The Wrap’s Scott Mendelson explains the reasons for investors warming up to the value of exhibition, a sector that has been in the doldrums since the onset of the pandemic.
As one example, Cinemark recently announced better-than-expected fourth-quarter results and a significant rebound in revenues for the full year in 2022 compared with 2021. Shares in Cinemark (NYSE: CNK) jumped on the announcement, with many analysts offering a “Buy” recommendation for the Dallas-based company, the country’s third largest exhibitor.
Warner Bros. Discovery has downshifted on its “streaming-first” strategy, with CEO David Zaslav explaining that “day & date” simultaneous releases to theatres and streaming create “no value” for the company. Investors have applauded this new approach, with shares in the media giant (NASDAQ: WBD ) rising by more than 60% since Zaslav took over in April 2022 when Warner Bros. and Discovery completed their merger.
IMAX is the highest flyer among exhibitors, with its success fueled by a steady flow of special-effects-laden blockbusters optimized for a premium large-format experience. Because Hollywood is on track to deliver the goods in 2023, the company is forecasting a complete recovery in its revenues this year to pre-pandemic levels. IMAX also benefits by having established itself as the top international exhibitor in the Chinese market, the second largest in the world.
Mendelson concludes that it has become clear that the exhibition has stepped back into a traditional role as a key contributor to the entertainment industry, alongside the ongoing expansion of streaming.
