives have their way. Even Regal is scouting the landscape for acquisition targets as it explores selling itself, chief executive Amy Miles says.

"M&A will remain a key part of our strategy," Miles says.

As Regal considers a sale, National CineMedia is fighting a federal lawsuit to block its $375 million acquisition of competitor Screenvision. The companies argue that the combination, which would encompass 88 percent of U.S. screens, would provide advertisers better service for the commercials that appear on movie screens before previews begin. Publicly traded National CineMedia was founded by AMC, Cinemark, and Regal. In its lawsuit, the Justice Department raised antitrust concerns, saying that the chains-the largest in the United States-would exercise "significant control and influence" over the new company.

Executives of the chains have declined in recent public appearances to comment directly on the lawsuit. National CineMedia, meanwhile, has expressed confidence that it can successfully defend against the lawsuit. The Justice Department has wrongly looked at the merger in the narrow context of only the film industry, National CineMedia CEO Kurt Hall said after the lawsuit was filed. Instead, the deal should be viewed within the broader competitive landscape of an ad market that includes hundreds of broadcast and cable outlets and many more online and mobile platforms, he said.

"Their claim that the merger will hurt advertisers is completely inconsistent with the reality of an increasingly competitive video-advertising market environment," Hall said.

Exhibitor confidence runs highest when executives discuss a 2015 release schedule peppered with sequels to hits that propelled 2013 tickets sales to a record $10.9 billion. The slate includes Avengers: Age of Ultron, Furious 7, Star Wars: Episode VII and the final Hunger Games. Executives and independent analysts agreed there is a very good chance these films and others on tap will push 2014 revenue beyond the $11 billion mark.

On paper, at least, the lineup looks like a sure bet. The Hunger Games: Catching Fire was 2013's top performer, taking in $424.7 million in the United States and Canada. The Hunger Games: Mockingjay Part 1 is expected to do well in this year's holiday season. The final film, Mockingjay Part 2, will reach theaters in November 2015.

ultron.jpgThe original Avengers took in $623.4 million in domestic sales and $1.5 billion worldwide in 2012, suggesting strong returns for Age of Ultron, which adds The Blacklist star James Spader as arch villain Ultron. Star Wars, a franchise begun in 1977, has generated $2.2 billion domestically, including re-releases of older installments. Globally, the franchise has done $4.5 billion in ticket sales. Other new films scheduled for release next year include Mad Max: Fury Road, a resurrection of the 1980s trilogy with Tom Hardy replacing Mel Gibson in the title role.

Fans echo the executives' enthusiasm. For example, Avengers: Age of Ultron has a 100 percent "want to see" rating on the movie-review website RottenTomatoes.com. Fury Road, The Hunger Games: Mockingjay Part 2, and Star Wars: Episode VII all have attracted a 99 percent rating.

Less pleasant for exhibitors is an agreement between Netflix and IMAX, the largest provider of big-screen technology, to release the Crouching Tiger, Hidden Dragon sequel simultaneously in theaters and to Internet-streaming subscribers. The film, a follow-up to the Chinese-language action film that took in $128 million in the United States and Canada and $214 million worldwide in 2000, is scheduled for release in August. Regal, Cinemark, and AMC all have said they won't show the film in their theaters. Outside the United States, European exhibitor Cineworld and Canada's Cineplex also have pledged a boycott.

"Our position on that type of programming is clear, and I think we've been consistent over the past three or four years regardless of when we were approached by third party as it relates to a day-and-date," Regal's Miles says. "We just think there is better programming from our screens, and we're going to continue down that path."

The major U.S. chains and AMC parent, Wanda, operator of China's largest chain, license IMAX technology in agreements that leave them with control over what films are shown on the screens, AMC said in a statement.

"No one has approached us to license this made-for-video sequel in the U.S. or China, so one must assume the screens IMAX committed are in science centers and aquariums," the AMC statement says.

Cinemark was more direct, declaring that the chain is "opposed to showing day-and-date releases at our entertainment complexes." 

Apart from tension over the day-and-date proposal, big-screen, premium-format showings of tentpole films was one of the bright spots for cinemas. Cinemark reported that third-quarter sales from 3D and large-format screenings rose to 25 percent of total admissions from 22 percent a year earlier. Exhibitors charge more for films shown in large-screen formats, whether with IMAX technology or proprietary brands such as Cinemark's XD, AMC Prime, Regal's RPX, Carmike's BIGD, or Marcus's UltraScreen. AMC also reported improved revenue from its large-format auditoriums, although specific numbers weren't provided.

In addition to recliner seats, executives see online ticket sales-and reserved seating-as yet another opportunity to attract more patrons by making it easier to get out and watch a movie. The sale of tickets online, including transactions at exhibitor websites and those of third-party vendors such as Fandango and MovieTickets.com, will reach $13.7 billion globally by 2017, Redwood Capital says, citing data from Global Industry Analysts.

Although Fandango and MovieTickets dominate the market, cinema operators are also getting into the business of selling tickets online. Cinemark operates its own online ticket engine. AMC rolled out a service in April, Lopez says. Overall, Internet sales for the chain rose 30 percent to 17.7 million tickets, or 13 percent of all tickets sold, in the third quarter. The robust results suggest a bright future for the technology.

"Slow box office and weak (2014) slate aside, our business on the Internet is booming," Lopez says.

 

Read more

dec19.png

By Daniel Garris

Warner's The Hobbit: The Battle of the Five Armies easily led this weekend's box office with $54.72 million. The third and final chapter of Peter Jackson's The Hobbit trilogy has grossed $89.13 million through its first five days of release. On the heels of a sharper than expected percentage decline on Thursday, the film rebounded nicely over the weekend and registered a five-day to three day ratio of 1.63 to 1. The five-day debut of The Battle of the Five Armies was 13 percent below the $102.05 million five-day start of 2002's The Lord of the Rings: The Two Towers (which also opened on a Wednesday) and 3.5 percent ahead of the $86.14 million five-day start of last year's The Hobbit: The Desolation of Smaug (which opened on a Friday).

The Battle of the Five Armies grossed $16.56 million on Friday, increased 29 percent on Saturday to take in $21.39 million and declined 22 percent on Sunday to gross $16.76 million. That placed the film's opening weekend to Friday ratio at 3.30 to 1, which is obviously inflated by the film opening on a Wednesday. The Hobbit: The Battle of the Five Armies received an encouraging A- rating on CinemaScore.

IMAX grosses were responsible for $7.45 million of the film's overall gross this weekend. Thus far The Battle of the Five Armies has grossed $13.37 million from 360 IMAX locations. That represents 15 percent of the film's overall domestic gross. The audience breakdown for the film skewed towards male moviegoers (60 percent) and moviegoers over the age of 25 (60 percent).

It what turned out to be a closer than expected race for second, Fox's Night at the Museum: Secret of the Tomb was able to outpace Sony's Annie with an opening weekend take of $17.10 million. The two films clearly split up the family audience this weekend and may remain close to one another throughout the rest of the holiday season. While it was able to claim second, Night at the Museum: Secret of the Tomb opened significantly below expectations. The third installment of the Ben Stiller led franchise had already been expected to see a significant drop-off from the performance of its predecessor, 2009's Night at the Museum: Battle of the Smithsonian (which debuted with $54.17 million in its first three days). Secret of the Tomb debuted 26 percent below the $23.24 million start of 2011's Alvin and the Chipmunks: Chipwrecked.

Night at the Museum: Secret of the Tomb opened with $5.66 million on Friday, increased 16 percent on Saturday to gross $6.55 million and decreased 25 percent on Sunday to gross $4.89 million. That placed the film's opening weekend to Friday ratio at 3.02 to 1. Family films tend to hold up very well throughout the holiday season and that will likely be the case for Secret of the Tomb. The film received a B+ rating on CinemaScore.

Annie debuted in third with $15.86 million. The musical remake starring Quvenzhané Wallis, Jamie Foxx and Cameron Diaz opened towards the lower end of pre-release expectations. That is positive news for Sony, especially after the events of the past week that led to the cancellation of the studio's release of The Interview. Annie trailed Night at the Museum: Secret of the Tomb by just $1.24 million this weekend. Annie opened 32 percent below the $23.24 million debut of the previously mentioned Alvin and the Chipmunks: Chipwrecked.

Annie started out with $5.29 million on Friday, increased 15 percent on Saturday to gross $6.08 million and fell 26 percent on Sunday to gross $4.49 million. That gives the film an opening weekend to Friday ratio of 3.00 to 1. Like Secret of the Tomb, Annie is likely to hold up nicely throughout the holiday season, though between the two films, it will face more direct competition from Disney's Into the Woods beginning on Christmas Day. Annie received a promising A- rating on CinemaScore, which strongly suggests that the film is going over much better with audiences than it has with critics.

Fox's Exodus: Gods and Kings landed in fourth with $8.11 million. The pricey Ridley Scott directed biblical epic starring Christian Bale was down a very sharp 66 percent from last weekend's debut. Poor reviews, mixed word of mouth and direct competition from The Battle of the Five Armies are all clearly taking a toll on the film. Exodus: Gods and Kings has grossed a lackluster $38.94 million in ten days. That places the film 7 percent behind the $41.87 million ten-day take of Son of God earlier this year.

The Hunger Games: Mockingjay - Part 1 followed closely behind in fifth with $7.88 million. The third installment of Lionsgate's blockbuster franchise was down a solid 38 percent from last weekend. Mockingjay - Part 1 has grossed $289.36 million in 31 days, which leaves it just $10.64 million away from becoming the second release of 2014 to reach the $300 million domestic milestone.

In its first weekend of wide release Fox Searchlight's Wild took in $4.11 million to place in sixth. The critically acclaimed drama starring Reese Witherspoon claimed a per-location average of $3,877 from 1,061 locations. Wild has grossed $7.17 million in 19 days of release.

On the limited front, UTV's PK was off to a very strong start with $3.57 million from 272 locations. That gave the Hindi language comedy starring Aamir Khan a per-location average of $13,108 for the frame. PK finished in ninth place among all films this weekend.

Read more

regalentertainmentgroup.png

KNOXVILLE, Tenn. -- Regal Entertainment Group (NYSE: RGC), a leading motion picture exhibitor owning and operating the largest theatre circuit in the United States, offers a quick gift solution for every movie fan on the holiday list. Now through Friday, December 26, Regal has an innovative offer and a great discount. For every $50 in online Regal eGift Cards sold, the buyer will receive a free $10 Regal eGift Card to be redeemed at the concession stand through Google Wallet.

"Regal eGift Cards can deliver a smile with the click of a button. This buy one get one free offer will sweeten the holidays for everyone shopping online," said Ray Nutt, senior vice president of business relations for Regal Entertainment Group. "By working with Google Wallet on this promotion, giving the gift of movies is even more appealing and it is the easiest way to shop by simply going to REGmovies.com or CorporateBoxOffice.com."

Regal eGift Cards can arrive instantly or be scheduled for a specific delivery date. Each eGift Card can be customized for recipients by adding a message and there's an option for uploading your own photograph to create a unique gift. There are no shipping charges or service fees for Regal eGift Cards.

Each eGift Card has a "Save to Google" button that allows moviegoers to automatically save the card to their Google Wallet account, so that it can be easily accessed on their mobile Android or iOS device via the Google Wallet app. The free $10 Regal eGift Cards must be saved to Google Wallet to be redeemed, and are valid at the concession stand through January 31, 2015.

"With such a terrific variety of movies this holiday and throughout 2015, Regal eGift Cards are a great choice for every friend and family member," said Ken Thewes, chief marketing officer at Regal Entertainment Group. "With a quick trip to our website you can share your love of movies with others in only a few clicks, so it's great for last-minute shoppers."

 

Read more

alamodrafthouselogo.png

Austin, TX -- Alamo Drafthouse Cinema is pleased to announce plans to open a Corpus Christi, TX location with franchise partner BACH Holdings. The Corpus Christi venue will be the sixth Alamo Drafthouse opened by BACH Holdings and will be located at the corner of Staples Street and Yorktown Blvd. The location was originally slated to be Movies & More, a project led by long time theatre owner Jeff Dinger. After discussing the opportunity, BACH and Dinger decided it would be best to partner and develop the location as an Alamo Drafthouse. Alamo Drafthouse will begin construction in the Spring and plan for a December 2015 opening.

"We have long loved Corpus Christi and have been extremely impressed with the growth of the area," said BACH Holdings co-owner Brandon Arceneaux. "With this opportunity, we found the perfect location and partner to bring our brand of cinema to town."

Jeff Dinger adds, "I am very excited to join the Alamo Drafthouse family of exhibitors and look forward to bringing to Corpus Christi the unique and creative energy for which the Alamo Drafthouse is known."

Alamo Drafthouse provides a unique combination of theater and restaurant, showing first-run and independent films and special programming events with an extensive menu made from scratch in a state-of-the-art culinary kitchen. After constructing the 32,000 square foot space, the Alamo Drafthouse will be a state of the art venue with seven screens, and the only dinner theatre in Corpus Christi. Each of the auditoriums will be equipped with Sony 4K digital projection as well as excellent screen size to room ratio and amazing Dolby Digital sound. In addition to the superior AV equipment, the layout of each screening room will eliminate the traditional front row, ensuring every seat in the house allows for a great viewing experience. Alamo Drafthouse will also feature a lounge offering an extensive menu of draft and bottled beers, wine and food. The lounge will offer patrons an inviting place to socialize whether they are early for the movie or just want to visit with friends.

Read more

by Kathy Conroy, Vice President and COO, National Association of Theatre Owners

Women are underrepresented in movies, as well as in leadership positions at organizations that produce, distribute, and exhibit movies. Through her work at the Geena Davis Institute on Gender in Media, Geena Davis is shining a light on gender imbalance in entertainment. Many readers will recall the Academy Award winner's powerful presentation at CinemaCon 2013, in which the she described and quantified the degree to which women and girls are underrepresented and misrepresented in Hollywood movies targeted to children ages 11 and under. Crowd scenes in movies rated G, PG, and PG-13, for example, averaged female representation of only 17 percent, sending the message that women and girls don't take up as much space as men and boys. The Geena Davis Institute's research suggests that the percentage of speaking female characters in top-grossing movies has not meaningfully changed in roughly 50 years. Further, women and girls are often stereotyped and sexualized when they are depicted in popular content.

Now, as Hollywood is embracing new audiences and opportunities in international markets, the Geena Davis Institute has conducted new research that explores whether the underrepresentation and misrepresentation of women and girls in entertainment is an American phenomenon or if it extends beyond U.S. borders. The institute partnered with the University of Southern California's Annenberg School for Communication and Journalism to explore the visibility and the nature of female depictions in films worldwide. The result was "Gender Bias Without Borders," a study that analyzes female character representation and portrayals in popular films across the 10 most profitable theatrical territories internationally-Australia, Brazil, China, France, Germany, India, Japan, Russia, South Korea, and the United Kingdom-and compares them to the United States. The quantitative study looked at films released between January 1, 2010, and May 1, 2013, with a rating "roughly equivalent" to the MPAA rating of G, PG, or PG-13 and examined key data points including gender representation, portrayals, attributes, sexuality, and careers.

A total of 5,799 speaking or named characters in the sample were evaluated for gender representation and found to be 69.1 percent male and 30.9 percent female, a gender ratio of 2.24 males to every one female. The imbalance was heightened in some genres. Action-adventure films depicted significantly fewer females (23 percent) in comparison to the average (30.9 percent), whereas comedy (32.8 percent), drama (34.2 percent), and animated (29.3 percent) movies were closer to the average.

The study found that the gender of the director and writer was related to the onscreen portrayal of girls and women. Films with a female director attached had 6.8 percent more females on screen than those without a female director. Historically, women have been underrepresented in the role of director. There have been notable exceptions, of course. Extraordinary women like Ida Lupino, Penny Marshall, Barbra Streisand, Jane Campion, Sofia Coppola, Betty Thomas, Nora Ephron, Kathryn Bigelow, and Diablo Cody have been successful despite Hollywood's tendency to restrict the range given to female directors. The underrepresentation of female writers, producers, and directors was examined in the recent study. Out of a total of 1,452 filmmakers in the study, 20.5 percent were female and 79.5 percent were male. This translates into a gender ratio behind the camera of 3.9 males to every one female. Women comprised 7 percent of directors, 19.7 percent of writers, and 22.7 percent of producers across the sample, as this country-by-country breakdown illustrates:

Conroy_1.png

The study looked not only at prevalence, but also at the portrayal of women and girls. It examined the way in which characters were depicted, with special attention to the demographics, stereotypes, and occupations of the speaking characters. Male characters held disproportionately more positions of power than their female counterparts in the 120 movies in the sample. Few female characters filled executive positions in the C-suite. Of the 79 executives shown across the sample, only 13.9 percent were female. Female characters in academics, sports, and religion faced a similar struggle, as this chart illustrates:

Conroy_2.png

There is reason to believe that onscreen gender balance and gender depiction are improving. There have been several movies in the past few years that have included notably nonstereotyped depictions of girls and women-Brave, The Fault in Our Stars, Frozen, Gravity, The Hunger Games, Maleficent, and others. Perhaps a trend toward serious and diverse roles for women has begun. At the same time, more women are producing, writing, and directing. It was inspiring to see Angelina Jolie, for example, stand before the audience at CinemaCon 2014, not as a glamorous movie star, but as a producer and director speaking with great passion about her project, Unbroken.

This fall, Geena Davis and her colleagues convened decision makers interested in the empowerment of women and girls at symposia held in New York, Washington, D.C., and Los Angeles. John Fithian and I had the opportunity to attend the Washington, D.C., event titled, "Second Symposium on Gender in the Media." The program featured keynote remarks by Davis, a presentation of the "Gender Bias Without Borders" research results by Stacy Smith of the USC Annenberg School, and a panel of thought leaders discussing, "Stories from Around the World: Empowering Women and Girls Through Film." Elizabeth Frank, chief content and programming officer, AMC Theatres, participated in the panel that discussed the impact of global film on women and girls, as well as best practices to drive change.

The presentations that afternoon led to the undeniable conclusion that gender inequality is rampant in global films. Not one country is anywhere near representing the reality that girls and women comprise fully half of humanity. Half. Not 30.9 percent. Half. It is critical that exhibition and distribution, with a customer base that is at least half female, address this imbalance. One might ask, but what can I do?

Content creators can do a lot to affect change, and many are stepping up to the plate. Davis reported that 68 percent of the entertainment-industry executives familiar with the message said they had used the institute's research in two or more projects, and 41percent had used the findings in three or more projects. When asked what they had changed, over 25 percent had changed the aspirations or occupations of female characters or their dialogue. "If she can see it, she can be it," one of the institute's key messages, is taking root. Davis makes the point that, while gender equality in "the real world" will take years to achieve, underrepresentation of girls and women on screen can be fixed immediately. "In the time it takes to make a movie, we can change what the future looks like," she said. "There are woefully few women CEOs in the world, but there can immediately be lots of them in films."

It's not only content creators who can positively affect change. Leaders in all segments of the industry can be advocates for gender equality. Exhibitors can be aware of gender balance when making decisions about what content to play on their screens. Choose to show gender-balanced films on your screens. Exhibitors and distributors can create and maintain inclusive workplaces. Choose inclusiveness. Research suggests that gender balance is directly related to good decision making. Diverse inputs from individuals with different backgrounds result in better outcomes. Inclusiveness is not only the right thing to do; it's the smart thing to do. Engage women and men as advocates for change. To hear a compelling argument, listen to Emma Watson's speech before the United Nations as part of the HeForShe campaign.

Senator Amy Klobuchar from my home state of Minnesota recently shared some advice she was given regarding how to best advocate for gender equality: "Speak softly and carry a big statistic." She rejected the "speak softly" part, noting her preference to speak with passion, but she agreed wholeheartedly with the importance of having solid data. The Geena Davis Institute provides an abundance of entertainment industry-specific data to support the message. Read the research findings. The institute's website is aptly named www.seejane.org. Think about the data and incorporate it in your decision making.

Celebrate the women in your organizations and industry. NATO applauds BoxOffice Pro for publishing "Women in Exhibition and Distribution" in the February 2013 issue. Last year the magazine recognized five exceptional women in exhibition and distribution-Amy Miles (Regal), Pat Gonzalez (Paramount), Nora Dashwood (ArcLight), Elizabeth Frank (AMC), and Nikki Rocco (Universal). BoxOffice Pro continued its focus on women in its October 2014 issue by recognizing nine women who are making significant contributions to the industry-Marianne Abiaad (Royal Corporation), Susie Beiersdorf (Sony Electronics), Mariana Hong (MasterImage 3D), Belinda Judson (NATO Regionals), Pat Marshall (Cineplex), Kelly O'Connor (Warner Bros.), Shelly Olesen (C. Cretors and Company), Darryl Schaffer (Screenvision), and Ann Stadler (Marcus Theatres).

NATO celebrated Nikki Rocco this fall at NATO's advisory board meeting as she prepares to step down as president of domestic distribution at Universal Pictures after 47 years at the studio. Rocco was the first woman to be named, in 1996, to head a major studio's theatrical distribution operations. Thank you, Nikki Rocco, for providing women throughout the industry with a most positive representation of female executive leadership. "If they can see it, they can be it."

 

Read more

Subscribe to Articles Feed