The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

By Sebastian Pellejero

NEW YORK, July 20 (Reuters Breakingviews) - Nothing increases a challenge like success. Film director Christopher Nolan’s retelling of Homer’s "The Odyssey" sold some $260 million of tickets worldwide over its opening weekend, with 20% of the box office from IMAX IMAX.N, a record for the jumbo-screen operator. It's seeking a buyer, but like the epic poem’s hero, boss Rich Gelfond may find the journey ends at home.

Long known for immersive movie experiences, $2.2 billion IMAX has turned scarcity into a business model. Only about 40 theaters could show "The Odyssey" in its 70-millimeter format. Each screen generated roughly $153,000, more than double the average of previous record-holder, "Avengers: Endgame."

Behind the spectacle sits a profitable business. IMAX generated $410 million of revenue last year, converting 60% into gross profit. A 165% share-price rally since 2023 has left them trading at around 13 times adjusted EBITDA, richer than theater chain Cinemark CNK.N but a discount to venue operator Sphere Entertainment SPHR.N.

For potential suitors, the path will be expensive. Any buyer, as the Wall Street Journal reported was being sought in May, paying a conventional 30% premium would imply a nearly $3 billion enterprise value, including net debt, roughly 16 times this year’s expected EBITDA, according to Visible Alpha.

If lenders cap buyout shops at $1 billion, near the ceiling for earnings tied to Hollywood’s release calendar, the equity check would be about $2 billion. Even with 9% annual EBITDA growth and a later sale at 14 times, investors would earn just a 15% annualized return over five years, Breakingviews calculates, less than private equity firms typically promise.

Entertainment companies face their own obstacles. A $700 million takeover premium would demand roughly $90 million in annual earnings improvement. With a 40% adjusted EBITDA margin, there's little to cut at IMAX. Any new steward would be on the hook to find growth instead. Expansion is capital-intensive and having a studio as owner might weaken its appeal, if rivals balk.

Netflix NFLX.O and Apple AAPL.O pose fewer competitive concerns. Both can afford the price tag, but seem to have bigger strategic priorities. "The Odyssey" will eventually depart theaters, renewing the quest for more features with a similar siren call to moviegoers. IMAX, however, might be left to persevere on its own.

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"The Odyssey" sold $264 million of tickets worldwide during its opening weekend from July 17 to July 19, with a record $52 million coming from IMAX screens, according to studio estimates.

The company is exploring a sale and has approached entertainment companies as potential buyers, The Wall Street Journal reported on May 21, citing unnamed sources.