Cinemark Beats Q3 Estimates, Will Continue To Sideline Netflix Movies

Major U.S. exhibitor Cinemark beat Wall Street estimates with third-quarter earnings of 43 cents a share and revenue of $754.2 million and said its Movie Club subscription service is well ahead of internal projections.

Asked during a conference call with analysts about Netflix’s recent game-changing move to release film titles like Roma and The Ballad of Buster Scruggs theatrically before they hit the streaming service, CEO Mark Zoradi held firm. “We would very much welcome to show Netflix movies in our theaters as we do Amazon movies,” he said. “The issue comes down to the exclusive window and at such time that they’d be willing to abide by the windows that all of our major studios currently do, we would welcome them. As it currently stands, with a one or two-week window, I don’t anticipate that we would be playing the Netflix films.”

Despite Netflix mounting bigger-budget efforts featuring A-list stars, major theater circuits have largely shunned the streaming service out of concern for damaging relationships with major studios. Typically, studio films play in theaters for several weeks before moving through ancillary windows.

“We’ve been really clear with our key partners,” Zoradi said later on the call. “We have a 74-day exclusive window to [electronic sell-through] and then an 88-day to DVD and VOD and so whether that is Netflix or a major studio partner, the policy is going to be the same. We need to have a level of consistency here.”

Movie Club, which Cinemark has emphasized as exhibitors counter the initial inroads of MoviePass, represented about 8% of third-quarter box office and its U.S. subscriber tally jumped 27% in the quarter to 445,000. It is tracking ahead of internal targets by more than two-and-a-half times, and is getting popcorn-buying customers in the door. (While film rentals fluctuate, theaters make a large portion of their revenue on food and drink sales, which they fully control.) “We are seeing very positive results at the concession stand,” Zoradi said. “The basket size is about equal with non-Movie Club members even with the discount and we’re seeing more visits to the concession stand.”

As to MoviePass, which racked up 3 million members but has stumbled since shifting its model in the late summer, COO and CFO Sean Gamble didn’t mince words on the call. “MoviePass is less and less important today and continues to decline,” he said.