Movie theater admissions were up in 2012, but the long-term trend remains down. Even so, says Moody’s Investors Service, exhibitors are getting more money from each patron. And, says the credit rating agency, it’s not just due to higher ticket prices.
In fact, ticket prices have flatlined over the past two years. Rather, exhibs have been staying ahead because of concession sales; onscreen advertising; and event programming, such as live concerts and Metropolitan Opera performances, made possible by digital delivery and projection. Major exhibs also have been adept at controlling costs and running their theater circuits more efficiently.
Further consolidation is likely as the industry completes its shift to digital. At some point, Moody’s says, studios will ask exhibs who don’t make the transition to pay part of the extra cost for prints. That should force smaller exhibs to shut down or sell out to larger chains.
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Such acquisitions should boost revenue and cash flow for the five movie theater operators whose debt Moody’s rates: AMC Entertainment, Carmike Cinemas, Cinemark USA, NAI Entertainment Holdings and Regal Entertainment Group.
Since 2006, revenue per patron at those exhibs has risen 22.1% while cash flow per patron has grown 18.6%.