Editors’ Note: Deadline’s Reopening Hollywood series focuses on the complicated effort to get the industry back on its feet while ensuring the safety of everyone involved. Our goal is to examine numerous sides of the business and provide a forum for leaders in Hollywood who have a vision for how production could safely restart in the era of coronavirus.
Cinemark is the first of the big three circuits –before AMC and Regal– to reopen after three month shutdown out of safety due to the coronavirus. The exhibitor largely plans to stay on track for a full July 17 opening of its theaters — even if Disney’s Mulan gets pushed to August or later. “The engine has been lit,” Cinemark CEO Mark Zoradi tells Deadline about the reopening of the nation’s third biggest circuit. The worst case scenario for any exhibitor in the ramp-up toward Mulan on July 24 and Tenet on July 31 would be a reversal of the reopening decisions made recently by government authorities across the country. Safety is key, and essential for business, and Cinemark this early AM outlined their enhanced protocols so that their customers are comfortable.
Cinemark’s reopening will now take place over four phases with more locations reopening on July 3, July 10 and finally July 17, that latter date when Warner Bros. tenth anniversary re-release of Christopher Nolan’s Inception opens along with Sony/Tri-Star’s Selena Gomez-produced romantic drama Broken Hearts Gallery and A24’s horror pic Saint Maude.
There’s been a lot of concern around town in the wake of Universal sending such notable titles like Trolls World Tour, The King of Staten Island and Focus Features’ Jon Stewart movie Irresistible into the home that COVID-19 has completely changed the way Hollywood does business. Zoradi disagrees, and he expounds on that further down.
The Cinemark CEO also tells Deadline about the outlook of theatrical after reopening due COVID-19: “I don’t expect to have a light switch go on and theaters are back at their maximum capacity allowed. I think it will be a process, that’s why we’re opening up with library product, and I think movies like Mulan and Tenet will play longer. We have less product at the beginning. While we have the ability to not open with a gigantic (box office) opening like it would have prior, movies are going to play longer, because people are going to gradually come back. Word of mouth is going to start. Social media is going to go ‘Wow, it’s a really clean environment and the prices are reasonable.’ And I keep coming back to –moviegoing, is without question, the most affordable piece of family entertainment.”
DEADLINE: When do you anticipate Cinemark re-opening their California theaters?
Mark Zoradi: As you know, the Governor of California OK’ed theaters to open up with a 25% capacity limit. Los Angeles is still not open and some local counties may be more restrictive than what the Governor of California allowed. We anticipate opening up our theaters in California beginning on the week of July 3, and we will adapt those openings based on the local ordinances in addition to the Governor’s. So we hope to begin on July 3 and July 10. We’re likely to move most of our California theaters into phase 2 of reopening so we can give ourselves a little bit more time. But it’s our anticipation that by the time Mulan opens up on July 24, that California will have allowed theaters to open up with either 25% or 50% capacity limits and we’re prepared for either one of those.
DEADLINE: You mentioned on a recent earnings call that Cinemark can operate at 30% capacity limits in its auditoriums. If California or other local communities across the nation are insisting on 25%, does that lack of 5% impact your bottom line?
ZORADI: Well, two things there, California is very unique to the rest of the nation. Texas was at 25% to start, but they’ve gone to 50% and many states are following that mode. Many are starting at 25% but withing 3 or 4 weeks they’re going to 50%. So, I think specifically in California we can operate very profitably at 25%. It’s not our desire, but especially when you’re starting out, beginning with Mulan on the 24th, and then Tenet on the 31st. We’ll have so many screens in a big multiplex, we’re going to be able to — if we’re required to have 25% in certain California counties, we’re going to double and triple screens. We might have as many as 6 or 7 screens to open up Mulan in a 12-plex or 7-8 screens in a 16 plex. We’re going to separate the shows and be able to separate the people, and double down on the number of auditoriums. In some ways, it’s actually more preferable for guests, because then they can choose to come at 6pm, and 6:30pm and 7pm or 7:30pm, because we’ll stagger all those times. Then the following weekend when Tenet opens, the vast majority of the screens are going to be on Tenet and Mulan and holdovers from Unhinged and The Broken Hearts Gallery. Given that there’s not a lot of product in the marketplace, we’ll just reduce the library product and increase the first-run product. Then after Mulan, and Tenet, on Aug. 7 you have SpongeBob, on the 14th you have Bill & Ted, and then in September you’ve got a Quiet Place 2, and then it takes off in the fourth quarter with Wonder Woman 1984, Marvel’s Black Widow, Soul, No Time to Die, and Top Gun:Maverick. The fourth quarter looks really good. And 2021 looks really good because a bunch of movies got delayed.
DEADLINE: There are some in Hollywood who believe that the coronavirus has impacted the way the film industry does business, and that there will be more of a focus on releasing movies in the home; that the business model will get redrawn. Do you agree with that notion? Some of those movies that debuted in the home during COVID-19 were clearly pics that weren’t ever ripe for a theatrical release. And if you think about, even before COVID-19, studios were in this same situation of determining whether certain low and mid-budget films were ideal for a home or theatrical release.
ZORADI: I don’t think in a categorical way. As long as I’ve been in this business, there have been the movies that have gone outside of theatrical, directly into the home market. I was at Disney when we released The Lion King (1994) –then the biggest animated movie of all-time. The sequel to The Lion King, Simba’s Pride, went straight to video. That was the case at the time. Aladdin, another giant animated hit for Disney; that sequel went direct to video. Then you have examples like High School Musical, which started on the Disney Channel, but with High School Musical 3 was released in theaters. The distribution went both ways, all around the circle. Today’s world is streaming. Sometimes studios are going to make movies just for streaming, the same way that Disney made movies for the Disney Channel for years, the same way that HBO has made movies.
So, the big movies, the ones that really count, these movies from a financial standpoint have to go theatrical. It’s a $40 billion-plus business. In fact, in 2019, it was $42 billion worldwide. And in some cases half, or more than half of the revenue stream on big theatrical movies is coming from worldwide theatrical. You can’t just cut that out and think the economics are going to work. And honestly, the studios recognize that. Disney clearly does, Warners does, and I think Universal does on their big movies. And that’s why movies like F9, Jurassic World: Dominion and Minions: The Rise of Gru, these are all going theatrical because they want that high per cap revenue that they get out of theatrical.
One more thing on the windows situation: The studios created windows, and they like it because it allows them to re-market and get additional revenue from the next sequential window along the line. You start with your highest per cap window ,which is theatrical and you work your way down. Theatrical also clearly creates value for all the ancillary markets. From the home entertainment market, we see time and time again, people who actually rent movies tend to have seen it already in the theater. So the theatrical business sets it up, helps the ancillary video market, clearly helps the merchandising and theme park business for the two companies that are heavily into theme parks. It’s the engine that lights the fire. I don’t see a categorical change in this.
Will there be examples and changes and unique one-off? Yes, on smaller movies that have a short theatrical run. Can some of those have a shorter window than have traditionally been? Yes, we can talk to studios about that. But the big important movies, we don’t see a categorical change either on our side or the studio side.
DEADLINE: Jumping over to the COVID-19 safety side. You mentioned on a recent call that Cinemark would not take the temperatures of moviegoers. Exhibition has debated this. Some are currently taking attendees’ temperatures whereas others don’t want their theater to look like a hospital. Can you tell me more about Cinemark’s decision not to take moviegoers’ temperatures?
ZORADI: We know that we have taken significant precautions that we have even dubbed it “The Cinemark standard” because it’s everything from when you start to buy your ticket which will be a paperless transaction to when you first show up and it is sparkling clean. And all of our employees will have a health check before their shift. They will have their temperatures checked. They will all be required to wear masks and gloves and any county or state that requires masks, we will, of course, enforce that. In places where it’s not required by the county or city, we will highly encourage masks, but not require it. It’s a big country out there: There are places that may require it. California may be one. If it’s required in California, we’ll abide by it. There are other places like Texas where it’s not required. In those cases, we’ll highly recommend, but not require it.
We think with all the safety precautions we’ve taken with Plexiglas to our seat technology where you’re never going to have anyone sitting directly next to you, to your party, to all of the cleanliness protocols, where we are cleaning all the hard surfaces, disinfecting with spray every morning all the seats, and then going back in between shows with a disinfect wipe down. We have 12 training modules for our employees on all the new protocols. We have team huddles before every shift. We have hand sanitizers, HEPA filters in our vacuum cleaners, we’ve increased airflow into our theaters as well. We don’t think that requiring a temperature check is something that we need to do. It has potential problems with it. Some people come as a family. So, we’re giving some level of responsibility to the guests and I don’t think guests want to leave their homes if they’re sick. If anyone gets to the theater, and doesn’t feel well, there’s an easy, contactless refund they can obtain.
DEADLINE: For safety reasons, did you have to eliminate certain concessions?
ZORADI: I wouldn’t say they were eliminated, but they’re delayed. At this point we’re going with what we call our core: Bottled drinks, and soft drinks and you got to have movie popcorn, but we’re very careful how that popcorn is popped and delivered to consumers. There’s packaged candy and a limited amount of alcohol and frozen drinks. What we’re delaying are the items that require preparation of an individual, for example we make custom Pizza Hut pizzas. For a short time, we’re going to delay that. We have a lot of theaters with kitchens where we make wraps or tacos, and for the time being we’re going to delay that. We’re going to take this slow and easy, make it simpler for our concession people and to also make people feel comfortable. For the comeback period, we’re going to have highly reduced concessions to encourage people. Movie Club members will get an additional 20% off the highly reduced price. You can come to any of the library titles for the ticket price of $5 for adults, $3 for children and seniors. So we’re trying to welcome people back with a healthy and clean environment, and low cost concession.
DEADLINE: Are hot dogs also delayed?
ZORADI: We’re doing hot dogs. They’re very simple to make. They’re individual. There’s literally no preparation. A food service person wearing a glove, puts it on the grill, and it rolls. For our Movie Club Members, of which we have more than 950K, during the library product, they’ll be able to come to the theater three different times for no cost. You can come see Jurassic World or Raiders of the Lost Ark, or Inception when that comes out, and bring a friend. No cost for you or your friend. We’re giving those passes to every club member.
DEADLINE: The furloughed and the laid off workers, they’re all coming back as well? The majority of the theater staffers are returning ? [Editor’s note: Cinemark back in April soon after the COVID-19 exhibition shutdown laid off 17,500 domestic hourly employees and furloughed 50% of its headquarters corporate employees at 20% of salary]
ZORADI: We’re in the process now of hiring back. Obviously we hired back the five test theaters in Dallas, and we’re in the process of hiring back. Our theater general managers never left. We kept our theater general managers on partial salary during the last three months. They’re contacting people who previously worked with them, and they will come back in a phased approach. We may not end up with every single employee back, but we’re going to be hiring back thousands of employees over the next three weeks.