Robert Pattinson, right, and John David Washington in a scene from ‘Tenet.’
Photo: Melinda Sue Gordon/Associated PressEven the most dedicated moviegoers, willing to wear masks, need something to actually see.
Movie theater operators have encountered a few bumps on their road to recovery. In mid-June, Warner Bros. delayed the planned opening of psychological thriller “Tenet” by two weeks from its July 17 target date. The move would have given theater owners a chance to get more screens open in time for the debut. Then, a resurgence in Covid-19 cases across the country caused the studio to push that date back further, this time to Aug. 12. Disney quickly followed suit by delaying “Mulan” from July 24 to Aug. 21.
Because those two movies are expected to be the main draws getting customers back into theaters, investors have taken the developments hard. Stocks of the three largest publicly traded theater chains—AMC Entertainment, Cineworld and Cinemark—slid an average of 23% for the month of June.
That beatdown might seem logical, given the recent unsettling trend of the pandemic. But theater operators have actually fared far worse of late than other seemingly more risky groups in the crowd-based entertainment business. Pure-play theme park operators Six Flags, SeaWorld and Cedar Fair fell only 16% during the month, on average, while cruise ship operators Norwegian Cruise and Carnival actually both gained more than 4% in that time. Movie chains are also some of the most damaged stocks for the year, averaging a loss of 60% so far compared with 54% for the theme park group.
Whenever they reopen, braving a movie theater will likely be less intimidating than boarding a cruise ship, packing into a theme park or moshing at a rock concert. But theater operators will also be in the uncomfortable position of being the first to test the broader public’s appetite for engaging in activities the pandemic has made particularly risky.
It is already proving to be a learning experience. The original reopening plans broadcast by AMC and Cinemark didn’t require patrons to wear masks at shows, though both have since made them mandatory. AMC Chief Executive Adam Aron noted that his company’s original policy prompted “an intense and immediate outcry” from customers.
Another risk for theater owners compared with other crowd-based entertainment businesses is that movie exhibitors lack control over one key aspect of their business—the movies themselves. Those are produced by studios looking to maximize the return on their investment. With reported production budgets both exceeding $200 million, “Tenet” and “Mulan” need the widest possible audiences.
Credit Suisse analysts said Monday they “would not be surprised” by more delays in those and other films as they downgraded the shares of AMC and Cinemark.
Both U.S.-based chains along with U.K.-based Cineworld formally pushed back their reopening plans this week, now targeting late July. That, of course, depends on the behavior of a disease that so far hasn’t shown much propensity to follow a call sheet.
Write to Dan Gallagher at dan.gallagher@wsj.com
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