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'Wicked' spectacles, merger gossip and movie industry woes at CinemaCon 2024
Movie theaters need more movies. Will they ever get enough to truly thrive again?
That was the central question overhanging CinemaCon 2024, the annual convention bringing together Hollywood studios and multiplex operators in Las Vegas this week.
Exhibitors pleaded with the major studios to release more films of varying budgets on the big screen, while studios made the case that their upcoming slates are robust enough to keep them in business.
Once again, CinemaCon, where studios trot out executives and movie stars to pitch their upcoming blockbusters, arrived at a particularly challenging time for the film industry.
After weathering a devastating pandemic that shut down theaters for months, two of the most essential parts of the Hollywood machine, writers and actors, went on strike. The work stoppages — which lasted a combined six months — prompted the leading entertainment companies to push a number of titles to 2025 from 2024, disrupting the supply chain and sparking widespread anxiety in the exhibition community.
Box office revenue in the U.S. and Canada is expected to total about $8.5 billion, which is down from $9 billion in 2023 and a far cry from the pre-pandemic yearly tallies that nearly reached $12 billion.
“It’s not enough for us to simply sit back and want more movies,” said Michael O’Leary, president of the National Assn. of Theatre Owners, during Tuesday’s state-of-the-industry address at the Colosseum in Caesars Palace. “We must work with distribution to get more movies of all sizes to the marketplace.”
Though a fuller release schedule is expected for 2025, talk of budget cuts, greater industry consolidation and corporate mergers has forced exhibitors to prepare for the possibility of a near future with fewer studios making fewer movies.
In the extravagant banquet and trade show halls of Caesars Palace, theater operators groaned about 2024 being painted as yet another “lost year” for cinema — determined in spite of the grim discourse to remain optimistic.
“All indications are the rest of the year is going to be a lot better,” said David Fetters, vice president of West Mall Theatres in Minnesota and South Dakota. “The product we’re seeing here is looking outstanding.”
The studios tried to give exhibitors something to hope for during their CinemaCon presentations — hyping their movie lineups, bringing out filmmakers and cast members, pulling silly stunts, and playing sizzle reels, sneak peeks, trailers and, in some cases, entire features for their industry audience.
‘Wicked’ brings down the house
While promoting their 2024-25 programming, the studios pulled out plenty of stops.
Distribution executives at Warner Bros. delivered their opening remarks dressed as Michael Keaton’s Beetlejuice; Dwayne Johnson joined a Polynesian dance troupe while introducing Disney’s “Moana 2”; and the head of distribution at Paramount entered the theater in full “Gladiator” armor on a gold chariot.
But Universal’s presentation of “Wicked” — director Jon M. Chu’s film adaptation of the hit Broadway musical — took the cake. Convention attendees arrived at their seats to find a surprise in their cup holders: roses that illuminated for a technicolor light show set to an instrumental medley of “Wicked” songs. After the overture, a pre-taped message to all “CinemaConians” from Jeff Goldblum’s imposing Wizard of Oz played onscreen, and Goldblum took the stage in real life.
He was later joined by Michelle Yeoh (Madame Morrible), Jonathan Bailey (Fiyero) producer Marc Platt and Chu, who fought back tears while talking about casting the film’s leading witches. On cue, Glinda and Elphaba themselves — Ariana Grande and Cynthia Erivo — emerged from the wings to thunderous applause.
Like Chu, Grande was overcome with emotion and paused briefly to compose herself while delivering her remarks. .
Other pictures teased during the studio presentations included Universal’s “Despicable Me 4,” Warner Bros.’ “Furiosa: A Mad Max Saga” and “Joker: Folie à Deux,” Paramount’s “A Quiet Place: Day One” and “Transformers One,” and Disney’s “Inside Out 2” and “Deadpool & Wolverine.”
Paramount deal looms
Amid the displays of corporate harmony, it was hard to ignore the elephant in the convention center: a potential merger between Paramount Global and David Ellison’s production company, Skydance.
Shares of Paramount Global — home of Paramount Pictures, CBS and several other legacy brands and franchises — took a nosedive Wednesday after news that a group of of the company’s directors are stepping down amid merger discussions.
This would be only the latest Hollywood merger in a string of deals, including Disney’s acquisition of Fox in 2019 and Warner Bros.’ union with Discovery in 2022.
When asked about the theatrical implications of another studio sale in an already rapidly consolidating industry, National Assn. of Theatre Owners President Michael O’Leary and Motion Picture Assn. Chairman Charles Rivkin largely waved it off.
“There’s always other things that we can do as an industry association to strengthen our industry, and I’ll cross that bridge when I get to it,” Rivkin said during a CinemaCon news conference.
Rather than avoiding the topic during the studio’s CinemaCon presentation on Thursday, Paramount Pictures chief Brian Robbins handled the situation with humor.
“There’s been a lot of speculation around our parent company around [mergers and acquisitions],” Robbins said before joking that Paramount’s head of domestic distribution, Chris Aronson, “has now thrown his hat into the ring as a bidder.”
“He’s starting a Kickstarter campaign,” Robbins continued as the crowd chuckled.
Japanese cinema and faith-based content reign
As the domestic film business has been thrown into turmoil in recent years, Japanese cinema and faith-based content have been two of movie theaters’ saving graces.
Industry leaders kicked off CinemaCon on Tuesday by singing the praises of Sony-owned anime distributor Crunchyroll’s hits — including the latest “Demon Slayer” installment.
Mitchel Berger, senior vice president of global commerce at Crunchyroll, said Tuesday that the global anime business generated $14 billion a decade ago and is projected to generate $37 billion next year.
“Anime is red hot right now,” Berger said. “Fans have known about it for years, but now everyone else is catching up and recognizing that it’s a cultural, economic force to be reckoned with.”
Last year, event-cinema company Fathom Events decided to expand its annual Studio Ghibli series, screening “Spirited Away,” “Princess Mononoke” and other Hayao Miyazaki classics for five nights each instead of just one or two. Fathom Events Chief Executive Ray Nutt said that the extended runs allowed those titles to gross 142% more than they had in the past.
“Anime was one that did very well for us,” Nutt said. “The team is really good at sourcing content and then figuring out where the audiences drive tickets.”
Another type of product buoying the exhibition industry right now is faith-based programming, shepherded in large part by “Sound of Freedom” distributor Angel Studios.
During its presentation on Wednesday, Angel Studios unveiled its lineup of “stories that amplify light,” including an animated feature telling the biblical tale of David and a live-action drama about a German pastor who conspires against the Nazis during World War. II.
“Some of the faith-based things, especially in our part of the country — the Midwest — have had a lot of good traction,” Fetters said.
Nutt added that Fathom Events has also had “huge success” connecting with faith-based audiences by screening content such as episodes of “The Chosen,” a drama series chronicling the life of Jesus Christ. The latest season of the show generated $32 million at the box office, according to Nutt.
Exhibitors make plea for more movies… and flexible windows
The greatest challenge facing theaters right now is a dearth of theatrical releases, exhibitors say. Theater owners urged studio executives at CinemaCon to put more films in theaters — and not just big-budget tent poles timed for summer movie season and holiday weekends.
“There’s been a bit of a shortage of good content because of the strikes and that sort of thing,” said Mark Shaw, owner of Shaw Theatres in Singapore. “And also, during the pandemic, we lost some of the audience. Trying to get that audience back into theaters is a bit of a challenge.”
“Whenever we have a [blockbuster] film — whether it be ‘Barbie’ or ‘Super Mario’ … records are set,” added Bill Barstow, co-founder of ACX Cinemas in Nebraska. “But we just don’t have enough of them.”
During an industry think-tank panel on Wednesday, Disney distribution executive Cathleen Taff defended the company’s decision to delay certain movies — including the animated film “Elio” and a live-action remake of “Snow White” — to 2025, explaining that at least some of those titles were not finished in time for a 2024 release.
“From a studio perspective … we need to walk in tandem together,” Taff said.
“We have to pick some good dates and we had to do those shifts. And of course we thought about the theaters, but the reality is we’re not going to release an unfinished film.”
An additional issue affecting owners of independent theaters and smaller chains is studio-imposed three-week minimum runs for major movies. Multiple exhibitors told The Times that these businesses can’t afford to let one movie to take up a screen for three weeks because there simply isn’t enough population where they operate to fill seats for that long.
“If you run it for two weeks, the community has already seen it,” said Colleen Barstow, vice president of ACX Cinemas.
“There is no need to require three-week or longer commitments,” said Chris Johnson, chief executive of Classic Cinemas in Illinois. “If you have a hit, we will hold it.”
The next frontier: ‘alternative content’
One way that exhibitors are trying to fill the void of studio releases is by showing “alternative content” — from reissues of beloved films and screenings of TV shows to musical performances and sporting events.
The best example of this phenomenon is AMC Theatres’ distribution of Taylor Swift’s “The Eras Tour” and Beyonce’s “Renaissance.”
Fathom Events, which has been in the business of alternative content for decades, is going further by attaching live and pre-recorded Q&As to their screenings, as well as handing out collectible merchandise as an extra incentive for audiences.
“You go to go to a regular movie, you buy the ticket, you watch the movie — I don’t mean to demean the movie experience by any stretch of imagination — but that’s pretty much it,” Nutt said. “With us, you are going to … get something special.”
Larger companies such as AMC have been partnering with studios to level up their merchandise game as well. See: the infamous “Dune 2” popcorn bucket, which inspired Disney to promise at CinemaCon to deliver a must-have “Deadpool 3” popcorn bucket.
“There are some studios that inadvertently make crude and rude popcorn buckets,” joked Marvel Studios president Kevin Feige during Disney’s presentation. “And then there are popcorn buckets designed by Deadpool.”
In an expansion of its business of processing pharmaceuticals in Earth’s orbit, Varda Space Industries is renting a large El Segundo plant where toy manufacturer Mattel used to design Hot Wheels and Barbie dolls.
The plant in El Segundo’s aerospace corridor will be an extension of Varda Space Industries’ headquarters in a much smaller building on nearby Aviation Boulevard.
Varda will occupy a 205,443-square-foot industrial and office campus at 2031 E. Mariposa Ave., which will give it additional capacity to manufacture spacecraft at scale, the company said.
Originally built in the 1940s as an aircraft facility, the complex has a history as part of aerospace and defense industries that have long shaped the South Bay and is near a host of major defense and space contractors. It is also close to Los Angeles Air Force Base, headquarters to the Space Systems Command.
Workers test AstroForge’s Odin asteroid probe, which was lost in space after launch this year.
(Varda Space Industries)
Varda is one of a new generation of aerospace startups that have flourished in Southern California and the South Bay over the last several years, particularly in El Segundo, often with ties to SpaceX.
Elon Musk’s company, founded in 2002 in El Segundo, has revolutionized the industry with reusable rockets that have radically lowered the cost of lifting payloads into space. Though it has moved its headquarters to Texas, SpaceX retains large-scale operations in Hawthorne.
Varda co-founder and Chief Executive Will Bruey is a former SpaceX avionics engineer, and the company’s spacecraft are launched on SpaceX’s workhorse Falcon 9 rockets from Vandenberg Space Force Base in Santa Barbara County.
Varda makes automated labs that look like cylindrical desktop speakers, which it sends into orbit in capsules and satellite platforms it also builds. There, in microgravity, the miniature labs grow molecular crystals that are purer than those produced in Earth’s gravity for use in pharmaceuticals.
It has contracts with drug companies and also the military, which tests technology at hypersonic speeds as the capsules return to Earth.
Its fifth capsule was launched in November and returned to Earth in late January; its next mission is set in the coming weeks. Varda has more than 10 missions scheduled on Falcon 9s through 2028.
For the last several decades, the Mariposa Avenue property served as the research and development center for Mattel Toys. El Segundo has also long been a center for the toy industry as companies like to set up shop in the shadow of Mattel.
The Mattel facility “has always been an exceptional property with a legacy tied to aerospace innovation, and leasing to Varda Space Industries feels like a natural continuation of that story,” said Michael Woods, a partner at GPI Cos., which owns the property.
“We are proud to support a company that is genuinely pushing the boundaries of what’s possible, and are excited to watch Varda grow and thrive here in El Segundo,” Woods said.
As one of the country’s most active hubs of aerospace and defense innovation, El Segundo has seen its industrial property vacancy fall to 3.4% on demand from space companies, government contractors and technology startups, real estate brokerage CBRE said.
Successful startups often have to leave the neighborhood when they want to expand, real estate broker Bob Haley of CBRE said. The 9-acre Mattel facility was big enough to keep Varda in the city.
Last year, Varda subleased about 55,000 square feet of lab space from alternative protein company Beyond Meat at 888 Douglas St. in El Segundo, which it started moving into in June.
Varda will get the keys to its new building in December and spend four to eight months building production and assembly facilities as it ramps up operations. By the end of next year, it expects to have constructed 10 more spacecraft.
In the future, Varda could consolidate offices there, given its size. Currently, though, the plan is to retain all properties, creating a campus of three buildings within a mile of one another that are served by the company’s transportation services, Chief Operating Officer Jonathan Barr said.
“We already have Varda-branded shuttles running up and down Aviation Boulevard,” he said.
Ships near the Strait of Hormuz before and after attacks began
Every day, around 80 oil and gas tankers typically pass through the Strait of Hormuz, the narrow waterway off Iran’s southern coast that carries a fifth of the world’s oil and a significant amount of natural gas.
On Monday, just two oil and gas tankers appear to have crossed the strait, according to a New York Times analysis of shipping activity from Kpler, an industry data firm. Since then, one tanker passed through.
“It’s a de facto closure,” said Dan Pickering, chief investment officer of Pickering Energy Partners, a Houston financial services firm. “You’ve got a significant number of vessels on either side of the strait but no one is willing to go through.”
Tankers have been staying away from Hormuz since the U.S.-Israeli attacks on Iran that began on Saturday. A prolonged conflict could ripple broadly across the global economy, threatening the energy supplies of countries halfway around the world and stoking inflation.
International oil prices have climbed 12 percent since the fighting began, trading Tuesday around $81 a barrel, and natural gas prices have surged in Europe and in Asia.
A senior Iranian military official threatened on Monday to “set on fire” any ships traveling through the Strait of Hormuz. Vessels in the region have already come under attack. Several oil and gas facilities have also been struck or affected by nearby shelling, though the damage did not initially appear to be catastrophic.
Where ships and energy facilities have been damaged
A fire broke out Tuesday at a major energy hub in Fujairah, United Arab Emirates, from the falling debris of a downed drone, the authorities said. On Monday, Qatar halted production of liquefied natural gas, or fuel that has been cooled so that it can be transported on ships, after attacks on its facilities.
The sharp reduction in tanker traffic is reducing the supply of oil and gas to world markets, pushing up prices for both commodities. And the longer that ships stay away from the Strait of Hormuz, the less oil and gas get out to the world, which could raise prices even more.
Shipping companies have paused their tankers to protect their crew and cargo, and because insurance companies are charging significantly more to cover vessels in the conflict area.
On Tuesday, President Trump said that “if necessary,” the U.S. Navy would begin escorting tankers through the strait. He also said a U.S. government agency would begin offering “political risk insurance” to shipping lines in the area.
In addition to tankers, other large vessels regularly go through the strait, including car carriers and container ships. In normal conditions, nearly 160 make the trip each day.
Some ships in the region turn off the devices that broadcast their positions, while others transmit false locations — making it hard to give a full picture of the traffic in the strait.
The Shiva is a small oil tanker that has repeatedly faked its location, according to TankerTrackers.com, which tracks global oil shipments. It is suspected of carrying sanctioned Iranian oil, according to Kpler. The Shiva was one of the two tankers that crossed the strait on Monday.
The oil and gas that typically move through the strait come from big producing countries like Saudi Arabia, Iraq, Iran and United Arab Emirates, and are exported around the world.
Where tankers moving through the Strait have traveled
In 2024, more than 80 percent of the oil and gas transported through the Strait of Hormuz went to Asia. China, India, Japan and South Korea were the top importers, according to the U.S. Energy Information Administration.
Countries have energy stockpiles that could last them into the coming months, but a continued shutdown of the strait could damage their economies.
Several big disruptions have roiled supply chains in recent years, but the tanker standstill in the Strait of Hormuz could have an outsize impact.
Paramount Skydance’s jubilation over its come-from-behind victory to claim Warner Bros. Discovery has entered a new phase:
Call it the deal-debt hangover.
Two major ratings agencies have raised concerns about Paramount’s credit because of the enormous debt the David Ellison-led company will have to shoulder — at least $79 billion — once it absorbs the larger Warner Bros. Discovery, bringing CNN, HBO, TBS and Cartoon Network into the Paramount fold.
Fitch Ratings said Monday that it placed Paramount on its “negative” ratings watch, and downgraded its credit to BB+ from BBB-, which puts the company’s credit into “junk” territory. Fitch said it took action due to “uncertainty” surrounding Paramount’s $110-billion deal for Warner Bros. Discovery, which the boards of both companies approved on Friday.
S&P Global Ratings took similar action.
To finance the Warner takeover, Ellison’s billionaire father, Larry Ellison, has agreed to guarantee the $45.7 billion in equity needed. Bank of America, Citibank and Apollo Global have agreed to provide Paramount with more than $54 billion in debt financing.
“Potential credit risks include the prospective debt-funded structure, Fitch’s expectation of materially elevated leverage and limited visibility on post-transaction financial policy and capital structure,” Fitch said.
Late last week, Paramount sent $2.8 billion to Netflix as a “termination fee” to officially end the streaming giant’s pursuit of Warner Bros. That payment paved the way for Warner and Paramount’s board to enter into the new merger agreement.
Paramount hopes the merger will be wrapped up by the end of September. It needs the approval of Warner Bros. Discovery shareholders and regulators, including the European Union.
Paramount executives acknowledged this week the new company would emerge with $79 billion in debt — a considerably higher total than what Warner Bros. Discovery had following its spinoff from AT&T. That 2022 transaction left Warner Bros. Discovery with nearly $55 billion of debt, a burden that led to endless waves of cost-cutting, including thousands of layoffs and dozens of canceled projects.
Warner still has $33.5 billion in debt, a lingering legacy that will be passed on to Paramount.
Paramount plans to restructure about $15 billion in Warner Bros. Discovery’s existing debt.
Paramount CEO David Ellison at a 2024 movie premiere for a Netflix show.
(Evan Agostini / Invision / AP)
Paramount told Wall Street it would find more than $6 billion in cost cuts or “synergies” within three years — a number that has weighed heavily on entertainment industry workers, particularly in Los Angeles.
Hollywood already is reeling from previous mergers in addition to a sharp pullback in film and television production locally as filmmakers chase tax credits offered overseas and in other states, including New York and New Jersey.
Some entertainment executives, including Netflix Co-Chief Executive Ted Sarandos, have speculated that Paramount will need to find more than $10 billion in cost cuts to make the math work. More recently, Sarandos went higher, telling Bloomberg News that Paramount may need $16 billion in cuts.
Cognizant of widespread fears about additional layoffs, Paramount Chief Operating Officer Andrew Gordon took steps this week to try to tamp down such concerns.
Gordon is a former Goldman Sachs banker and a former executive with RedBird Capital Partners, an investor in Paramount and the proposed Warner Bros. deal. He joined Paramount last August as part of the Ellison takeover.
During a conference call Monday with analysts, Gordon said Paramount would look beyond the workforce for cuts because the company wants to maintain its film and TV production levels.
Paramount plans to look for cost savings by consolidating the “technology stacks and cloud providers” for its streaming services, including Paramount+ and HBO Max, Gordon said. The company also would search for reductions in corporate overhead, marketing expenses, procurement, business services and “optimizing the combined real estate footprint.”
It’s unclear whether Paramount would sell the historic Melrose Avenue lot or simply centralize the sprawling operations onto the Warner Bros. and Paramount lots in Burbank and Hollywood.
Workers are scattered throughout the region.
HBO, owned by Warner Bros. Discovery, maintains its West Coast headquarters in Culver City; CBS television stations operate from CBS’ former lot off Radford Avenue in Studio City; and CBS Entertainment and Paramount cable channels executive teams are located in a high-rise off Gower Street and Sunset Boulevard, blocks from the Paramount movie studio lot.
“The combination of PSKY and WBD could create a materially stronger business than either individual entity,” Standard & Poor’s said in its note to investors. “However, this transaction presents unique challenges because it would involve the combination of three companies, with the smallest, Skydance, being the controlling entity.”
David Ellison’s production firm, Skydance Media, was the entity that bought Paramount, creating Paramount Skydance.
Ellison has not announced what the combined company will be called.
Paramount shares closed down more than 6% Tuesday to $12.45.
Warner Bros. Discovery fell 1% to $28.20. Netflix added less than 1% to close at $97.70.
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