Warner Bros. says 'Tenet' wasn't a 'home run,' 'not optimistic' about movie theaters rebounding

Key Points
  • AT&T chief John Stankey said he foresees a "choppy" recovery for the film industry.
  • Because of the coronavirus pandemic, AT&T's WarnerMedia may need to devise new ways of releasing its content.
  • WarnerMedia generated revenue of $7.5 billion during the recent quarter, down from $8.4 billion a year earlier.
John David Washington and Robert Pattinson star in "Tenet," an upcoming spy film written and directed by Christopher Nolan.
Warner Bros.

The coronavirus pandemic has not been easy to navigate for studios or movie theaters.

AT&T chief John Stankey said Thursday he foresees an uneven recovery ahead for the film industry, one that might force AT&T's WarnerMedia to devise new ways of releasing its content.

"We're not optimistic," he said. "We're not ... expecting a huge recovery in theatrical moving into the early part of next year. We're expecting it to continue to be choppy."

Stankey's remarks came during the company's earnings call after AT&T reported that its WarnerMedia segment, which contains HBO as well as the company's movie and TV studios, generated revenue of only $7.5 billion. That's down from $8.4 billion a year earlier and is the result of cinema closures and the need to postpone major blockbuster releases.

Warner Bros. was one of the first studios to launch a big-budget feature into the market, bringing "Tenet" to international theaters in August, and to the U.S. and Canada in early September. The Christopher Nolan film has garnered $333.9 million globally since its debut, a combination of a $283.3 million haul in foreign markets and around $50.6 million from domestic ticket sales.

"I can't tell you that we walked away from the 'Tenet' experience saying it was a home run," Stankey said, but added that he was "happy we did it."

Under normal circumstances, "Tenet" might have garnered $50 million to $60 million during its opening weekend domestically. This figure is on par with Nolan's non-Batman films such as "Inception" and "Dunkirk." During the pandemic, however, the film tallied less than $10 million during its debut.

With an estimated budget of $200 million and a marketing budget that was likely half of that figure, "Tenet" has just barely broken even at the box office.

The lackluster performance, especially in the U.S., has made Warner Bros. more cautious about other theatrical releases. "Wonder Woman 1984" has bounced around the calendar multiple times before landing a Christmas debut. There is no guarantee, however, that the film will debut in 2020.

Gal Gadot stars in "Wonder Woman 1984."
Warner Bros.

Audiences have been hesitant to return to theaters, especially as Covid-19 cases have continued to spike and there are rising fears that the outbreak could worsen as the months get colder. This led Cineworld, the owner of Regal Cinemas, to shutter more than 500 domestic theaters. In a domino effect, that forced studios to push films into 2021.

This chicken-and-egg scenario is devastating for cinema operators and studios. Without new content, theaters can't remain open, but without a large number of open cinemas, studios can't release new films.

Theaters had hoped that once California and New York loosened restrictions on theaters that studios would be more willing to keep films on the calendar. Regal has even decided to reopen 11 theaters in New York state after Gov. Andrew Cuomo permitted theaters outside New York City to reopen.

Still, Regal is not reopening its other theaters at this time, noting that the company loses less money by being closed.

"I'd say the holiday season is going to be the next big checkpoint to see what occurs and whether or not we can actually move some content back into theatrical exhibition," Stankey said. "And we're going to have to maybe make a game-time decision on that based on what's happening in different geographies and what's happening effectively with infection counts in the country."

Stankey said the company is still committed to releasing content in theaters, but that it is keeping its options open and working on a "plan A, plan B and plan C."

"As we get through the next month or two and we look at what's occurring, we'll call the cards on the A plan and the B plan and the C plan and kind of come back to you," he said. "So that's kind of the best I can give you on where we are in restarting that."

This isn't great news for theater operators who have become cautiously optimistic that the debuts of these films won't move into 2021 now that New York theaters are beginning to reopen. Several times over the last few months these owners have ramped up safety measures and marketing spending, only to see films get pushed to a new release date.

Already the largest theater chain in the world, AMC Theaters, and the sixth-largest chain B&B Theatres, have warned that bankruptcy could be on the table if things in the industry do not turn around soon.

AMC Entertainment CEO Adam Aron on reopening plan
AMC Entertainment CEO Adam Aron on reopening plan