PVR in talks with producers to release films in theatres as virus eases

PVR Ltd. is in talks with Bollywood producers to release their movies in cinema halls now rather than on streaming sites like those run by Netflix Inc. and Amazon.com Inc., now that the pandemic is easing in India.

The country’s biggest cinema operator, which runs about 835 screens across 71 cities, is currently operating most theaters at half capacity due to Covid-related restrictions. However, it sees benefits in the “age-old strategy” of movies first coming to the big screen before being monetized on other platforms.

“This applies more to big films, where the yield per eyeball in theater is still the highest as compared to all the other distribution platforms,” Kamal Gianchandani, PVR’s chief of strategy, said in an earnings call last week.

A number of Indian films starring top actors such as Amitabh Bachchan, Akshay Kumar and Vidya Balan opted for streaming platform release in 2020 as theaters were shuttered by shelter-at-home rules. Post reopening, Christopher Nolan-directed science fiction “Tenet” and superhero movie “Wonder Woman” were the only prominent releases before Tamil action thriller “Master” opened in theaters last week.

“We are hopeful that Master will be a case study based on which you will see -- over the next few weeks -- the Bollywood film guys and more South Indian regional guys planning the release calendar of the films which are currently ready,” PVR’s Chief Financial Officer Nitin Sood said.

PVR’s shares, which snapped eight years of gains to fall about 30% in 2020, have risen almost 14% this year. The stock has 20 buy calls, six holds and four sells among analysts tracked by Bloomberg.

The Gurgaon-based company reported a loss of 491 million rupees in the three months ended December compared with a profit of 363 million rupees a year ago. The loss was, however, smaller than the 2.13 billion-rupee Bloomberg consensus estimate. PVR also said it has “reasonable liquidity” to meet debt and interest obligations for the next few months.

Gianchandani, who is also the top executive of PVR’s movie production and distribution business, said major costs such as fees charged by top actors haven’t dropped for producers despite the pandemic-induced slowdown, and therefore, movie makers will seek better returns by releasing in cinemas first before less lucrative models like streaming.

“Clearly, the ability to take multiple bites out of the same route is a better strategy,” he said.