Apr 27, 2021 - Economy

Movie theater owners ecstatic after record-low Oscars ratings

Illustration of a popcorn container wearing a mask.

Sunday night's Oscars telecast was a ratings dud, with viewership falling below 10 million for the first time ever, but the reaction from movie theater owners, and other in-person entertainment operators pummeled by the pandemic, was wild applause.

Behind the scenes: 2020 was supposed to be the year that streaming killed cinemas, as we'd all become enamored with watching new feature films from the couch. But most of us didn't, as reflected by the record-low Oscars ratings.

A big reason we watch award shows is to see if the art we loved was also loved by others, and rewarded. But if you didn't watch in the first place, then there's no emotional attachment.

Investment angle: AMC stock rose yesterday and is up again today.

  • Altamont Capital Partners and Fortress Investment Group yesterday became almost certain to buy Alamo Drafthouse Cinemas out of Chapter 11 bankruptcy, as no rival bidder emerged. Altamont was an existing backer, and had pursued the bankruptcy as a restructuring mechanism when revenue disappeared and PPP loans ran out.
  • Endeavor is set to go public later this week, aiming at a valuation north of $10 billion. It doesn't operate theaters, but it represents lots of movie stars and has a large live events business that would benefit from a return of in-person entertainment.

A big question is if studios like Warner Brothers will revive the old theater exclusivity window or try to leverage some big-budget films to salvage the new normal. Or if there's a short-term bifurcation in how studios treat U.S. and international audiences, as COVID continues to ravage other countries.

The bottom line: Studios had their big chance to go direct, and it didn't really seem to work. Investment firms will pay heed, on both sides of the equation.

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