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Landmark Theatres CEO sees best year in company history as M&A process proceeds


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Landmark Theatres CEO sees best year in company history as M&A process proceeds

? Declining admissions are a natural part of new media entrants, but the theater business is healthy.

? Landmark Theatres will have its best box office year in 2018.

? MoviePass disrupted the industry, making subscription ticketing services are a part of the future of theater.

Landmark Theatre Corp., one of the largest privately owned theater chains in the U.S., is involved in a sales process, with suitors reportedly including Inc. and Netflix Inc.

Ted Mundorff, CEO of the Wagner/Cuban Cos.-owned company, said the exhibition business looks good in 2018 despite the competition for eyeballs. While the executive would not provide any details on the sales process in an interview with S&P Global Market Intelligence, he did say an announcement should be forthcoming. What follows is an edited transcript of that interview.

SNL ImageLandmark CEO Ted Mundorff
Source: Landmark Theatres

S&P Global: What is the future of theatrical and streaming film? Do you think they can overlap?

Ted Mundorff: I believe the theatrical experience drives business, drives awards, drives the event. I have not seen any evidence of a model that would call for a streaming and exhibition window at the same time that benefits either side. I believe theatrical sets the tone for what people are going to remember and what they’re going to see later on streaming.

Studios are trying to figure out ways to save money, and they believe that they should shorten the window or collapse the window completely. ... I certainly can't speak for [the studios] but that's the feeling I get. I believe that if windows were collapsed it would devalue the product on both sides.

What can theater operators do to recover from flatlining admissions?

It's not flatlining. Since 1927 it has declined. Every reporter likes to report that, but it's been reported every year since 1927. The fact is, the box office is up. The box office in a bad climate does about $10.5 billion a year. I think it's a pretty healthy business. So everyone can shake their head and say admissions are down, but guess what, Major League Baseball is down. The NFL is down. Television is down. You name it, it's down, and it's going to continue to be down because every new thing that comes along has an impact on something else. So it's not news.

The reason I go back to 1927 is because 1926 is the year network radio came to be, and the first thing out of everyone's mouth was, "The movie theaters are dead." Well, the '50s come along and it's the same thing with television. Then VHS comes along, DVDs, Netflix, etc. So it's a refrain that has been often said, but I can tell you that Landmark Theatres will have its biggest year in its history this year at the box office. So I'm sitting here pretty pleased with results. Our product is pretty good. We do have runs of bad product, and folks vote with the pocketbook. But this year has been an abundance of riches.

Do you see a future for subscription platforms like MoviePass Inc. in the industry?

I do. I think the notoriety that MoviePass has captured over the last year is tremendous. And hey, we have to look at our pricing models. It definitely disrupted the business. As an industry, individually, we have to look at how we price the movies and what kind of model are we going to present. AMC Entertainment Holdings Inc. and Cinemark Holdings Inc. have already started their own subscriptions, and they'll play with that. [There's an] old story: You don't want to be the first cell phone company; you want to be the third cell phone company because the first two failed. So I think there's a model out there, but also the studios are going to have to agree with it because even though they can't tell you what to price, they can tell you the minimum they'll accept per ticket. I think they will realize, hopefully, that they need to work with exhibitors to try to hit that sweet spot that will encourage more theatergoers.