Cinemark CEO: Priority Is to Rebuild Balance Sheet, Not Acquire Theaters From Rivals

Cinemark CEO Mark Zoradi
Matt Winkelmeyer/Getty Images

Cinemark CEO Mark Zoradi

"I don't want to say M&A isn't a potential in the future," Mark Zoradi told an investors conference.

Cinemark CEO Mark Zoradi insists he has no interest in acquiring movie theaters directly from AMC Theatres as his rival looks to survive the pandemic.

But that won't stop Cinemark from negotiating with landlords for new locations when they take back ownership of venues from struggling theater circuits. "We're not in those negotiations or discussions at this point with any landlord, regardless of the rumor that came out in the New York Post. It wasn't true," Zoradi told the MKM Virtual Investor Conference during a session that was webcast.

The Cinemark boss was responding to earlier media reports that Zoradi was looking to pick up movie theaters from AMC Theatres as that market rival looks to survive the pandemic. Zoradi stipulated Cinemark would not negotiate to acquire theaters until they had reverted back to a real estate landlord.

And looking ahead, Zoradi said orphan movie theaters were likely to come up for grabs as the industry inevitably contracted amid the pandemic and the possibility of bankruptcies among rivals loomed. "We know there will be opportunities and we're going to let those opportunities play out and not jump into the fray," he said.

"I don't want to say M&A isn't a potential in the future, but it's not something we're actively doing, as we speak, right now," Zoradi added. He insisted Cinemark's main priority is to rebuild its balance sheet, not acquire theaters from struggling rivals, post-pandemic.

"We're going to be very careful in taking the cash we have on hand, for which we have plenty, and risking it with acquisitions where we're not certain what that particular outlet is going to do in a post-pandemic environment," Zoradi said.

The Cinemark CEO also made it clear he didn't like being side-swiped by his major studio partners as they unveil streaming and box office plans for their theatrical movies. "They really made good on what they indicated to us. We had enough discussions to where we weren't surprised by what they said," Zoradi said of Disney's decisions on the theatrical and/or streaming distribution of films that were unveiled last week.

That includes the Disney+ release of the live-action Pinocchio and Peter Pan & Wendy titles and the theatrical release of Black Widow as part of its box office strategy amid the pandemic.

That's in contrast to Warner Bros., which failed to telegraph that studio's decision to put its entire 2021 slate of films on its HBO Max streaming service the same day the titles open in theaters, Zoradi argued. "The truth is Warner Bros. made a pretty shocking announcement to the industry," he added.

WarnerMedia CEO Jason Kilar apparently failing to fully brief Cinemark left Zoradi to conclude the studio is driving hard towards the streaming arena, irrespective of other industry trends. "There's no question that Warner Bros's move was primarily motivated by wanting to prop up HBO Max," he told the investors conference.

Imax CEO Richard Gelfond, as he made his own appearance at the MKM virtual conference, also criticized Warner Bros. for its industry optics after the studio rolled out its movie streaming strategy for HBO Max last week. "They made some serious miscalculations. First, they didn't talk to anyone about it, which would have got a lot of feedback privately, rather than getting so much negative feedback publicly," he told investors.

Gelfond also said Warner Bros. had wrongly suggested the pandemic will last until the end of 2021, when he ventured the promise of the COVID vaccine held out the possibility that the multiplex could see rebounding attendance starting in April 2021 and picking up pace next summer.

The Imax boss also forecast Warner Bros.' streaming strategy will start to come undone when box office returns are revealed for titles like Black Widow and Top Gun: Maverick next year.  "Warner will not want to sacrifice that global box office," Gelfond said as HBO Max remained a domestic platform and the studio would face piracy concerns for its blockbuster titles as they are released overseas.

"I don't think that model will hold or gain a lot of traction, primarily as the talent has rebelled against that model," he added about Warner Bros.'s hybrid release strategy. Disney, by contrast, was "nuanced" as it made its streaming announcements last week by, in part, by not choosing a one-size-fits-all approach to release its upcoming movie slate as did Warner Bros.

"They've (Disney) said, during the pandemic, we're going to try other models," Gelfond observed. The result is some Disney blockbuster movies will go to Disney+ and most will be held for a theatrical release next year as the studio looks to a post-pandemic world where box office rebounds at the local multiplex.

"They've taken an intelligent, measured approach, which is there's COVID rules and then there's normal rules, whatever normal may be," Gelfond said of Disney's streaming strategy.