Sean Gamble: Sure. I’ll start with the alternative content question. It’s interesting. Alternative content, non-traditional content always showed tremendous promise and it was frustrating that it never seemed to really get going. It generally was a couple percentage, 1% to 2% of the overall box office. And to your point, I’d say, fortunately, we’re starting to see some momentum now really build. We’ve seen some real scale start to kick in, in multicultural titles, in the anime films. Certainly, we’ve seen that now with Taylor Swift. Up until this point, just to focus on the concert films for a moment, we’ve actually seen hints of promise with concert films for quite some time with BTS and Coldplay and Billie Eilish and Metallica.
But those have largely been released on a very limited scale. And I think Taylor just blew the door off the place with the huge success that she just had with her Eras Tour. And it was phenomenal for fans in terms of having access and being able to relive the moment of that tour in theaters. It was like having, again, a front row seat at the concert. If you’re a music artist — I’ve always wanted to know, like if you’re a music artist and you saw that, I don’t see how you could not want to do that going forward, both to give your fans that opportunity and also just to extend the value of these tours that they’ve poured so much time and effort into. So we’re definitely optimistic about more of that. We’ve seen what they can do. I think others have seen what that can do.
And it’s growing. So I certainly do think that we could continue to see more and more success here. Faith-based films, we’ve had some huge results there with Jesus Evolution and Sound of Freedom and The Chosen. We continue to see big results getting posted in that category. I mentioned the multicultural content with the Indian films and South Asian titles. So yes, I think we’re definitely seeing that. As part of the percentage of box office that we’re seeing the uptick, year-to-date for us, it’s been tracking about 10%. Part of that is just based on overall recovery of volume. So we think as more traditional films recover, that may go down a bit. But we could certainly see this starting to get to a place where we’re looking at 5%, maybe a little bit more of overall box office over the years and continued growth.
Melissa Thomas: And then I’ll take your question, Ben, around the conservatism on cash and kind of how we’re thinking about capital allocation. So I’ll start with the CapEx side. So as we look forward, this is an area where we will continue to be flexible with our capital expenditures. We’re certainly going to factor in our expectations around box office recovery and cash flow generation. But at the same time, we’re going to be targeting ROI generating opportunities to make sure we’re positioning the company well for the long term. So it’s really a balance that we’re trying to strike there. And even as you think about both CapEx as well as dividends, we also need to keep in mind that we do have 2025 maturities that we also are looking to proactively address, so really looking to balance those dynamics but we feel really good about the cash we have on hand.
We do want to see the implications on the box office, as we mentioned, and we will be flexible from a capital expenditure standpoint and from a dividend standpoint. It’s just too early really to say at what point that would be reinstated, but I think it’s fair to say that need to see more sustained achievement of that target leverage ratio before we will look to do so.
Ben Swinburne: Okay, fair enough. Thank you.
Sean Gamble: Thanks. I appreciate the questions.
Operator: Thank you. The next question is coming from Mike Hickey of Benchmark. Please go ahead.
Mike Hickey: Hi, Sean, Melissa, Chanda. Good morning, guys. Congrats on another great quarter here. Just a basic — two questions pretty basic here. Definitely seeing not just your success, Sean, but the industry coming back here and we’ll see how 4Q shakes out. I’m curious [indiscernible] from you, but maybe we get to 2.6 billion or so for the year, domestic box office. So you still have the sort of 3 billion call it recovery bridge to where we were pre-pandemic, which seems like a huge opportunity for you and the industry in terms of growth. Just curious your confidence — I know film product’s a big piece of the equation, but just broadly speaking, Sean, your confidence that you kind of cross that recovery bridge to where we were and sort of really optimize the model here.
Just again curious your margin opportunity when you cross that recovery bridge to sort of where you were pre-pandemic, because it looks like your margin profile could be higher? Second question. Great to see the streamers come in with some product and it sounds like that’s going to increase. I’m just curious, the feedback you’re getting from Apple and maybe Amazon and maybe Netflix, I know you’ve sort of experimented with those guys. They’re hesitant for the moment. I think they put a lot of product in maybe that will change over time. Just curious what Apple and your other streaming partners are saying in terms of the success or not they’re getting from the box office. You look at some of the films, it’s not like they’re putting up massive numbers.
But I think there’s more than just that in terms of what’s important for their ecosystem in terms of how they leverage the theater. And curious over time, Sean, when you think about as those streamers scale up product and maybe we have alternative really taking shape for the first time with concert films, if you think you’re in a position in the next couple of years to have more wide release product than what you had versus pre-pandemic? Thanks, guys.
Sean Gamble: Sure. Thanks, Mike. I appreciate the questions. I guess starting off on kind of confidence in recovery. As we kind of talked about, two of the big macro items are just consumer behavior and overall volume of content. I think the question is probably more geared towards consumer behavior, which, as we’ve mentioned, like what’s been incredibly encouraging to us is just the level of performance of so many films over the past two plus years across all different genres. We’ve seen large films, small films, in all different categories break records quarter-after-quarter. And we look at that and just we look at the potential of films, we see consumers across all demographics have come back when that compelling content is in the marketplace.
So we haven’t seen disruption in that, which is obviously a key driver for our business, if the consumer interest is there. It all starts with that, right? So I definitely think we’ve kind of crossed the bridge on that. Clearly, there was a hold back for a period of time because of fears of the health environment with COVID. But we’re well past that at this point. And now it’s just a matter of getting that content to fully recover, which, again, all signs point to that happening. It’s just taking a little bit of time. Clearly, the whole production process was first disrupted by the pandemic. So we’re still working through that, or the studios are still working through that. And now the strikes have caused another blip. But all indicators, all comments about plans are to the extent of getting content back to where it was.
