19 March 2023
At least year’s ShowEast in Miami, when Universal Pictures screened DreamWorks Animation’s “Puss In Boots: The Last Wish” the auditorium at the Regal South Beach was mostly full, though there a good number of delegates who rolled their eyes and decided to stick around the Loews Hotel to take meetings and await that evenings reception. Those who did attend the film reported how pleasantly surprised they were with the latest installment of a franchise most had assumed had used up all its nine lives.
Yet last week during the weekly Dine-In Cinema Summit conference call (which is always well worth dialing into) the exhibitors in attendance all commented on how “Puss In Boots: The Last Wish” was still one of the most popular films playing in their cinemas. For most it was third behind “Scream VI” and “Creed III,” sometimes even outpacing “Ant-Man and the Wasp: Quantumania.” For others the animated film starring Antonio Banderas as the fairy tale feline was doing even better.
Even though curiosity may be a well known health concern for cats, I was intrigued enough to start making a few inquiries with exhibitors around the globe to see how Shrek’s old sidekick was fairing in different territories. The story was the same everywhere. While “Avatar: The Way of Water” may be pulling in more in box office thanks to its premium ticket prices (from formats such as Dolby Cinema and 3D), “Puss In Boots: The Last Wish” has been bringing in more attendees. Both films were released at the end of December 2022. Some exhibitors even dared compare it to the unexpectedly long running 2017 release “The Greatest Showman,” which played in theatres for at least six months and in some cases up to a year.
Was it not so long ago exhibitors and distributors were duking it out over the ever-decreasing length of theatrical release windows? Now we have an animated family film swashbuckling its way into a fourth month in cinemas. As of last weekend, “Puss In Boots: The Last Wish” had earned over USD $461 million globally making it the ninth biggest 2022 Hollywood film release.
When asked why they believed the Dreamworks Animation film was still performing so well in theatres, every cinema operator expressed the same reasoning; there is currently a dearth of family movies on a release schedule that used to be littered with them. So while exhibitors are publicly lobbying for distributors to send more titles their way, its worth underscoring how important it is that at least some of them be geared toward those that require parents to buy their tickets (i.e. children).
During a special meeting of shareholders last week AMC’s investors voted overwhelmingly in favor of increasing the number of common shares in the world’s largest movie theatre chain and also approved a 10 to 1 reverse stock split. The former passed with 88% of the vote, the latter with 87%. This should allow the exhibitor to raise additional operating cash and reduce its over USD $5 billion in debt by increasing its share base.
The financial machinations of the maneuver can be tricky to understand, but the short version of the story is that, after shareholders balked at allowing AMC to issue more common shares to raise more cash in 2021, the company created a new set of shares dubbed AMC Preferred Equity units (APEs). Each common shareholder received a single APE share. AMC could then raise money through issue new shares of APE without approval from common shareholders. One issue was that the share price of APE plummeted far below the price of AMC’s common shares.
One reason shareholders voted to convert APE back into common shares is that it was one of the few ways for them to see any short term value. APE’s share price hovers around USD $1.40 while AMC’s common shares are sitting at over USD $4.00. The arbitrage opportunity here is obvious with common shareholders being able to sell their shares and increase their position in the company by purchasing discounted APE shares which eventually are expected to now convert back into the higher priced common shares.
As for the reverse stock split, it’s not a move traditionally undertaken by financially stable companies. In AMC’s instance it will decrease the number of its shares on the open market while increasing its share price. Theoretically, combining 10 shares at USD $4.00 each would create a single share around USD $40. To raise more cash, the company could then issue new shares at that new level (which undoubtedly would decrease in value in the short term due to dilution).
AMC won’t be able to implement on either of the approved plans until at least 27 April when a hearing in class-action lawsuit filed by a group of the companies shareholders is set to be heard in Delaware Chancery Court. The suit relates to shareholders who view the creation of APE in 2022 as an end run around the company’s inability to issue additional common shares.
North America’s largest cinema advertising company National CineMedia (NCM) is reportedly in negotiations to hand control to its senior lenders. The move would come before filing for Chapter 11 bankruptcy protection. The plan would be to have a pre-arranged restructuring deal, while the company continues to operate as normal.
The company, which owes roughly $1.1 billion in debt, is in an extended grace period after missing interest payments owed to its bondholders last month. It has hired law firm Latham & Watkins LLP as restructuring counsel, while its operating subsidiary National CineMedia LLC recently tapped lawyers from Paul Weiss Rifkind Wharton & Garrison LLP, according to people familiar with the matter. FTI Consulting Inc. is serving as restructuring adviser, while Lazard Ltd is the company’s investment banker, these people said.
NCM was hit hard by the COVID-19 pandemic as it has long-term agreements with many of the largest cinema operators in the United States. With box office slow to recover, it means that the number of eyeballs that it has to guarantee to brand partners and clients have not materialised at multiplexes. To make matters worse, NCM is also locked in litigation with Cineworld-owner Regal, which is itself going through Chapter 11. Cineworld has asked that the Regal-NCM agreement be canceled so that it can be re-negotiated on more favourable terms (to Regal) or that it is free to go with another cinema advertising company.
NCM recently released a study commissioned with Lumen that advertising in cinema outperforms television and online by four to seven times. Sadly a dearth of blockbusters in 2022 means that there were too few hit movies for the adverts before them to significantly outperform other advertising-supported mediums.
Nordisk Film Cinemas has been named as the 2023 recipient of the “International Exhibitor of the Year” award at CineEurope. Asger Flygare Bech-Thomsen, CEO of Nordisk Film Cinemas, will accept the honors which will be presented as part of the CineEurope Awards Ceremony hosted by The Coca-Cola Company on Thursday, 22 June in Barcelona, Spain.
Each year at CineEurope, the International Exhibitor Award is given to a cinema exhibitor whose accomplishments, new developments, growth, and market leadership make them the standard-bearer for the industry.
Referring to this year’s award, Andrew Sunshine, President of The Film Expo Group commented “Nordisk Film Cinemas has built a culture of innovation for cinema, changing the moviegoing experience in Scandinavia. It has proven to be a pioneer in the industry and we congratulate all on this well-deserved honor.”
Nordisk Film Cinemas is the market leader in both Denmark and Norway with 47 cinemas and more than 250 screens across Scandinavia, including Sweden. It is part of one of the oldest film companies in the World – Nordisk Film founded in 1906 just outside Copenhagen.
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