Event Cinema in the Post-Pandemic Era

the thick of the pandemic. UH, and that was back in May of UH. And so just to get an idea of how people are returning back to theaters in particular and experiencing thing right now, it is back with us CEO at Fathom Events are home to a MC cinemark Regal. He is joining us via zoom from Las Vegas. Ray. How are you good, Carol? How are you doing? I'm doing well, trying to keep track of kind of a

NonStop environment. Um, tell us about your world and how have things changed since May have when we talked with you and may Have one. Well, a lot of things have changed since two thousand nineteen when we had our our best year in event cinema. But uh, you know, as theaters started closing down and everything, Uh, it impacted us pretty significantly. Obviously most of our content is distributed

to movie theaters. Uh. Not only AMC regular Cinema R that on us, as we were saying, but also ninety seven other theater circuits around the world, and everybody the circuit side of the business responded differently in terms of closings, openings, when they closed, when they opened. So it presented a

lot of challenges for us. But we were able to survive the period by getting two pp P loans and e r C credit and UH worked on projects and we launched a program called Hope UH internally, and what it was was, we're concerned about the health of our employees.

We needed to stay optimistic. Uh, we need to stay persistent and then excel when we came out of the pandemic someday, and we didn't know when that would be back then, but we're in that stage now and people are coming back to to theaters like you wouldn't believe and like I'd like to be alright, So I know, fingers crossed, right, So you know, we're bloomberg and we like to get concrete evidence and numbers. So give me an idea. Are you back to where you were pre

pandemic levels? Now we were we were just to give you some some of those numbers. We were down about eighty percent off at two thousand nineteen in two thousand twenty, which was very consistent with where with where the commercial business was with all of and exhibitors as well. Um, we're looking to be about seventy five percent of two thousand nineteen and everybody's using two thousand nineteen is a gauge. Uh, is that being the last full year prior to the pandemic.

So the you know, the the analysts, I think are looking somewhere between seventy percent and maybe seventy five percent commercial product and will be at least as at seventy five percent at the top range of that when by when uh, by by this year, by this year, by the end of the year. So where are you right now then? So, uh, where we are right now is probably around of two thousand nineteen, but we're back in loaded with content because a lot of the productions were,

uh we're delayed because of COVID. So now all that's catching up. So you're gonna see a very very strong uh ladder Q two Q ry. How are things like, you know, how is the supply chain impacting you? And the supply chain includes also you know, labor workers. You know, you can't open up you know, you can't open up a venue right if you don't have the people there to support it. You know it really it really has

an impact impacted us. The biggest thing that I think our exhibitor partners went through was the fact that their theaters were closed. You have a lot of minimum wage workers that had to go get a job elsewhere, and so they're hiring a lot of new employees right now and have been. And it's the training aspect of it. So it hasn't necessarily been the supply chain in terms of any materials or anything like that. It's been more

along the lines of personnel. That's that that's actually really interesting. What about things that you are doing specifically though to kind of rev up the audience and get people back, because well, we're talking a lot about We've got about thirty seconds and then we'll come back and talk some more about this whole idea of people are ready to go out and experience things but you know, a lot of people are getting on planes and you two are competing with people who maybe want to do other things

when it comes to experiences. Yeah, I mean, you know, it's very interesting because our content is so diverse, Carol. It's as as we talked about before. It's everything from the arts of the Metropolitan Opera to anime, to faith based content to classic movies. And it's been very very interesting to see how how each of those audiences come back within each of those genres. And I'll be happy to talk a little bit more about that in a bit if you'd like, Yeah, I'd love to. Let's get

into the breakdown. We're gonna do a little bit of news and then we'll continue the conversation. Right we're talking with Ray Not. He's chief executive officer of Fathom Events, joining us via zoom from Vegas, and I am curious to see in terms of what people are coming back to see what they want to do, uh in a theater. So we'll get into that in just a moment. I want to get back to our conversation. We're talking with Ray Not. He see you at Fathom Events, still with

us via zoom from Las Vegas. Hey, Ry, I want to go back before I get into some of the content that you guys will be putting out there. You mentioned you're looking to be about right nineteen by the end of the year. What confidence do you have that you get back there? And the reason I ask is Charlie Pett and I just talked about a story about how consumers have stopped adding new streaming services. I mean, I do feel like people are kind of overwhelmed by choices.

So what confidence do you have that we kind of get back to where it was? I I think we're actually seeing we're actually seeing that and we're right on track giving our given our forecast. Okay, Uh, that's where that basis comes from. But um, you know, the people that are that are really returning to theaters are in the categories of faith anime, especially faith. I mean, we we have had We ended last year with a film called The Chosen and uh it did our biggest title ever.

It was fourteen million dollars that we did. We sold over a million tickets and so you know, again, content is king. I know that's an old cliche, but it is. And if you have the right content in theaters, which we have found later in the year. We believe that the audiences are going to come out and want that communal experience. You took me right to where I want. Now. I agree content is king, and as the streaming services right, they see it directly in terms of subscribers or engagement.

So you mentioned um faith, Tell me about you know, because you've got different choices. You've got sports, you've got opera, you've got the anime. Um you mentioned faith. What's what do you see is the biggest area of growth for you and maybe really driving the top line? Well, I I think a couple of different areas. They think. What our programming team has done a very excellent job of doing is sourcing content that you would never ever, never ever thought of could be on the big screen. You know.

A good example of that is I think last time we may have talked, we were talking about the partnership that we had with Warner Brothers where we brought uh episodes of Friends Anniversary, and we're doing that with Golden Girls for example, coming up as well. So that that is a very uh, you know, girls night out and niche group that wants to come out communally, and that's really what we're seeing um, you know on the faith

based area. I mentioned this the chosen that that was a is an app that's free to everybody with millions of subscribers, and that that audience had never come to theaters communally. And they made this film specifically for Christmas called The Messengers and it was about the birth of of Jesus through the eyes of Mary and Joseph. And we did a surprise announcement with Angel Studios on that and it was the very first time that audience had

ever gathered communally and they came out in droves. So it's it just tells me that people are looking to have some form of entertainment in that communal together environment. Well there's something to be said, but for niche programming, right. So because of the success of that is it is it causing you to explore other areas? It is? Uh,

you know, there there are other areas out there. The great thing about the great thing about Fathom is we have this foundation of all these categories and sports, comedy, what have you, and and all of those are our foundation of our business that will continue to build on. But you're going to see more live events in theaters. We have the largest live network of any any anybody in theaters out there, and uh, so you're gonna start

seeing some things like WWE. You're gonna see some more boxing as as those types of productions ramp up in the live live area, we'll be bringing those to theaters again. So the cost of content is it going up? There's so many people competing for content. It does sound like you're getting into certain areas that maybe aren't as competitive, but I mean sports is certainly competitive. How expensive is

that when you look at your balance sheet? Well, in the history of Fathom, we've never paid for a dime to acquire content. And the reason for that is our model is a little bit different. We don't produce content, we don't pay for content. We essentially barter promotional content, and we barter about a hundred million dollars in promotional

value a year. So, um, it's licensed for a window of time with Fathom theatrically and uh it's a basically a rev share that we do with the content provider at the box office, and that that's our our model. It's very very different. I am also curious about your demographics. I'm always curious about a service like this, especially when you talk about you know, your faith, uh vertical if you will doing really well? Is it an does it

sc older? Give me an idea of the cross section. Well, it's uh, it's interesting because our our largest content provider is still the Metropolitan Opera and average age is around seventy three years old. So you'll you'll have that will do children's programming where you have you know, parents and kids come up that are that obviously sway much much younger.

You have anime content, and anime content can be anything from a very young age to uh, you know, there's even content out there that it's hard are in uh in the anime space. So uh So having this diverse amount of content and vert goals that we have. The

age differentiation is all over the place. But that's what makes it special for us because if the older audiences with the mat and some of the classic movies are a little bit slower to come back, then we're gonna push more for the faith and the anime and the children's program. Just got about forty seconds here, I mean, what what worries you most about the outlook? Just quickly? You know, I'm I'm very bullish on it. I you know, I don't think that there's gonna be another outbreak that

will close theaters again. That was obviously our biggest concern out there. UM, I see more and more content providers wanting to distribute content like this. It's not a traditional theatrical run, it's not straight to streaming, and we don't consider ourselves competitive with any of those guys. So I guess to answer your question or not answer your question. He's on the horizon right now, Caro, A little sounds like you're sleeping. Well, I need to get there as well.

Ray now, thank you so much, great update and great deep dive into what you guys are up to. Ray not CEO at Fathom Events, joining us via zoom from Las Vegas