UPDATED with Imax CEO Rich Gelfond comments: Imax CEO Rich Gelfond said Thursday after his company reported first-quarter earnings that China theaters are moving to an early June opening, and he anticipates U.S. exhibitors will open doors in July-August with library content, discounts, studios taking a smaller share of revenue and marketing that nudges people to off-peak show times.
Flipping the on switch, he told Deadline, requires extensive coordination between theaters chains and studios that’s happening on a scale he’s rarely seen despite the public throw-down over Trolls World Tour.
“I think it has to be a concerted effort. They won’t put out films unless people will come to watch them. The general tone is more cooperation than I’ve seen in my 26 years in the business between studios and exhibitors. I think the conflict is exacerbated by everyone’s frustration around the pandemic,” he said.
That said, “They are not my movies [i.e Trolls]. So I have enough fights that I have to fight. This is somebody else’s fight,” he said. Imax thrives on blockbusters that it runs for about two weeks – putting it in a good place ahead of a back-to-back, pent-up big release schedule starting with Tenet in July and running through next year. For the record, he noted, “You can’t recoup the substantial financial commitment of a blockbuster film without theatrical release.”
Imax swung to loss and saw sales plunge by 56% last quarter but has a strong cash position, a lean operation and expects to ramp up quickly when the time comes. Gelfond said he thinks brands will do particularly well coming out of the crisis – and Imax has a strong one.
Imax – and the rest of industry – will hopefully soon have a playbook in China. Imax is a pioneer there and its screens in the country closed in January, well before the rest of the world. The government reopened them but it was short-lived. There was blowback on social media for opening theaters before schools, which are starting to open to students this week.
Asked about China’s preference for local content and limits on Hollywood fare, Gelfond said he thinks the government may make an exception given the crisis.
“They have a stated objective of playing as much Chinese content as they can but … I think their goal is to get the economy going again,” he said. Many screens there are in big malls, he said, “So my guess is that they will let in a lot of those films to get consumers back into the malls to spend. And also because production has been closed longer in China than anywhere so after they run through the New Year’s movies and others” there will be more opening for Hollywood content.
Imax has also had 24 theaters open in South Korea and Taiwan but they’re not doing much business for lack of product, he said. China, on the contrary, will have a backlog of Chinese originals first set to run during the Chinese New Year celebration rudely interrupted by COVID-19.
PREVIOUSLY, 5:31 AM: Large screen exhibitor Imax on Thursday reported a 56% drop in sales and swung to a loss last quarter as it was one of the first U.S. entertainment companies to feel the squeeze of the COVID-19 pandemic, which shuttered it theaters in China way back in January. Screens in the rest of world followed.
Imax swung to a net loss of $49 million from a profit of $8 million the year before. It posted $35 million in revenue for the three months ended in March. However, the company said a solid balance sheet and ample cash puts it in a strong position to operate “through this historic period of COVID-19-driven theater closures.”
“In response to the virus, the company has implemented cost reductions and drew on its revolver, ending the quarter with $352.3 million in consolidated cash and its $300 million revolver fully drawn. It estimates a monthly cash burn rate of approximately $10 million and remains confident in its ability to operate through an extended business shut down and a zero revenue environment,” it said.
Imax is actively preparing to reopen to what is projected to be an Imax-friendly second-half release slate.
CEO Rich Gelfond and other executives will provide more details on a conference call the discuss the numbers this morning.