Speaker 1: You're listening to Bloomberg Business Week with Carol Messer and
Speaker 1: Bloomberg Quick Takes Tim Stinovic on Bloomberg Radio. As you know, uh,
Speaker 1: we talk a lot about, certainly what's going on in
Speaker 1: the markets, how individuals are getting back out into the
Speaker 1: world experiencing things. We've seen that play out when you
Speaker 1: speak of the markets and some of those airline stocks,
Speaker 1: some of those leisure stocks. Well, last time we caught
Speaker 1: up with our our next guest, we were really in
Speaker 1: the thick of the pandemic. UH, and that was back
Speaker 1: in May of UH. And so just to get an
Speaker 1: idea of how people are returning back to theaters in
Speaker 1: particular and experiencing thing right now, it is back with
Speaker 1: us CEO at Fathom Events are home to a MC
Speaker 1: cinemark Regal. He is joining us via zoom from Las Vegas. Ray.
Speaker 1: How are you good, Carol? How are you doing? I'm
Speaker 1: doing well, trying to keep track of kind of a
Speaker 1: NonStop environment. Um, tell us about your world and how
Speaker 1: have things changed since May have when we talked with
Speaker 1: you and may Have one. Well, a lot of things
Speaker 1: have changed since two thousand nineteen when we had our
Speaker 1: our best year in event cinema. But uh, you know,
Speaker 1: as theaters started closing down and everything, Uh, it impacted
Speaker 1: us pretty significantly. Obviously most of our content is distributed
Speaker 1: to movie theaters. Uh. Not only AMC regular Cinema R
Speaker 1: that on us, as we were saying, but also ninety
Speaker 1: seven other theater circuits around the world, and everybody the
Speaker 1: circuit side of the business responded differently in terms of closings, openings,
Speaker 1: when they closed, when they opened. So it presented a
Speaker 1: lot of challenges for us. But we were able to
Speaker 1: survive the period by getting two pp P loans and
Speaker 1: e r C credit and UH worked on projects and
Speaker 1: we launched a program called Hope UH internally, and what
Speaker 1: it was was, we're concerned about the health of our employees.
Speaker 1: We needed to stay optimistic. Uh, we need to stay
Speaker 1: persistent and then excel when we came out of the
Speaker 1: pandemic someday, and we didn't know when that would be
Speaker 1: back then, but we're in that stage now and people
Speaker 1: are coming back to to theaters like you wouldn't believe
Speaker 1: and like I'd like to be alright, So I know,
Speaker 1: fingers crossed, right, So you know, we're bloomberg and we
Speaker 1: like to get concrete evidence and numbers. So give me
Speaker 1: an idea. Are you back to where you were pre
Speaker 1: pandemic levels? Now we were we were just to give
Speaker 1: you some some of those numbers. We were down about
Speaker 1: eighty percent off at two thousand nineteen in two thousand twenty,
Speaker 1: which was very consistent with where with where the commercial
Speaker 1: business was with all of and exhibitors as well. Um,
Speaker 1: we're looking to be about seventy five percent of two
Speaker 1: thousand nineteen and everybody's using two thousand nineteen is a gauge. Uh,
Speaker 1: is that being the last full year prior to the pandemic.
Speaker 1: So the you know, the the analysts, I think are
Speaker 1: looking somewhere between seventy percent and maybe seventy five percent
Speaker 1: commercial product and will be at least as at seventy
Speaker 1: five percent at the top range of that when by
Speaker 1: when uh, by by this year, by this year, by
Speaker 1: the end of the year. So where are you right
Speaker 1: now then? So, uh, where we are right now is
Speaker 1: probably around of two thousand nineteen, but we're back in
Speaker 1: loaded with content because a lot of the productions were,
Speaker 1: uh we're delayed because of COVID. So now all that's
Speaker 1: catching up. So you're gonna see a very very strong
Speaker 1: uh ladder Q two Q ry. How are things like,
Speaker 1: you know, how is the supply chain impacting you? And
Speaker 1: the supply chain includes also you know, labor workers. You know,
Speaker 1: you can't open up you know, you can't open up
Speaker 1: a venue right if you don't have the people there
Speaker 1: to support it. You know it really it really has
Speaker 1: an impact impacted us. The biggest thing that I think
Speaker 1: our exhibitor partners went through was the fact that their
Speaker 1: theaters were closed. You have a lot of minimum wage
Speaker 1: workers that had to go get a job elsewhere, and
Speaker 1: so they're hiring a lot of new employees right now
Speaker 1: and have been. And it's the training aspect of it.
Speaker 1: So it hasn't necessarily been the supply chain in terms
Speaker 1: of any materials or anything like that. It's been more
Speaker 1: along the lines of personnel. That's that that's actually really interesting.
Speaker 1: What about things that you are doing specifically though to
Speaker 1: kind of rev up the audience and get people back,
Speaker 1: because well, we're talking a lot about We've got about
Speaker 1: thirty seconds and then we'll come back and talk some
Speaker 1: more about this whole idea of people are ready to
Speaker 1: go out and experience things but you know, a lot
Speaker 1: of people are getting on planes and you two are
Speaker 1: competing with people who maybe want to do other things
Speaker 1: when it comes to experiences. Yeah, I mean, you know,
Speaker 1: it's very interesting because our content is so diverse, Carol.
Speaker 1: It's as as we talked about before. It's everything from
Speaker 1: the arts of the Metropolitan Opera to anime, to faith
Speaker 1: based content to classic movies. And it's been very very
Speaker 1: interesting to see how how each of those audiences come
Speaker 1: back within each of those genres. And I'll be happy
Speaker 1: to talk a little bit more about that in a
Speaker 1: bit if you'd like, Yeah, I'd love to. Let's get
Speaker 1: into the breakdown. We're gonna do a little bit of
Speaker 1: news and then we'll continue the conversation. Right we're talking
Speaker 1: with Ray Not. He's chief executive officer of Fathom Events,
Speaker 1: joining us via zoom from Vegas, and I am curious
Speaker 1: to see in terms of what people are coming back
Speaker 1: to see what they want to do, uh in a theater.
Speaker 1: So we'll get into that in just a moment. I
Speaker 1: want to get back to our conversation. We're talking with
Speaker 1: Ray Not. He see you at Fathom Events, still with
Speaker 1: us via zoom from Las Vegas. Hey, Ry, I want
Speaker 1: to go back before I get into some of the
Speaker 1: content that you guys will be putting out there. You
Speaker 1: mentioned you're looking to be about right nineteen by the
Speaker 1: end of the year. What confidence do you have that
Speaker 1: you get back there? And the reason I ask is
Speaker 1: Charlie Pett and I just talked about a story about
Speaker 1: how consumers have stopped adding new streaming services. I mean,
Speaker 1: I do feel like people are kind of overwhelmed by choices.
Speaker 1: So what confidence do you have that we kind of
Speaker 1: get back to where it was? I I think we're
Speaker 1: actually seeing we're actually seeing that and we're right on
Speaker 1: track giving our given our forecast. Okay, Uh, that's where
Speaker 1: that basis comes from. But um, you know, the people
Speaker 1: that are that are really returning to theaters are in
Speaker 1: the categories of faith anime, especially faith. I mean, we
Speaker 1: we have had We ended last year with a film
Speaker 1: called The Chosen and uh it did our biggest title ever.
Speaker 1: It was fourteen million dollars that we did. We sold
Speaker 1: over a million tickets and so you know, again, content
Speaker 1: is king. I know that's an old cliche, but it is.
Speaker 1: And if you have the right content in theaters, which
Speaker 1: we have found later in the year. We believe that
Speaker 1: the audiences are going to come out and want that
Speaker 1: communal experience. You took me right to where I want. Now.
Speaker 1: I agree content is king, and as the streaming services right,
Speaker 1: they see it directly in terms of subscribers or engagement.
Speaker 1: So you mentioned um faith, Tell me about you know,
Speaker 1: because you've got different choices. You've got sports, you've got opera,
Speaker 1: you've got the anime. Um you mentioned faith. What's what
Speaker 1: do you see is the biggest area of growth for
Speaker 1: you and maybe really driving the top line? Well, I
Speaker 1: I think a couple of different areas. They think. What
Speaker 1: our programming team has done a very excellent job of
Speaker 1: doing is sourcing content that you would never ever, never
Speaker 1: ever thought of could be on the big screen. You know.
Speaker 1: A good example of that is I think last time
Speaker 1: we may have talked, we were talking about the partnership
Speaker 1: that we had with Warner Brothers where we brought uh
Speaker 1: episodes of Friends Anniversary, and we're doing that with Golden
Speaker 1: Girls for example, coming up as well. So that that
Speaker 1: is a very uh, you know, girls night out and
Speaker 1: niche group that wants to come out communally, and that's
Speaker 1: really what we're seeing um, you know on the faith
Speaker 1: based area. I mentioned this the chosen that that was
Speaker 1: a is an app that's free to everybody with millions
Speaker 1: of subscribers, and that that audience had never come to
Speaker 1: theaters communally. And they made this film specifically for Christmas
Speaker 1: called The Messengers and it was about the birth of
Speaker 1: of Jesus through the eyes of Mary and Joseph. And
Speaker 1: we did a surprise announcement with Angel Studios on that
Speaker 1: and it was the very first time that audience had
Speaker 1: ever gathered communally and they came out in droves. So
Speaker 1: it's it just tells me that people are looking to
Speaker 1: have some form of entertainment in that communal together environment.
Speaker 1: Well there's something to be said, but for niche programming, right.
Speaker 1: So because of the success of that is it is
Speaker 1: it causing you to explore other areas? It is? Uh,
Speaker 1: you know, there there are other areas out there. The
Speaker 1: great thing about the great thing about Fathom is we
Speaker 1: have this foundation of all these categories and sports, comedy,
Speaker 1: what have you, and and all of those are our
Speaker 1: foundation of our business that will continue to build on.
Speaker 1: But you're going to see more live events in theaters.
Speaker 1: We have the largest live network of any any anybody
Speaker 1: in theaters out there, and uh, so you're gonna start
Speaker 1: seeing some things like WWE. You're gonna see some more
Speaker 1: boxing as as those types of productions ramp up in
Speaker 1: the live live area, we'll be bringing those to theaters again.
Speaker 1: So the cost of content is it going up? There's
Speaker 1: so many people competing for content. It does sound like
Speaker 1: you're getting into certain areas that maybe aren't as competitive,
Speaker 1: but I mean sports is certainly competitive. How expensive is
Speaker 1: that when you look at your balance sheet? Well, in
Speaker 1: the history of Fathom, we've never paid for a dime
Speaker 1: to acquire content. And the reason for that is our
Speaker 1: model is a little bit different. We don't produce content,
Speaker 1: we don't pay for content. We essentially barter promotional content,
Speaker 1: and we barter about a hundred million dollars in promotional
Speaker 1: value a year. So, um, it's licensed for a window
Speaker 1: of time with Fathom theatrically and uh it's a basically
Speaker 1: a rev share that we do with the content provider
Speaker 1: at the box office, and that that's our our model.
Speaker 1: It's very very different. I am also curious about your demographics.
Speaker 1: I'm always curious about a service like this, especially when
Speaker 1: you talk about you know, your faith, uh vertical if
Speaker 1: you will doing really well? Is it an does it
Speaker 1: sc older? Give me an idea of the cross section. Well,
Speaker 1: it's uh, it's interesting because our our largest content provider
Speaker 1: is still the Metropolitan Opera and average age is around
Speaker 1: seventy three years old. So you'll you'll have that will
Speaker 1: do children's programming where you have you know, parents and
Speaker 1: kids come up that are that obviously sway much much younger.
Speaker 1: You have anime content, and anime content can be anything
Speaker 1: from a very young age to uh, you know, there's
Speaker 1: even content out there that it's hard are in uh
Speaker 1: in the anime space. So uh So having this diverse
Speaker 1: amount of content and vert goals that we have. The
Speaker 1: age differentiation is all over the place. But that's what
Speaker 1: makes it special for us because if the older audiences
Speaker 1: with the mat and some of the classic movies are
Speaker 1: a little bit slower to come back, then we're gonna
Speaker 1: push more for the faith and the anime and the
Speaker 1: children's program. Just got about forty seconds here, I mean,
Speaker 1: what what worries you most about the outlook? Just quickly?
Speaker 1: You know, I'm I'm very bullish on it. I you know,
Speaker 1: I don't think that there's gonna be another outbreak that
Speaker 1: will close theaters again. That was obviously our biggest concern
Speaker 1: out there. UM, I see more and more content providers
Speaker 1: wanting to distribute content like this. It's not a traditional
Speaker 1: theatrical run, it's not straight to streaming, and we don't
Speaker 1: consider ourselves competitive with any of those guys. So I
Speaker 1: guess to answer your question or not answer your question.
Speaker 1: He's on the horizon right now, Caro, A little sounds
Speaker 1: like you're sleeping. Well, I need to get there as well.
Speaker 1: Ray now, thank you so much, great update and great
Speaker 1: deep dive into what you guys are up to. Ray
Speaker 1: not CEO at Fathom Events, joining us via zoom from
Speaker 1: Las Vegas