A Raisinet recession at movie theaters

Tue Nov 11, 2008 1:05am EST
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By Georg Szalai

NEW YORK (Hollywood Reporter) - It seems American moviegoers might be going with the large, rather than the jumbo, when it comes to popcorn and soda.

Two operators of film theaters on Monday reported weaker U.S. revenue as dwindling concession spending added to smaller admissions figures in the third quarter despite record-breaking results from Warner Bros.' "The Dark Knight."

Both Carmike Cinemas and Cinemark Holdings made reference to the tough economic environment, which could cut into consumers' willingness to spend on popcorn and movie tickets despite the conventional wisdom that moviegoing is a recession-proof activity.

However, the numbers announced by Carmike after the market close paints a different picture. The company reported a $24,000 profit, down from the $2.1 million recorded in the year-ago period as revenue dropped 7.4% to $122.9 million. Admissions revenue fell 6.9% to $81.1 million, and concession revenue decreased 8.3% to $41.8 million, exacerbating the situation. Columbus, Ga.-based Carmike operates 250 U.S. theaters.

"The economic environment is very challenging," CEO Michael Patrick said, though he lauded increased revenue per patron, the closure of underperforming theaters and cost measures as factors that helped the bottom line. "In the face of the current operating environment, Carmike has taken timely steps to reduce expenses, with third-quarter general and administrative expenses cut by over 14% as we lowered salaries and wage expense, incentive compensation and legal and professional fees."

Earlier in the day, Cinemark reported a third-quarter profit of $20.4 million, reversing a year-ago loss of $23.4 million. Revenue rose 1% to $476.2 million, but only because gains in international markets made up for lower U.S. results.

International revenue in the quarter rose 26.1% to $118.4 million, but the U.S. saw a 5.2% decline to just below $360 million. Plano, Texas-based Cinemark operates 414 theaters in the U.S. and additional ones in 12 foreign countries, including Mexico and South and Central America.

Financial details mentioned on Cinemark's earnings call provided further insight into the divide between domestic and international operations in the latest quarter.   Continued...

<p>Filmmaker Michael Moore watches his documentary "SiCKO" during a special screening for the California Nurses Association (CNA) at the Crest Theater in Sacramento June 12, 2007. REUTERS/Max Whittaker</p>