Imax will lay off roughly 100 full-time employees as part of a company-wide effort to rein in costs, Variety has learned.
The pink-slipping will take place across nearly every division, including its finance, marketing, and entertainment arms, as well as staffers in its China subsidiary. The layoffs are taking place on Monday and are expected to result in a one-time impairment charge of approximately $15 million related to severance packages and other costs associated with the job cuts. The move comes as Imax’s stock is languishing after investors have grown concerned about an industry-wide box office downturn. Shares in the company are down nearly 30% since last April, hitting their lowest levels in nearly four years.
Imax CEO Richard Gelfond said the company’s popularity has continued to grow, but acknowledged that it has not done enough to bolster profits.
“We looked at the business and decided we needed to rationalize our cost structure to create more shareholder value,” Gelfond said. “For the last several years our revenues have grown nicely, but our costs have grown as well.”
The cuts represent a little more than 10% of the company’s work force. It will leave Imax with roughly 600 employees.
In addition, the company’s board has approved a new shareholder repurchase plan that will buy back up to $200 million of its common stock over the next four years. Along with the layoffs, Imax said it will embark on a cost-reduction plan that will target approximately $20 million in annualized savings.
It’s been a difficult few months for the cinema business. Domestic ticket sales for the year are up more than 3%, but there have been a number of high-profile flops such as “The Mummy” and “Baywatch.” Gelfond hit back at any notions that audiences were losing interest in moviegoing, noting that “Wonder Woman” had connected with consumers.
“The box office goes through good patches and bad patches,” Gelfond said. “That’s the nature of this industry.”
A few failed blockbusters aren’t the only thing making Wall Street skittish. Analysts think that exhibition companies will have no choice but to accept a push from studios to release movies on demand within a few weeks of their theatrical debuts. Talks are ongoing, but in a note on Monday, MoffettNathanson Research’s Robert Fishman predicted that the industry would reach a new “common standard” on early on-demand releases by next year.
Gelfond said that Imax, with its massive screens and elaborate sound systems, is sufficiently different from the standard theatrical experience to protect it against any on-demand experimentation.
“That not going to impact Imax,” Gelfond said. “We’re such a special experience that you’re never going to be able to get what we provide at home.”