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Cinema should look at striking content deals with streaming services to get much-needed content amid studios’ ongoing film slate delays due to the coronavirus pandemic, one Wall Street analyst suggested on Friday.
“Theater owners should consider finally striking a deal with Netflix, Amazon and other SVOD services as a lifeline to get more product on movie screens,” MoffettNathanson’s Robert Fishman wrote in a report.
“To no one’s surprise,” he decided to cut his box office projections “given a high level of uncertainty around the future of the domestic box office and when we should expect to see a return to a new normal level of attendance,” he explained. “2020 unfortunately now looks like a year where the domestic box office is set to plummet 81 percent from 2019 down to $2.1 billion.”
What about a possible rebound next year? “Factoring in the studio supply and potential consumer demand issues, we now forecast 2021 to be depressed at 35 percent below 2019, or $7.4 billion, before growing 23 percent to $9.1 billion in 2022,” Fishman estimated.
The analyst highlighted that U.S. exhibitors “are under attack by factors mostly out of their control.”
How can movie attendance return to prior levels if blockbuster films aren’t released? “While some may try to point to the studios for not taking more risk or partnering with exhibitors to come to a solution, the reality of the current stock market to hugely value all things streaming is helping convince management teams to more fully embrace the future as seen with Disney’s latest decision to move Pixar’s Soul to Disney+,” the MoffettNathanson expert said.
So what can cinema groups do beyond looking for possible streaming content? “First and foremost, we believe the focus for all exhibitors should remain on preserving liquidity, as most have tried to do since the start of this pandemic,” Fishman wrote. “Next, despite the lack of major tentpole releases until at least the end of November, we would recommend reaching agreements with their studio partners on alternative windowing strategies to help ease the decision making process for studios to bring back their movies.”
Fishman in his report cut his stock price target on exhibition giant Cinemark by $4 to $12, but maintained his “neutral” rating on the stock. After all, “on a relative basis, it is clear Cinemark has maintained the strongest liquidity position and should have enough liquidity well into fall 2021 at its current run-rate.”
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