IMAX gleich Großbildleinwandkinos - die neue Methode ausgelutschte Filme nochmal auszupressen.
NEW YORK (CBS.MW) - During the week leading up to the Academy Awards in March,
Hollywood's big shots turned out to plug their projects for the television cameras.
One afternoon, CNBC interviewed director Ron Howard and producer Brian Grazer on the
blockbuster "A Beautiful Mind." Their production company, Imagine Entertainment, had made
the Oscar-winning film. Joining Howard and Grazer on the broadcast were their new
associates, Richard Gelfond and Bradley Wechsler.
Gelfond and Wechsler are the co-heads of Imax Corp. (IMAX: news,
designing and manufacturing projection and sound systems for
eight-story-high movie screens.
In August, Imax will present a digitally re-mastered version of
Imagine's "Apollo 13." The 1995 film about a near-disastrous moon
mission grossed $172.1 million in the U.S., according to Exhibitor
Relations, which tracks box office results.
Gelfond quipped that if someone told him a year ago that he'd be
schmoozing with the likes of Ron Howard, Brian Grazer and Tom
Hanks - not to mention doing business with them - "I'd have thought you were hallucinating."
Shareholders of Imax, which has more than 225 theaters in 30 countries, may want to pinch
themselves these days as well.
True, the stock is still selling at a quarter of its September 2000 price. But it has regained its
footing after falling to a 52-week low of 55 cents last September. Shares are trading at 10 times
that, these days. The stock rose 41 cents to close at $5.91 on Wednesday.
Imax has a two-pronged growth strategy. First, the company will continue to release such
Imax-branded entertainment as "Everest" on gargantuan screens geared to for families. Imax has
had a wide range of subjects in its movies over the years, ranging from the Rolling Stones in
concert to basketball superstar Michael Jordan.
The films are relatively short, but the novelty of the big screen is enough to compel viewers to
pay full feature prices for tickets.
But in a switch, Imax will also try to build on its identity by re-releasing "Apollo 13" and other
old favorites that fit its brand's appeal. Gelfond declined to give names of other prospective
films but said with confidence that Imax expects to have several more of these movies in
theaters.
"Before the end of this year, we'll announce a major `day-and-date' release of a live action
movie," Gelfond said in a recent interview with CBS.MarketWatch.com. He added that Imax
hopes ultimately to release four-to-six of these movies a year.
The company expects to be able to charge a premium for the films and to make up on bigger
audiences what it loses in fewer showings because of the films' longer running times.
"We see this as a `new-release window' for Hollywood to add revenue," Gelfond said. "Just as
we've seen the pay-TV window, the cable-TV subscriber window, the Blockbuster window
and the DVD window, we'll see the Imax window."
Imax isn't content to show movies from the past. The company plans eventually to show
first-run movies in its format, too, Gelfond said.
In the mean time, it's fun to draw up a list of visually stunning movies that would seem ideal for
Imax's large-screen format.
How about such Oscar-winning films as "Gladiator" and "Braveheart," with its panoramic battle
scenes? Or, perhaps an installment of the "Indiana Jones" series would excite viewers?
During the release of "Harry Potter and the Sorcerer's Stone" late last year, Imax executives got
some welcome news.
"We commissioned a survey of people as they were leaving some theaters showing `Harry
Potter,' " Gelfond said. "About 35 percent of them said they'd be willing to pay at least $3 a
ticket more to see `Harry Potter' again on an Imax screen."
For Hollywood studios, Imax could represent a windfall - if not a godsend - as an opportunity
for movie companies to wring fresh profits out of proven box office successes.
Moviemakers have been frustrated throughout history by the limitations of the pricing systems
for films. Theaters are forced to charge the same amount of money to customers, whether the
film is a blockbuster or a bomb.
"Hollywood can't charge more money to show `Spider-Man' than `Forty Days and Forty
Nights,'" Gelfond said. "Imax could add money to their gross. Maybe when some people go to
see `Spider-Man' for a second or a third time, they might want to see it in an Imax format."
Analysts say the Imax presentation can have some appeal.
"Imax lends itself to epic films," said Paul Dergarabedian, president of Exhibitor Relations.
"`Apollo 13' will be an interesting test. If it does well, this will be a great way for Hollywood
studios to earn some revenue on a film that has already been produced. It could open up an
opportunity for the studios."
Imax still has a long way to go before it becomes a household name in Hollywood. Imax films,
unsurprisingly, continue to be dwarfed by the blockbusters at the box office.
Like an actor who has played the same sort of role for a long time, Imax has a tendency to get
typecast because it has become synonymous with light family fare and semi-educational
subjects.
"The Dream Is Alive" and "Everest" have been Imax's two biggest movies to date, grossing
more than $100 million each. But to put that figure in perspective, "Spider-Man" topped the
century mark in its first weekend to set a record.
In turnaround
When a film project gets passed around from one studio to another, Hollywood veterans like to
say it is "in turnaround." Imax, in a corporate sense, is also in turnaround. It has taken steps to
stop the bleeding in its stock and now the shares have built some momentum after a dire period
when they were trading for less than a dollar.
"Almost every commercial exhibitor was bankrupt or in financial distress, so basically our entire
customer base was in financial difficulty," Gelfond said.
"People worried that we might have a problem with our receivables and growth plans," Gelfond
said. "We had $100 million in debt due in April of '03. People thought it would be difficult for us
to pay that money back when it was due."
Imax eventually took care of the debt burden and further eased questions about its viability with
its healthy earnings reports in the fourth quarter of last year and the first three months of 2002.
On May 9, Imax distributed good news. In the first quarter, Imax had net earnings of 32 cents a
share and earnings from continuing operations of 6 cents a share, compared with a year-earlier
loss of 42 cents a share.
In a statement at the time of the earnings release, Gelfond and Wechsler said the results
reflected "the continued improvement in our business and the effects of our lower cost
structure." We remain on track for a return to profitability for all of 2002 based on the improved
film slate for Imax theaters this year and our internal focus on costs."
Imax has the challenge of convincing investors that their shares can match the potential gains of
the giant media firms.
"Fund managers generally like to buy shares in large companies because there is greater liquidity
in those stocks," said David Joyce, an entertainment industry analyst with Guzman & Co. in
Miami. "It's very tough for small companies - especially in this kind of stock market - to attract
attention," Joyce added.
The Imax executives are encouraged that Hollywood - and Wall Street -- noticed their
company's rebound.
"The public is very cynical about turnaround stories," Gelfond conceded. "This adds to our
credibility and gives Hollywood studios and exhibitors confidence in our ability."
Imax has had a niche in Hollywood for years. In 1997, Gelfond accepted an Oscar for an
achievement in technology from Helen Hunt, who had starred the year before in "Twister."
Gelfond proved to be a good luck charm for Hunt. A year later, she was back at the Oscars
ceremony. She won the Best Actress award for her performance in "As Good As It Gets."
Imax has had its share of financial twisters. Now it hopes that its performance will soon be as
good as it gets.
Jon Friedman is media editor for CBS.MarketWatch.com in New York.
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