Movie theaters are doing boffo business
During the Great Depression, Americans flocked to ornate movie houses to forget about their troubles. Now, they are turning to impersonal multiplexes for relief.
Movie admissions are up about 10 percent year-to-date, according to the National Association of Theater Owners (NATO), a trade association. Box Office Mojo estimates that box office receipts are up more than 14 percent. Five movies this year have grossed more than $100 million. This is great news for movie exhibitors.
Shares of Regal Entertainment Group Inc. (RGC) are up 39 percent this year, eclipsing companies which make movies, including Time Warner Inc. (TWX), News Corp. (NWS), and Walt Disney Co. (DIS), all of which have dropped by double digits. Rival Cinemark Inc (CNK) has gained 33 percent. Carmike Cinemas Inc. (CKEC) has soared more than 160 percent over the past month.
Consensus estimates for Regal Entertainment range from 6 to 14 cents, according to Thomson Reuters. Revenue is expected to rise 2.5 percent to $642.31 million in the current quarter. Cinemark's earnings per share is expected to rise from five to 11 cents on revenue of $421.7 million. Analysts expect Carmike to lose 14 cents this quarter but for business to rebound to a 47 cent profit next year.
Patrick Corcoran, NATO's director of media and research, told the DailyFinance that theater owners were "a little surprised" by how well they have done. Though people often deride movies for being expensive, they aren't when inflation is considered, he said.
"Not everybody is broke," he said. "People still have to get out."
His view is backed by a recent note from Piper Jaffray which predicted strong results from the exhibitors.
"With a deep slate of compelling content being released over the next several quarters, we are optimistic robust box-office trends will continue," the analysts wrote. "In addition, we believe the battered consumer is likely to continue to 'trade-down' and head to the theater over other more expensive forms of out-of-home entertainment in the moderate term, consistent with patterns during previous recessions."
Movie theaters are flexing their marketing muscles to drum up business. There are special deals for stay-at-home parents along with screenings of television shows for children. Corcoran noted that one theater owner is offering free screenings on Wednesday nights and others give customers $1 sodas.
This year, people have liked Hannah Montana: The Movie, Monster's Versus Aliens in 3-D, and -- lord help us -- Paul Blart: Mall Cop, which currently tops the box office. Corcoran demurred when I asked him to take a stab at forecasting how businesses may fare for the rest of the year.
But it's safe to say that legions of fans will flock to the latest Star Trek feature. Early reviews are positive. The theaters better order extra popcorn.