New Analysis Says U.S. Movie Theaters Will Reopen in September “At The Earliest”, Predict a 70% Decline in Box Office

Tentpole release dates remain uncertain as movie theaters in major markets see prolonged closure

A new analysis from MKM Partners says U.S. movie theaters will likely not be operational until September, citing spikes in COVID-19 cases in major exhibition markets. In addition, the financial planning company predicts the 2020 domestic box office to take a dive of nearly 70% – a decrease from its initial 55-60% projections.

MKM Partners cites one particular release, Warner Bros.’ Tenet, in the assumption that U.S. movie theaters will remain closed. MKM suspects that Tenet, which is currently slated for release on August 12, will be delayed even further.

“We place a low likelihood of Tenet opening on Aug. 12 given a rising number of COVID-19 cases in key areas, such as California, Texas and Florida, along with the slowed re-opening of the New York City economy,” said MKM analyst Eric Handler. “In our view, it would be surprising to see theaters able to re-open nationwide before September, at the earliest.”

While it is true that some states have allowed movie theaters to reopen (and some are even suing to do so), it’s been a very staggered process. Hardly any of the theaters that have reopened have done so at full capacity, and most that have aren’t showing new releases on account of studios delaying many of their anticipated titles.

Warner Bros. has largely positioned Tenet as the leader of the assumed box-office resurgence, hoping to claim the title as the first major release in a post-COVID world. They’ve been in a neck-and-neck competition of sorts with Disney’s Mulan, whose release date has also shifted twice already (the latter is currently slated for an August 21 release).

Running the Numbers

Handler predicts box office numbers for the rest of 2020 dropping further than MKM originally thought. He predicts third- and fourth-quarter earnings to represent a 90% and 50% fall, respectively, down from the initial predictions of 65% and 29%. He also suggests that box office results won’t be at a “back to normal” level of about $11.5B until 2022.

Handler remains skeptical about the worldwide box office, as well. Although he thinks Europe “appears to be in a better position than the U.S. regarding the pandemic,” he doubts that they’ll have any “meaningful new content” to show for the upcoming months. European markets have seen soft reopenings in the past few weeks, no doubt hampered by the cancellation/virtualization of many film festivals and markets.

Handler also cites China as “a big question mark” in terms of how their government’s reopening will pan out. China was on their way to reopening movie theaters by late spring, but they’ve started to slow down the process in the wake of additional COVID-19 cases. (Other entertainment venues, such as Disneyland Hong Kong, are also re-closing for preventative measures.)

Future Suggestions

From a business standpoint, Handler and MKM suggest that movie theaters focus on the liquidity of their stocks “until there is a broad reopening”, as the future remains “extremely clouded”. Handler cites IMAX and Cinemark as pillars during this crisis for having “well-funded balance sheets”.

Other chains, such as AMC, haven’t been as lucky, as predictions about their potential bankruptcy and shuttering have been circulating for months. Handler says their recent debt restructuring allows for “some breathing room” but won’t be a guaranteed fix in the long term.

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