Cinemark Q3 Earnings Reports: CEO Mark Zoradi Speaks on “Dynamic Theatrical Windows,” the Success of Private Rentals

Many of the questions asked of Cinemark CEO Mark Zoradi during this morning’s quarterly earnings call were about streaming and theatrical exclusivity—leading the CEO to offer some updates on their evolving windows policy as well as clarify other points about the chain’s status moving into the fourth quarter of 2020.

At AMC’s Q3 earnings call, held earlier this week, CEO Adam Aron touted the chain’s deal with Universal, which can see the theatrical exclusivity window for that studio’s titles shrink from the traditional 72 days to as little as 17 at AMC theaters. Cinemark, Zoradi announced, will join AMC in playing upcoming Universal and Focus releases The Croods: A New Age, Freaky, and Let Him Go when they open in theaters this month. Cineworld, owner of Regal, the country’s second largest chain, has made no announcements about reopening the bulk of their theaters in the coming weeks, though none of the handful of Regal theaters open in NY and CA list showtimes for Focus Features’ Let Him Go, out tomorrow.

Cinemark, explained Zoradi, is having “active discussions with multiple content providers to evolve windows.” The exhibitor is advocating for a “dynamic window” structure, whereby the period of theatrical exclusivity will vary based on the box office potential of individual films. “Movies that are your big tentpole blockbusters will likely have a longer window,” says Zoradi, while a smaller or mid-range movie “could have a shorter window. And what that does is it allows the studio or content provider to monetize that particular movie quicker, because it’s not in the theaters as long. A movie that’s going to be in the theater for a long time, we’re asking for—and we think we’ll be able to get—a longer exclusive window.”

Zoradi was unable to offer specifics, noting that “there are active ongoing negotiations going on with various studios at this time.” However, in dealing with specific content providers, he noted that a potential agreement “will always come down to the terms—both films rental terms and number of days of exclusive release… We’ve been extremely consistent that we believe an exclusive theatrical window up front is very important” for both Cinemark and content providers, for whom an exclusive theatrical window “eventizes a movie and actually creates additional value downstream.”

Speaking more generally on Cinemark’s Q3 operations, Zoradi noted that, at this point, approximately 90 percent of the chain’s U.S. cinemas and 40 percent of its Latin American cinemas (including over 60%, or 54 theaters, in Brazil) are open. In the United States, approximately two-thirds are open all week, with the remaining third being open only on weekends; the chain has also “honed in the number of showtimes.” 21 theaters in the United States have been permanently closed, though the bulk of those closures happened in Q2. Approximately a third were of second-run houses, for which “in today’s world, there’s just not a market for,” says Zoradi.

Cinemark also touted the success of their private watch parties. In the four months since the program’s launch, Cinemark has sold nearly 50,000 private events, attended by more than 600,000 people, “with a significant portion reporting it was their first time back in the theater since the shutdown, underscoring the opportunity for guests to sample the cleanliness and safety of our theaters.” During the Q3, private watch parties represented 17 percent of Cinemark’s total box office; now, moving into Q4, that number is north of 20%.

During Q3, Cinemark welcomed 1.9 million attendees and admissions revenues of $14.9 million, concessions revenues of $9.1 million, and total revenues of $35.5 million. (Down from $821.8 million in the equivalent period last year.) But, with nearly 90 percent of their domestic theaters now open, said Zoradi, “we have been encouraged by our results to-date, wherein we have been burning less cash open than when we were shut down. Significant drivers of this success have been our extensive health and safety protocols that are part of The Cinemark Standard, and innovative new ways of operating our theaters and maximizing revenues, such as the Private Watch Party concept we launched in July. We look forward to a more normalized pipeline of new film content and continuing to welcome back Cinemark moviegoers to enjoy the immersive cinematic experience they have been craving.”

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