Global cinema reopenings a healthy sign for Vista Group

Thursday, 22 October 2020

Cinemas staff take precautions as movie theaters reopen in New Delhi, India this month. Seven months after screens went dark because of Covid-19, cinemas have reopened in much of India with mostly old titles on show.

The world's struggling movie industry threw listed film solutions company Vista Group for a loop, but the company is now banking on cinema attendance returning to normal next year

Vista, which has about 300 staff in New Zealand and the equivalent overseas, makes almost all its revenue internationally.

But as Covid-19 fears shuttered movie theatres, and production houses and studios struggled to return to work, the company announced in June that it was making an unspecified number of job cuts.

In an update to the NZX, chief executive Kimbal Riley said between 70 per cent and 75 per cent of cinemas globally were open as of the end of September, providing ‘’areas of strong and consistent recovery’’.

* Vista Group plans job cuts as global cinemas remain closed

Cinemas have been unable to open for months at a time this year due to global lockdowns.

And ‘’whilst acknowledging that there is a way to go,’’ he remained confident about film’s future.

''The current trajectory for Vista Group has seen us perform at levels above our capital raise scenarios and while this remains subject to industry factors, it gives us confidence as we move towards 2021, when we anticipate levels of content supply and cinema attendance will begin to return to normal.’’

Riley told Stuff the major movie markets were now starting to revive. China had just eclipsed the United States in terms of box office returns, and New York had just reopened its cinemas.

‘’And if you look around the world, even with socially distant seating, restrictions on capacity, etcetera, people are very keen to go back to the cinema.’’

Scenarios Vistas had faced earlier this year had ranged from cinemas being back to normal in August, to no one being back until 2021, ‘’so we’re somewhere between that’’.

‘’We aren’t specifically exposed to any particular country. America is our biggest market overall, as you might expect in the film industry, but large parts of America are open.

‘’What we now want to see is that they are open and stay open but that the studios release some of the bigger movies which they’re being a bit reluctant to do at the moment.’’

Riley noted it was ‘’actually a very interesting time to go to the cinema because the show times aren’t dominated by an Avengers movie, they've got all kinds of interesting stuff. But in terms of mass appeal, some of those tentpoles would be useful.’’

The uncertain outlook earlier in the year prompted Vista to raised $65 million in capital, cut jobs and take $3.8m in wage subsidies locally and internationally.

It expects to save between $12m and $15m in salaries, and $1m annually by merging its two Auckland offices.

But the group has also taken the opportunity to buy the 50 per cent stake it did not own in Dutch film distribution software Maccs for around $2m.

One achievement of note was a research paper on gender in the media, by its movie data analytics subsidiary Movio and the Geena Davis Institute.

The paper delved into the impact of on-screen representation in driving box office success and was ''very well received,’’ Riley said.

In New Zealand, Movio received $414,746 in initial wage subsidies and a $210,515 subsidy extension for 59 and 43 people respectively.

Vista Entertainment Solutions took a $2.45m wage subsidy for 349 people, $1.25m as an extension for 266 people, and a resurgence subsidy of $308,130 for 264 staff.

Riley didn’t expect the company to pay back the subsidies because of the substantial hit to revenue in the first half. It made a net loss of $43.2m and took a near-40 per cent drop in revenue.

Its shares, which hit a two-year high of $5.91 last July, are currently trading around $1.62.