Why revenue for movie theater chains is down. Way down.

Nova Safo Oct 31, 2014

Why revenue for movie theater chains is down. Way down.

Nova Safo Oct 31, 2014

The two biggest cinema chains in the U.S. reported dismal summer earnings, not surprisingly, on the heels of a lackluster summer for films.

Revenue was down for films from $4.85 billion in summer 2013 to $4.05 billion this summer, and consequently Regal and AMC announced drops in earnings of 15 and 9 percent respectively. 

That’s problematic because summer is when studios work to lure lots of eyeballs with big blockbusters.

“July was really the killer,” says Keith Simanton, managing editor of IMDB which keeps track of box office numbers through its website BoxOfficeMojo.com

Year over year, July 2014 was down 38.5 percent. Last time it was down that much was in 1995, when “Waterworld” was the big July premiere.

“A number of films did reasonably well,” Simanton says, “but were not the gigantic smashes that was hoped or supposed.”

“Hercules,” for example, brought in $99 million domestically and had a production budget that Box Office Mojo estimates at $85 million.

With the bad summer box office news, Regal Entertainment Group, which is the nation’s largest cinema chain, said it’s considering selling itself.

“It’s about the last thing I expected to hear in my lifetime,” says Barton Crockett, a media equity analyst with FBR Capital Markets.

Crockett says Regal might actually be in a position of strength at the moment, because this past summer wasn’t as much a trend as a part of a larger cycle. For one thing, there are high expectations about the slate of movies scheduled for release in 2015.

“It’s kind of smart at one level to think about selling into what seems to be a lot of investor enthusiasm about a strong 2015,” Crockett says.

That enthusiasm includes high hopes for the two films the comic book powerhouse Marvel plans to release next year: “Avengers: Age of Ultron” and “Ant-Man.” Both films are slated for summer 2015.

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