(Bloomberg) -- Imax Corp. signed an agreement for 30 new theaters in China, a deal that reduces the company's risks by requiring its partner to build many of the new screens.
The large-format cinema operator struck a deal with Guangzhou JinYi Media Corp., one China's largest exhibitors, to install 30 Imax theaters in new and existing locations, according to a statement. JinYi will fund the work in nine of the theaters, a shift from previous practices, said Rich Gelfond, Imax's chief executive officer.
“China is still a rapidly growing market for Imax,” Gelfond said in an interview. The deal “balances the risk and reward of operating in a rapidly developing market,” he said.
China passed the U.S. in total screens last year and is forecast to become the biggest market by sales in the coming years. The Imax deal comes on the heels of a hot start to the Chinese box office in 2018, after smaller gains the past two years. January-February sales have risen 36 percent, while revenue at Imax screens has gained 27 percent, Gelfond said.
Imax rose 6.1 percent to $20.95 at 11:03 a.m. in New York after advancing 6.8 percent for the biggest intraday gain since October.
The new strategy helps Imax manage risk as the Mississauga, Ontario-based chain expands to smaller Chinese cities with uncertain demand for films.
Of the new theaters, half will open by 2019 and the rest by 2023, according to the company. The agreement will give Imax a total of 885 theaters in China, with 543 already open and 342 under contract. Overall, Imax has deals for 90 theaters with JinYi.
While a U.S. trade war with China appears to be escalating, Gelfond said he doesn't think the movie industry will be targeted.
Beyond China, Gelfond said Imax has been approached by a number of parties interested in opening theaters in Saudi Arabia, where the company operates that country's only public theater. Many in Hollywood this week are following the visit of Saudi Crown Prince Mohammed Bin Salman and the potential for opening up of the Saudi movie market.
To contact the reporter on this story: Anousha Sakoui in Los Angeles at asakoui@bloomberg.net.
To contact the editors responsible for this story: Crayton Harrison at tharrison5@bloomberg.net, Rob Golum, Young-Sam Cho
©2018 Bloomberg L.P.
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