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Theater Chains Face Uncertain 2020 With Few Must-See Films

Ryan Vlastelica

(Bloomberg) -- Movie-theater stocks are facing a rough outlook for the new year, as a weak slate of films looks to extend the tepid U.S. box office seen over 2019, analysts said on Monday.

MKM Partners wrote that it was “taking a cautious outlook for 2020,” anticipating that domestic box office revenue would fall 4% in 2020. That’s on top of a year-over-year drop in 2019.

Referring to 2020, MKM analyst Eric Handler wrote that “the biggest issue for the year is it is lacking the mega-hits seen last year,” when four titles -- “Avengers: Endgame,” “The Lion King,” “Toy Story 4,” and “Frozen 2” -- all made more than $400 million.

“Looking at the current slate for 2020 we are having a tough time assessing if any film” can breach that level, he added.

Among the films scheduled for release in 2020 are “No Time to Die,” the latest entry in the James Bond franchise, along with “Mulan,” “Black Widow,” and “Wonder Woman 1984.”

The ongoing growth of streaming video -- notably with the recent success of Walt Disney Co.’s service -- is seen as adding to the cautious environment for theater chains like AMC Entertainment Holdings and Cinemark Holdings.

Given the proliferation of streaming services and the improved quality of streaming content, “consumers are becoming increasingly selective as to what movies warrant a trip to the movie theater,” wrote Richard Greenfield, an analyst at Lightshed Partners. “As consumers grow more selective, it puts increased pressure on the top 10 films of the year” to support overall box-office revenue. Looking at the 2020 calendar for film releases, “we simply do not see the excitement.”

He added that “it does not appear hard” to envision domestic box office dropping by double digits in 2020, “falling back to levels last seen in the early 2010s.”

Shares of AMC fell 2.2% on Monday and touched record lows. Last month, BofA downgraded the stock on the 2020 film schedule, as well as “a cont. rise in perceived competition from small screen competitors” like Netflix. Cinemark shares rose 0.2% on Monday, as did Imax Corp.

To contact the reporter on this story: Ryan Vlastelica in New York at rvlastelica1@bloomberg.net

To contact the editors responsible for this story: Catherine Larkin at clarkin4@bloomberg.net, Will Daley

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