Imax CEO Uncertain About When China Will Reopen Theaters

Beijing_COVID-19 - Getty - H 2020
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"The safety of our team and audiences is our top priority," Richard Gelfond said Wednesday.

Box office from Star Wars: Rise of Skywalker, Frozen 2 and Joker helped Imax beat Wall Street analyst forecasts for fourth-quarter earnings and revenues.

The large-format distributor on Wednesday posted earnings for the three months to Dec. 31, 2019, at $18.2 million, compared to a year-earlier $1.7 million. The earnings per-share earnings came to 29 cents, compared to 3 cents per share last year, which beat a Wall Street forecast of 26 cents. The adjusted per-share earnings at 35 cents beat a 30 cents forecast.

Imax saw overall revenues of $124.3 million for the fourth quarter, up from a year-earlier $108.9 million. That beat Wall Street expectations for overall revenues of $117.5 million. The company also posted record full-year 2019 box office of $1.1 billion, up 7 percent over the year-earlier period.

The fourth-quarter results came before the decision last month to postpone the Chinese New Year film slate in China because of the Coronavirus outbreak, a move that Imax supported. “In terms of the health crisis in China, where movie theaters nationwide remain closed, we are continuing to monitor the situation closely and needless to say the safety of our team and audiences is our top priority," Imax CEO Richard Gelfond said in a statement.

“We look forward to circumstances improving and Imax continuing to satisfy China’s strong demand for premium quality content and entertainment experiences," he added ahead of an afternoon analyst conference call.

During that call, Gelfond expanded on the impact on his screens in China, and the wider toll on that country's film industry, as the COVID-19 virus persists after the Lunar New Year. The exec told analysts that all Imax employees in China remain healthy. At the same time, Imax's 702 screens in China remain closed, as is the wider Chinese exhibition sector.

Gelfond looked beyond the current virus outbreak, which he called a "serious, short-term challenge," to when the Coronavirus crisis passes and Chinese moviegoers return to the local multiplex, not least to get out of their homes. "We're confident the business will rebound once conditions in China normalize," he told analysts.

But Gelfond said little about when, and how, the Chinese exhibition industry may reopen. "It's not just the slowdown of the infection. There's also getting infrastructure back and what are the government policies," he argued. The CEO also said there was a piracy risk for some upcoming Hollywood movies releases in China when theaters reopen as many studio titles may lose the opportunity for a day-and-date release simultaneous with the U.S. theatrical rollout to boost box office activity.

Among the big-budget local-language movies that had been set for release last month were Wanda's comedy-action sequel Detective Chinatown 3; Huanxi Media's comedy tentpole Lost in Russia and sports epic Leap; Dante Lam's action vehicle The Rescue; and the family animated pic Boonie Bears: The Wild Life.

Gelfond said he expected the local-language releases that Imax had planned for its Chinese New Year period to eventually get theatrical play in China later this year.

Local regulators have always blocked Hollywood films from releasing during the festival period to give home-team studios an uncontested run at the box office. China's weeklong Lunar New Year holiday, also known as Spring Festival, typically is the country's busiest moviegoing period by far, and this year's holiday was expected to generate over $1 billion in box office revenue.

But after health officials advised the Chinese public to avoid crowded places, studios pulled all of their holiday tentpoles from release and the nation's 70,000 movie theaters closed their doors. Shares in Imax China Holdings, which operates Imax screens in that market, slid on the Hong Kong Stock Exchange in the wake of the Chinese New Year cinema closures last month, but have rebounded in recent weeks.

Feb. 19, 2:30 p.m. Updated with comments by Imax execs made during an analyst call.