Hoyts sees light at the end of the tunnel

29 July, 2020 by Don Groves

Damian Keogh.

With the Russell Crowe road rage thriller Unhinged opening in cinemas tomorrow and Warner Bros. dating Christopher Nolan’s Tenet for August 27, exhibitors can look forward to an uptick in business after cinema closures and bleak trading.

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Hoyts Group CEO Damian Keogh is confident the business will rebound strongly once there is a steady flow of new releases. Ticket sales at Hoyts’ Carousel location in suburban Perth indicate older patrons feel safe going back to cinemas, he says.

Released by Studiocanal and directed by Derrick Borte, Unhinged follows Caren Pistorius as a hapless young woman who becomes the target of Crowe’s character’s rage after an incident at an intersection.

“Russell Crowe is quite scary,” says Keogh. “Unhinged will have limited mainstream appeal but will be the No. 1 movie for a few weeks and could have done better if the slate were crowded.”

What has been your main focus during these unprecedented times for exhibition – retaining as many staff as you can via JobKeeper?

The best way to explain our major focus is firstly survival and then recovery. By this time, even with our cinemas open apart from in Victoria, we had hoped to be more progressed in the recovery phase. This has been delayed primarily due to the high infection levels in the US and the major studios cancelling planned major releases. The outbreak in Victoria has also been a major setback locally.

At Hoyts we responded quickly to the mandated closing of our cinemas in March with a cost minimisation strategy across the business. At the same time we arranged a debt facility to ensure the survival of the business in the event the virus impact was going to last for a prolonged period.

While we have tried to look after as many staff as possible it has been challenging with the revenue impact. JobKeeper has assisted the process and without it we would not have been able to re-open at this time.

As the vast majority of your cinemas have recliner seats, I assume the permissible capacity per screen is higher than other cinemas?

The rules are different from state to state. Where the 4 sq mtr rule applies (such as NSW) we can generally have around 50 per cent capacity. With a lack of quality new releases capacity has not been an issue at this stage.

How long will the $10 ticket offer continue?

We introduced a $10 ticket offer when we re-opened during the school holidays while we were playing content that had been released some time ago. We will progress to our normal pricing policies as new content is released.

Do you get any sense that older patrons may be wary of returning to cinemas until the pandemic is contained or is it hard to know given the lack of new releases?

It is hard to know at this stage. Our Carousel cinema in Perth has frequently been the No. 1 cinema nationally over the past month. This is due to customers in Perth feeling safe and secure given the low COVID-19 infection rates. We believe that all customers, not just the elderly, will return to cinemas in big numbers once they feel safe in the community and the right movie releases are available.

As you told me, about 85 per cent of the Australian BO is generated by films from the five major studios, so until the virus slows down in the US the major studios will continue to hold back releases?

As more cinemas open globally there will be greater pressure to release movies despite the numbers in the US. As the Chinese and European markets pick up there will be an expectation for studios to begin supplying content. However the bigger blockbusters are likely to be moved back until the US is up to near normal capacity.

As a lot of films have banked up and are in the pipeline, I assume you are bullish about the line-up from September onwards? Which titles are you most looking forward to, assuming they hold to their release dates?

We are already seeing more titles move to 2021 at this stage so we are less bullish about the back end of 2020. There have been movements on almost a daily basis so it is difficult to keep track of all the changes. I had been looking forward to Top Gun but that is now slated for mid 2021.

Have you been forced to close any locations that were marginal?

Not at this stage.

Have you had to postpone any refurbishments or new builds?

We have put all capital projects on hold until business picks up.

On paper, the 2021 line-up should be terrific?

Fingers crossed we can get back to normality relatively soon, in which case I feel confident the cinema industry will bounce back strongly. Cinema is the No. 1 out-of-home entertainment experience in Australia. We have the world’s best cinemas here. Global box office is $US43 billion. The studios will never be able to replace those potential revenue streams in home entertainment.

 

 

 

 

 

 

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