AMC Chants ‘Doctor Strange!’ as Analysts Pour an Icy Jumbo Soda on the Optimism

AMC Theatres and Cinemark lost less money than they did this time last year, but analysts suggest profits will remain elusive.
Dr. Strange levitates Coke
Dr. Strange levitates Coke

The collapse of Netflix subscriber numbers put wind in CinemaCon’s sails, making its glowing assessment of the theatrical future seem… if not sensible, possible. Two weeks later, major exhibitors have weighed in with their quarterly numbers; so did a major media analyst. And for all the rah-rah-rallying in Las Vegas, the real world tells a slightly different story.

AMC Entertainment revenue soared in the first quarter of 2022, as expected, and with a net loss that improved from -$567 million in Q1 2021 to -$337 million this year. Although revenue grew by 5X, that’s still a pretty huge loss — but AMC Entertainment chairman and CEO Adam Aron is not looking back. “Let me say it again to all of those who doubted the consumer appeal of movie theaters,” he crowed on the company’s earnings conference call Monday afternoon, the day after the newest Marvel hit opened to $450 million globally. “‘Doctor Strange,’ ‘Doctor Strange,’ ‘Doctor Strange,’ ‘Doctor Strange.’”

Aron’s focus on the present (Q2 kicked off April 1) and the foreseeable future is understandable; the Q1 domestic box office was off 44 percent from the same quarter in 2019, before the pandemic messed everything up. Aron then recited that “Doctor Strange”-times-four mantra again (which would not be the final time; strange indeed) before moving on to another blockbuster.

“Oh my, are we gonna sell tickets for ‘Top Gun: Maverick,’” Aron said, gushing about the screening that served as the CinemaCon centerpiece. “Whatever you do in life, do not miss ‘Top Gun: Maverick,'” he added later in his closing remarks. (We did see “Maverick” with Aron, and it is excellent.) Aron then moved on to a very lengthy and Hollywood-like boxing analogy as a metaphor for AMC’s recovery. (The short version: They were wobbled and knocked down to a knee by Covid, but got back up; AMC is now shaking off the cobwebs and soon to graduate from throwing jabs to hooks.)

Yes, but. The same day AMC reported its first-quarter results, media analysts at MoffettNathanson predicted the 2022 domestic box office would total about $8.7 billion — the same ballpark as Aron’s own estimate. (IndieWire box-office editor Tom Brueggemann’s own 2022 estimate is less optimistic, landing between $8 billion and $8.25 billion.) However, MoffettNathanson added that it expects the 2023 box office will show no growth and will end slightly down, to $8.5 billion. The analysts still see streaming as the main culprit, dividing viewers’ time and money, and studios’ slates.

Tom Cruise
“Top Gun: Maverick”Paramount/screenshot

Cinemark’s revenue quadrupled from the first quarter of 2021 to the first quarter of 2022, but the chain still lost $74 million. (Cinemark lost $208 million in Q1 2021, when several theaters were still closed and the new film slate was truly limited.) Sean Gamble, Cinemark’s president and CEO, focused on the company’s recovery vs. the industry in his own earnings statements, comparing Q1 2022 with Q1 2019.

Although he acknowledged a “challenging start to [Q1 2022] due to Omicron-related shifts in film content,” Gamble credited “strong concessions sales and stringent cost management” for his chain’s turnaround. While the average ticket price rose two pennies, the average concession revenue per user increased by 52 cents. AMC concession revenue declined by 11 cents per U.S. guest, even as the overall food and beverage revenue quintupled. (Gamble probably should have chanted “The Batman” there.)

Three films crossed the $100 million mark at the domestic box office in the first quarter of calendar 2022: “The Batman” netted $338 million in just a few weeks; “Spider-Man: No Way Home,” a mid-December release, was second with $228 million in Q1; and “Uncharted” hauled in $135 million. (Honorable mentions: “Sing 2,” another December film, scored $84 million; “Scream” scared up nearly $82 million.)

Gamble said he is “extremely pleased with the improving rate of box-office recovery,” and “highly optimistic about its continued momentum based on the compelling slate of films ahead.”

That slate includes “Jurassic World Dominion,” “Lightyear,” “Top Gun: Maverick,” and “Doctor Strange in the Multiverse of Madness,” which as Aron would like to remind you, hit pay dirt last weekend.

Jurassic World Dominion
“Jurassic World: Dominion”Universal/screenshot

MoffettNathanson dared to wonder if exhibitors have “a little swagger” back.

“After the fits and starts last year because of COVID waves as well as studios shifting title release dates and shortening/eliminating theatrical exclusive windows, it seems that most of the negative headlines have faded away,” the fellas (they’re fellas) wrote. “Now that Netflix’s subscribers are declining, there is even a new bullish narrative on whether studios will be forced to rethink destroying their income statements by eliminating exclusive theatrical windows.”

Then they threw a jumbo, ice-cold Coke (not quite a popcorn bucket) on the business in the form of those annual forecasts, and also lowered Cinemark’s target price by $1 per share to $17. Or roughly one-and-a-half shares of AMC.

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