Movie Theaters Waiting to Reopen Could Be Best Thing for Cinema Chains, Analyst Says

As the country closes in on the third month of stay-at-home orders, some states have taken it upon themselves to begin allowing businesses, including movie theaters, to open their doors. Texas Gov. Greg Abbott on Monday gave theaters — as well as restaurants, retail stores and museums — the green light to reopen if they want. That news came the same day that theaters in Georgia were allowed to start welcoming moviegoers back. B. Riley FBR analyst Eric Wold wrote in a note to investor clients on Monday that theaters reopening this early, before studios begin releasing new films, would be the wrong move and likely not what’s best for profitability. “Some may believe opening theaters as soon as possible is best to ‘prime the pump’ with movie-goers and get them back to their prior habits. We continue to believe this may be the wrong move for a number of reasons, including movie-goer and investor sentiment as well as company-level profitability,” Wold wrote. “We believe movie-goer interest in seeing library films in theaters during the initial reopening period may be fairly limited–both given that those films can be seen at home and movie-goers may want to see how effective the cleaning/seating processes are before venturing back to theaters. “Major exhibitors are unlikely to reopen their theaters until the film slate will justify the incremental cost of opening the doors and staffing each location,” he continued. Though chains have been presented with an earlier than expected roadmap to reopen — and they desperately need to reopen — major chains seem steadfast in sticking to plans to begin opening in some capacity in late June, and ramping up through July. Cinemark management said recently it planned to begin resuming operations July 1 (AMC Theatres said the same last week), with the plan being to show older films for the few weeks, until Warner Bros. is expected to release Christopher Nolan’s new film “Tenet” on July 17. Alamo Drafthouse, which is headquartered in Texas, said on Monday that reopening its theaters would be “a very complex project that involves countless new procedures and equipment,” and not something that the company would be able to do quickly, let alone by the start of May. “While we expect to open our theatres [stet] in the weeks ahead of these new blockbusters, utilizing creative programming of immensely popular previously released films, we would be wise to do so only directly in advance of the release of major new movie titles,” an AMC spokesman said last week. “AMC is currently working through every detail required to successfully showcase these exciting new releases in an environment that’s safe and welcoming for moviegoers, and we will share those details as we get closer to the dates when our theatres [stet] will reopen.”