LONDON – Conditions are darkening in many cinemas around the world.
Cineworld Group PLC, one of the industry’s largest movie theater operators, confirmed last Monday that it was considering filing for Chapter 11 bankruptcy in the United States as it faces billions of dollars in debt and more empty seats in front of its screens than expected.
The British company, which owns Regal Cinemas in the United States and operates in 10 countries, said its theaters remained “open as usual” as it considered options for debt relief. Cineworld said it plans to continue operating even after any potential filings, although its equity investors could face significant or total losses on their holdings.
Cineworld faces challenges of its own after racking up $4.8 billion in net debt, not including rental debt. But the industry as a whole is navigating a tenuous recovery after the shutdown of pandemic cinemas around the world.
Sure, moviegoers returned to theaters this year to see blockbusters like “Spider-Man: No Way Home,” “Top Gun: Maverick” and “Jurassic World: Dominion.” Industry giant Warner Discovery said it was doubling the number of theaters and moving away from early films on its HBO Max streaming service.
But this summer’s $3.3 billion in ticket sales still lag nearly 20% behind pre-pandemic summer 2019 on Sunday, according to data firm Comscore. And there don’t seem to be any big hits on the immediate horizon to improve on those numbers.
Cineworld said its admission levels recently fell short of expectations. And with a “limited movie slate,” he expects the lower tiers to continue through November. This would mean further tightening of its finances.
Cineworld said it was in discussions with lenders and other major stakeholders as it considered its financial options. It also said that it “ultimately expects to continue its operations for the longer term without significant impact on its employees”. It has about 28,000 workers, according to the company’s website.
Even if the employees could walk away unscathed, the shareholders might not. The company again warned last Monday that a move to reduce debt from its balance sheet could hurt its equity investors.
Shares of the company in London fell 21.4% to the equivalent of around 3.8 US cents. This follows a 58.3% plunge the previous Friday after the Wall Street Journal reported that the company was preparing to file for bankruptcy protection within weeks.
Shares of other movie chains also stumbled on Monday, but nowhere near as big as Cineworld. Cinemark Holdings fell 5.8% to $15.33, for example.
Its executives said earlier in August that the next two months will be challenged by a drop in new releases. But they also said they were hoping for a strong end to the year.
Rival AMC Entertainment also called the upcoming movie schedule relatively weak, though it is optimistic for the end of the year and for 2023.
This year, about a third fewer blockbuster films have been released in theaters than before the pandemic. Part of this relates to residual delays in Hollywood’s production pipeline caused by prior COVID-19 shutdowns and postponements. But it’s also because a lot of movies go directly to streaming.
One of the most-watched films of the summer, the Ryan Gosling-Chris Evans action thriller “The Gray Man,” has premiered on Netflix.
Unless movies like Sony Pictures’ “Woman King,” starring Viola Davis, or Warner Bros. before “Halloween Ends” and “Black Adam” arrive in late October. Further on the horizon, however, are a few sequels that could set box office records: “Black Panther: Wakanda Forever” (November 11) and “Avatar: The Way of Water” (December 16).
AMC shares fell to $10.46 from $18.02 on Friday, August 19, although other factors weighed on the shares. The following Monday marked the first day of trading in the company’s new preferred shares, which bear the symbol “APE”.
Investors received one APE share for every AMC share they held at the end of Friday. Analysts said it looked like a two-for-one stock split, a deal that often sees a company’s share price fall by around half. Analysts said the new APE shares offer AMC a way to raise cash in the future, which it could use to pay down its debt.
Last year, the company took to the stock market to raise funds, taking advantage of a huge rise in its share price when it was caught up in the frenzy surrounding so-called meme stocks.
Its shares increased sixfold in January 2021, then more than doubled in May and again in June. Gains were driven by hordes of amateur investors, some calling themselves “monkeys” ready to hold the stock, whether Wall Street professionals branded it a bad buy.
AP Film Writer Jake Coyle contributed.