Cinemark CEO Mark Zoradi Says California, NY Opening Key For Exhibition; Sees M&A Surge

Cinemark CEO Mark Zoradi said getting theaters open in California and New York is crucial to the health of exhibition as the second largest U.S. chain has 70% of cinemas open but lacks these key markets — keeping it “behind the eight ball.”

Some California counties are open or opening but not yet San Francisco or Los Angeles. New York Governor Mario Cuomo Wednesday reiterated his thinking that with the state teetering on his target 1% infection rate, he can’t risk going over although he understands movie theaters and all businesses want to open. (Many, like gyms, casinos and indoor dining have.)

The fourth quarter will be “thinner” than usual” as releases continue to drift into next year but 2021-2022 look strong, load with films that were moved or had to delay production, Zoradi told investors at a Goldman Sachs media conference. He sees light starting with the year-end release of Wonder Woman 1984.

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We think that will be a smash hit,” timed with — hopefully — the virus starting to subside and — hopefully — California and New York open by then, Zoradi said.

He shrugged off the PVOD debate, saying he was in active talks even pre-COVID with multiple studios about the best parameters for a theatrical window – not just number of days but terms. “We don’t have to  figure it out this week or next,” he said. And he promised that Cinemark would always keep screens available for smaller films.

They key right now is to open. He heaped praise on Warner Bros. for releasing Tenet into such a sketchy domestic market. “We intend to play this movie for a long time, not just in theaters it’s currently in but also in California and New York when they open up,” he said. “It was important to get it out there … They opened the movie … knowing that it was going to be a long haul, a marathon. Warner can count on us and other exhibitors to play this for the long haul.”

Cinemark had solid financials before COVID struck and COO/CFO Sean Gamble, flanking Zoradi at the conference, assured investors the company has a solid financial runway through 2021.

Unfortunately not all theaters, especially smaller chains and mom and pop operations, have managed to absorb the the hit of being closed for five months — and in the case of New York still. That’s had industry sources anticipating a wave of consolidation in the business, a likelihood confirmed by the Cinemark execs, who plan to be active.

“There certainly are possibilities. We anticipate that opportunities will emerge out of everything we’re going through and we are in a good position to capitalize on it,” said Gamble. He expects potential acquisitions to surface domestically a well as internationally.

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