Exhibs hope B.O. won’t fizzle

Exhibitors who not long ago were optimistic that this summer would be a big one now are hopeful the fall will hold its own.

Facing a glut of summer releases, exhibs boasted that they were in a “no-lose situation,” and their confidence was infectious. Wall Street caught the bug and pushed shares of publicly traded exhibitors AMC Entertainment, Carmike Cinemas and Cineplex Odeon to lofty new heights.

And now,with the season nearly over, no one seems disappointed.

“We made more money in July than we made in all of 1992,” said a jubilant Michael Patrick, Carmike Cinemas president. “Our stock recently hit an all-time high, in part because of the big summer box office.”

Carmike stock, which has a 52-week high of 18 1/4, was unchanged Tuesday at 17 3/8. AMC Entertainment, with a high of 12 1/4, was up 1/8 to 12 1/8. Cineplex Odeon, with a high of 3 3/8, was even at 2 1/2.

“From a financial viewpoint, it well exceeded our expectations,” Peter Brown of AMC said of the season. “Our stock price has been moving steadily upward and the big summer is definitely helping.”

But now that the summer’s over, can the upward trend sustain itself? Will Wall Street stay interested or will investors drift into other entertainment vehicles once all the shouting over the record box office becomes a distant echo?

“The investment community, like Hollywood, always looks at the last big hit,” noted industry analyst Stuart N. Brotman. “The difference this fall is that there is a genuine euphoria over the summer and there will be some carry-over. If there are a few properties that can sustain that euphoria, these stocks just might keep the pace.”

Still, Wall Street remains circumspect. Some say that even if the stocks aren’t headed for a fall, the tremendous growth of the last six months — AMC up more than 80%, Carmike up more than 20% and Cineplex Odeon up 90% — is nearly impossible to maintain.

“There’s not any inherent growth in the business; it remains almost totally product-driven,” said money manager Gordon Crawford of Capital Guardian. He pointed out that this summer’s big numbers could cause problems for the exhibs’ stocks because of unfavorable earnings comparisons if next summer can’t live up to this one. “When you have peak product in the market, it’s not the time to be owning these stocks,” he said.

Stock analyst Lisbeth Barron of S.G. Warburg said public market investors need steadier, longer-term growth prospects than the exhibition stocks provide, and believes the stocks will continue to attract mostly shorter-term investors who are willing to play the box office.

But operators argue that the summer of ’93 was more than a blip and that the business is looking up for the foreseeable future. And despite the big run-ups in price over the last six months, operators say their shares will still climb.

Cineplex Odeon VP of marketing and communication Howard Lichtman said “Jurassic Park” drew in people who had gotten out of the moviegoing habit. More important, he said, “The Fugitive” and other late-summer films kept them coming back for more.

“This industry is cyclical,”Lichtman said. “When you’re in an up cycle, it generally lasts for a couple of years. As long as the product is there, this summer should represent the beginning of an up cycle.”

Likewise, Carmike’s Patrick believes the studio’s beefed-up production schedules bode well for exhibitors.

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