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Slow vaccine rollout could spark more movie delays

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Patrons watch a movie at AMC DINE-IN Thoroughbred 20 on August 20, 2020 in Franklin, Tennessee.

Jason Kempin | Getty Images Entertainment | Getty Images

A slower-than-expected rollout of the coronavirus vaccine could have a domino effect on the 2021 movie slate, with possibly devastating effects on the industry.

Movie theater operators and studios had been optimistic heading into the new year that a steady rollout of vaccines to the general public would result in more people heading to cinemas and keep films firmly set in their current release dates.

However, monthly targets set by President Donald Trump’s administration are not being hit, which has already forced Sony’s “Morbius” to be moved from its March debut to a seemingly greener October. The film had already been displaced twice from its original July 10, 2020, debut because of Covid.

There are fears that other studios will be compelled to follow suit. Currently, January is devoid of new titles, but studios have plans to dole out films starting in February.

“We are concerned about the pace of the vaccine rollout as it does endanger the [first-quarter] release schedule and the return to normalcy, even though movie theaters actually remain one of the safest out-of-home experiences,” said Karen Melton, vice president of marketing at Malco Theaters.

Early expectations were that 20 million vaccines would be administered in December and 50 million in January. As of Monday, only 8.9 million have found their way into Americans’ arms.

The Trump administration has blamed the Centers for Disease Control and Prevention for the slow rollout, saying the guidelines the organization gave of inoculating health-care workers and people in nursing homes first had created a bottleneck in distribution. States, however, have blamed a lack of money, manpower and guidance from the federal government for the poor distribution.

On Tuesday, the federal government announced that it is changing the way it allocates the vaccine. Its new strategy will be based on how quickly states can administer shots and the size of their elderly population. States will have two weeks to prepare for this change.

President-elect Joe Biden’s transition team announced last week that his administration will release all doses that had been held in reserve.

“I expect that we’ll see a dramatic increase in the vaccination rate,” said Michael Pachter, analyst at Wedbush, in an email to CNBC. “If we get 100 million people vaccinated in the first 100 days [which has been Biden’s pledge], we’ll have enough of a critical mass for theaters to fully reopen by the end of June.”

However, with the number of coronavirus cases still rising, more films could be displaced from the first half of the year, said Eric Handler, managing director of media and entertainment equity research at MKM Partners.

“I think it is inevitable that many films in [the first quarter] and even a good number in [the second quarter] are going to get pushed back,” he said.

As a result, Handler forecasts that the first-quarter box office will fall more than 90% from last year. The second quarter is likely to rebound slightly to be down between 50% and 60%, he said.

Already analysts are speculating about which films will be the next to shift. For Shawn Robbins, chief analyst at Boxoffice.com, the newest James Bond flick, “No Time to Die,” is a likely candidate.

“It is a golden egg for MGM, a studio that doesn’t have the deep slate of a Disney or Universal to bank on,” he said. “James Bond is a significant [intellectual property] with global implications and needs to be handled very delicately.”

“No Time to Die” has seen several delays. It was first pushed from its November 2019 release when Danny Boyle, who was supposed to write and direct the film, left the project. It bounced between a few dates before landing a release in April 2020. However, the coronavirus pandemic pushed it to November 2020 and then to April 2021.

Robbins also noted that Paramount’s “A Quiet Place II,” a sequel to the hit horror-thriller from director John Krasinski, as well as Disney’s “Black Widow,” its first theatrical Marvel film release since 2019, are also on that list.

The second “Quiet Place” was originally set for release in March 2020, but was pushed to September of that year due to the pandemic. It was moved again to April 2021. Similarly, “Black Widow” jumped to November 2020 from its original May date and then was postponed again to May 2021.

“With a new government administration incoming, much of Hollywood is probably looking to see if the vaccine delays up to this point can be mostly corrected during late winter and early spring,” Robbins said. “That may yet play a deciding factor in whether or not summer movie season is targeted to begin in early May, or perhaps is pushed back to the June-July-August corridor.”

Studios have options for these releases beyond simply delaying them. Warner Bros. has already made its entire 2021 slate day-and-date, which means all its movies will arrive in theaters and on HBO Max on the same day. Disney, too, plans to release “Raya and the Last Dragon” in theaters and for $30 on Disney+ on March 5.

“With the current state of the union, I’d say there’s a 95% chance ‘Black Widow’ follows in the footsteps of ‘Mulan’ and ‘Raya,'” said Jeff Bock, senior analyst at Exhibitor Relations.

“Hopefully, next fall will be a more normalized environment for movies to return full tilt to theaters,” he said. “Until then, it’s the wild Wild West.”

Disclosure: NBCUniversal is the parent company of Universal Studios and CNBC.


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Delta plans to bring back 400 pilots, signaling optimism about future air travel

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Pilots talk after exiting a Delta Airlines flight at the Ronald Reagan National Airport on July 22, 2020 in Arlington, Virginia.

Michael A. McCoy | Getty Images

Delta Air Lines is planning to bring hundreds of its pilots back by this summer as the airline seeks to position itself for a rebound in travel demand.

Delta’s pilots avoided furloughs last year after the union in the fall agreed to reduced pay and no flying requirements for some 1,700 junior aviators. Delta is now going to offer some 400 of them active status, according to a company memo. That will require additional flight training to fly certain aircraft.

The pilots are already receiving regular pay under $15 billion in additional government aid that Congress approved late last year in the latest coronavirus relief package.

“As we looked at ways to better position ourselves to support the projected recovery, we saw an opportunity to build back additional pilot staffing in advance of summer 2022 by bringing 400 affected pilots back to active flying status by this summer,” wrote John Laughter, senior vice president of flight operations, in a Jan. 21 staff note that was seen by CNBC. “This is well ahead of when we originally estimated we would be able to convert pilots back to full flying status and is possible because of the PSP aid and available training capacity starting in March and April.”

Delta didn’t immediately comment.


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Moderna working on booster shots for South African strain

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Moderna said Monday it’s accelerating work on a Covid-19 booster shot to guard against the recently discovered variant in South Africa.

Its researchers said its current coronavirus vaccine appears to work against the two highly transmissible strains found in the U.K. and South Africa, although it looks like it may be less effective against the latter.

The two-dose vaccine produced an antibody response against multiple variants, including B.1.1.7 and B.1.351, which were first identified in the U.K. and South Africa, respectively, according to a Moderna study conducted in collaboration with the National Institute of Allergy and Infectious Diseases. The study has not yet been peer reviewed.

The vaccine generated a weaker immune response against the South African strain, but the antibodies remained above levels that are expected to be protective against the virus, the company said, adding the findings may suggest “a potential risk of earlier waning of immunity to the new B.1.351 strains.”

“Out of an abundance of caution and leveraging the flexibility of our mRNA platform, we are advancing an emerging variant booster candidate against the variant first identified in the Republic of South Africa into the clinic to determine if it will be more effective to boost titers against this and potentially future variants,” Moderna CEO Stephane Bancel said in a statement.

Shares of Moderna were up nearly 4% in premarket trading after the announcement.

Paul Offit, director of the Vaccine Education Center at Children’s Hospital of Philadelphia, said he’s glad Moderna is preparing for the possibility that the virus could mutate enough to evade the protection of the current vaccines.

“This is not a problem yet,” said Offit, also a member of the FDA’s Vaccines and Related Biological Products Advisory Committee. “Prepare for it. Sequence these viruses. Get ready just in case a variant emerges, which is resistance” to the vaccine.

On Thursday, White House health advisor Dr. Anthony Fauci said new data showed that the Covid-19 vaccines currently on the market may not be as effective in guarding against new, more contagious strains of the coronavirus. Some early findings that were published in the preprint server bioRxiv indicate that the South Africa variant can evade the antibodies provided by some coronavirus treatments.

The Food and Drug Administration authorized Moderna’s vaccine for people who are 18 years old and older in December.

Moderna’s vaccine, like Pfizer’s, uses messenger RNA, or mRNA, technology. It’s a new approach to vaccines that uses genetic material to provoke an immune response. Late-stage clinical trial data published in November shows Moderna’s vaccine is more than 94% effective in preventing Covid, is safe and appears to fend off severe disease. To achieve maximum effectiveness, the vaccine requires two doses taken four weeks apart.

Bancel told CNBC that Moderna’s vaccine will be protective against the South African strain in the short term, but the company doesn’t know how long that protection may last.

“What is unknowable right now is what will happen in six months, 12 months, especially to the elderly because, as you know, they have a weaker immune system,” he said during an interview with “Squawk Box.” “Because of that unknown … we decided to take into the clinic, out of an abundance of caution, a new vaccine.”

“We cannot be behind. We cannot fall behind this virus,” he said, adding the virus will “keep mutating.”

–CNBC’s Noah Higgins-Dunn contributed to this report.


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5 things to know before the stock market opens January 25, 2021

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