An “unlikely” extended shutdown of theaters could end Cineworld Cinemas, the second largest global cinema chain and owner of U.S. based Regal Cinemas. Two to three months of zero revenue could put the cinema chain in “breach its debt covenants.” The coronavirus is spreading rapidly and theater chains across the world are scrambling to figure out what to do next. Studios have been pushing their movie release dates back and theaters could end up closing in the coming weeks. Sporting events, concerts, Broadway, and even Disneyland have shut their doors in the past 24 hours.
As for Cineworld, the company is going to attempt to negotiate new terms with their lenders. If not, this could “cast significant doubt about the group’s ability to continue as a going concern.” In other words, they’ll likely go out of business if things get to the absolute worst. The company’s stock plummeted more than 34% today and it doesn’t look good for the future. The news comes after Cineworld revealed that they were able to earn $4.37 billion last year, which is up 6% from 2018. CEO Mooky Greidinger had this to say.
“Cineworld has delivered a solid set of full year 2019 results despite 2018 being a very strong comparative period. In particular, I am proud of our integration with Regal which continues to progress well. The refurbishment plan is on track, our ‘Unlimited’ subscription plan was successfully launched in July 2019. It is thus ironic that these achievements should be overshadowed by the negative impact of the global COVID-19 crisis, even though that at the time of writing the group’s operations have not been affected to a material degree.
I am of course conscious of the possibility that events could develop adversely very quickly and change this position in the short term, but I remain confident that the crisis will ultimately pass and that the cinema exhibition industry will continue to play a major role in providing fun, laughter, happiness and joy to millions of dedicated movie fans, just as it has for over a century.”
Cineworld said just last week that it has not seen “any material impact” on admissions due to the coronavirus so far. The movie theaters in Britain have not shut down and there currently are no plans to do so. The company remains to stay positive about the situation, though they know things could change at any moment. Their dire downside is something that they think is unlikely to happen.
For now, studios will continue to push back their release dates, which is also hurting theaters all over the world. But, the process is to make sure that viewers stay healthy and away from the coronavirus. Theaters could end up seeing a big boom when the postponed movies end up hitting the big screen before the end of the year or at the beginning of next. North America is just now starting to take necessary precautions to prevent spreading.
Cineworld will remain to conduct business as usual with an eye on the future. The company is prepared for the worst, but will keep things going as normal as they can. Theaters in North America will do the same thing and prepare for what may come in the near future. Cineworld is still excited for No Time to Die and the rest of the 2020 blockbusters hitting theaters later this year. This news was first reported by Metro.
