Cinemark Shines Without the Drama

AMC’s weaker financial footing seemed to be a draw for the risk-addicted YOLO crowd, who saw the company as teetering on bankruptcy and as a possible investment or buyout target by a bigger Hollywood player. Cinemark by contrast has long been considered the most financially stable of the major theater chains. Michael Pachter of Wedbush wrote to clients earlier this week that he expects Cinemark “to come out of the pandemic relatively unscathed.” Of AMC, he predicted, “it will be years before AMC is able to revisit its prior growth strategy as it repays its growing mountain of debt.”

Cinemark’s fourth-quarter revenue plunged 88% from a year earlier to $98.2 million, and attendance was about 10% of the prior year’s comparable period. The company said it burned about $65 million in cash a month during the quarter. Still, revenue well exceeded Wall Street’s expectations, thanks in part to some innovative moves such as private watch parties, where families or other small groups rent a full auditorium for $99. These accounted for 24% of U.S. admissions revenue for the quarter. The company also says its “cash runway” extends into the fourth quarter, and even into 2022 including the tax refunds it expects to receive.

Cinemark has good reason to be more upbeat since its last report on Nov. 5, which came just days before news of the first major coronavirus vaccine breakthrough. A growing pace of vaccinations and plunging infection rates is allowing New York theaters to start reopening March 5, and Cinemark Chief Executive

Mark Zoradi

said Friday he expects the key markets of Los Angeles and San Francisco to begin reopening “in the coming weeks.”

Of course, even a financially strong theater chain has to grapple with the existential question of whether the pandemic has permanently impaired the industry. Much will depend on Hollywood studios keeping to current plans to start releasing pent-up blockbusters this summer.

Disney’s

“Black Widow,” currently slated for May 7, will be the first major test.

Meanwhile, Mr. Zoradi takes some comfort in the demand the company has seen for older films. More than half of the private watch parties during the fourth quarter were for older library films such as “Elf” that are widely available on home streaming services. Mr. Zoradi said this reinforces his view that “people are yearning for normality.” If so, Cinemark may be in a better position than its rivals to enjoy it.

Write to Dan Gallagher at dan.gallagher@wsj.com

Corrections & Amplifications
Cinemark said it burned about $65 million in cash a month during the fourth quarter. An earlier version of this article incorrectly cited that amount as the total for the quarter. (Corrected on Feb. 26)