Even with Avatar: The Way of Water on its screens, cinema giant Cinemark Holdings reported a swing to a loss in the fourth quarter amid falling revenue.
As admissions and concessions sales came up short of last year’s performance, Cinemark saw overall revenue fall to $599.7 million for the three months ended in December, compared with a year-earlier $666.7 million. The Texas-based exhibitor had 39.2 million patrons come through its cinemas during the latest quarter, down on the 48.1 million customers that came through the turnstiles in the same period of 2021.
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The cinema chain posted a fourth-quarter loss of $98.8 million, compared with a year-ago profit of $6.4 million, which had marked the first profitable quarter for Cinemark since the start of the pandemic. On an analyst call, Cinemark CFO Melissa Thomas pointed to a “significant reduction in film volume” from Hollywood, compared to pre-pandemic levels, and soft box office from certain titles during holiday period late last year to explain the fall in attendance and revenues.
The per-share loss for the latest quarter was 82 cents, compared with a year-earlier 5 cents a share profit. Analysts as part of a Zacks Investment Research survey had forecast a loss of 34 cents per share.
In the fourth quarter, Cinemark recorded a non-cash impairment charge for long-lived assets of $66.6 million, against an impairment charge of $13.3 million in the year-ago quarter. Cinemark has come through the disruption of the pandemic with Hollywood studios once again leaning into theatrical releases.
But the exhibitor is still battling to bring viewers into its theaters and away from alternatives such as Netflix and other digital platforms, not least with the offer of luxury recliner seating and new dining options.
“This past year represented another positive step forward for the theatrical exhibition industry’s recovery from the pandemic. Sustained consumer enthusiasm to view movies and events in an immersive, larger-than-life, theatrical setting was validated time and again throughout 2022 across all genres, audience segments, and periods of the year,” Sean Gamble, Cinemark’s president and CEO, said in a statement Friday.
On an analyst call, Gamble returned to touting the continuing appeal of cinema-going, even as attendance dipped during the latest fourth quarter. “People still love going to the movies,” he stressed as the Cinemark chief pointed to Hollywood tentpoles bringing people out to the multiplex last year, most recently with titles like Black Panther: Wakanda Forever, Top Gun: Maverick and the Avatar sequel.
That’s in the face of movie streaming alternatives in the home and other platforms, which has reduced the pipeline of Hollywood films in theaters. Gamble pointed to Amazon Studios’ Ben Affleck-Matt Damon drama Air set for a major theatrical release and an exclusive window.
“We believe Amazon’s move could represent the start of a more substantive entry into theatrical exhibition by streaming companies in light of this potential shift,” he argued as rival streamers are also expected to follow the lead of the MGM studio owner.
On the mergers and acquisitions front, Gamble told analysts that Cinemark was casting an eye to rivals “to target high quality assets,” but would be “pretty disciplined” in any deal-making. And on the issue of dynamic pricing, Gamble said the chain was moving slowly to avoid provoking any backlash from patrons, but “we do think there’s opportunity over time in that space for sure.”
