March 14, 2012 / 7:53 PM / 5 years ago

TEXT-Fitch on outlook for U.S. movie exhibitors

(The following statement was released by the rating agency)

March 14 - According to Fitch Ratings' 'An Exclusive Preview: Fitch's 2012 Movie Exhibitor Outlook and Analysis' report issued today, the operating outlook for U.S. movie exhibition industry remains stable, albeit within the context of the cautious view Fitch has maintained on the longer-term prospects for the industry over the past several years. Fitch expects 2012 attendance growth in the low single digits, mainly due to the more robust film slate compared to 2011. Fitch's forecast also factors in ticket price growth in the low single digits. This growth is mostly due to the continued rollout of premium screens and the more highly anticipated premium offering film slate in 2012. Fitch expects the DCIP rollout of digital screens to conclude in late 2012 or early 2013. Fitch believes movie exhibition will continue to be a key promotion window for the movie studios' biggest/most profitable releases. Longer term, Fitch believes revenues and the profitability of movie theaters could be increasingly challenged by factors that are largely out of management's control, such as quality and quantity of movies from the studios and increasing indirect competition from other distribution channels such as video on demand and the Internet. If such competition grows, the profitability of exhibitors could be increasingly challenged, as patrons may have less incentive to go to the theaters. The significant degree of operating leverage means that cash flow can be meaningfully affected by moderate top-line declines. These factors and financial policy decisions will remain the main drivers of credit quality over the longer term. The report, 'An Exclusive Preview', which provides updated organization charts and portfolio summaries for both AMC Entertainment Inc and Regal Entertainment Inc, is available on the Fitch web site at 'www.fitchratings.com' under the following headers: Sectors >> Corporate Finance >> Corporates >> Report Type >> Topical Research & Special Reports (Caryn Trokie, New York Ratings Unit)

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