A sparse, physically distanced crowd watches a film at the Queensway Cineplex Cinema in Toronto on Aug. 18, 2020.Melissa Tait/The Globe and Mail
Cineworld Group PLC’s move to temporarily close all its theatres in the United States and Britain raised fresh fears about the cinema industry’s prospects for recovery as the company warned the business is becoming “unviable.”
The news sent the already-battered share prices of cinema owners into another tailspin. Shares of Cineworld, one of the world’s largest cinema operators, fell 36 per cent on Monday after the news, while Toronto-based Cineplex Inc. was down by 29 per cent. The share price of AMC Entertainment Holdings Inc., the world’s largest chain, also dropped by 11 per cent.
COVID-19 had already hit the industry hard, with governments ordering theatre closings and Hollywood studios delaying the release of blockbusters. But Cineworld’s move is a signal of its pessimism about the ability to lure audiences back in meaningful numbers any time soon.
Just last week, Metro-Goldwyn-Mayer Studios announced the latest James Bond release, No Time to Die, will not be seen in theatres until April, 2021. The premiere had already been delayed from its initial release date last April until November, before it was pushed back again.
It was not the first postponed title that theatres had been counting on. Last month, Disney also delayed the releases of its newest Marvel vehicle, Black Widow, and the Steven Spielberg-directed West Side Story until next year.
After pushing ahead the release of Mulan multiple times since March, Disney decided to skip theatres altogether in North America and Britain, instead making the film available to subscribers of its Disney+ streaming service for an added fee.
On Monday, news reports suggested Warner Bros. will delay the release of Dune from December of this year to October, 2021.
Big-budget releases need big audience numbers to justify the investment, and studios are clearly holding out for release dates when they can expect a better box office. Currently, major U.S. markets such as New York and Los Angeles are largely still shut down. Even where theatres are open, moviegoers may be understandably unnerved by a rise in COVID-19 infections and by advice from public-health authorities to avoid indoor gatherings.
But the studios' decisions have been a blow to theatre owners hoping to draw audiences back to the big screen. Over the weekend, Britain’s Sunday Times reported that Cineworld wrote to British Prime Minister Boris Johnson, saying the delays are making the industry “unviable.” Cineworld will close 536 Regal theatres in the United States and 127 Cineworld and Picturehouse theatres in Britain starting this Thursday.
“The only major release post the peak of COVID, the highly anticipated Tenet, has delivered a disappointing performance,” Citi analyst Natasha Brilliant wrote in a research note on Monday, referring to the Christopher Nolan-directed thriller that was released at the end of August. “It seems that there is a vicious circle – with concerns over audience levels, the studios are unwilling to release their strongest content. And without decent content, audience levels are unlikely to return any time soon.”
Like other cinema operators, Canada’s largest chain, Cineplex, had already been severely affected by mandated closing in the spring to combat the spread of the coronavirus. Its market value was also hurt by the cancellation of a deal to be acquired by London-based Cineworld. The two chains are locked in a legal battle over the failed deal that fell apart during the pandemic. Cineplex stock was worth $31 a share in early March, and closed on Monday at $4.75.
Analysts have raised concerns that Cineplex’s financial uncertainty may make it unable to meet commitments under its agreements with lenders on its earnings-to-debt ratio. “It is clear to us that the renewed covenants with the banks can no longer be met” and will require “a significant amendment,” said Canaccord Genuity analyst Aravinda Galappatthige in a report last week.
On Sept. 23, Cineplex announced that 1.5 million people had visited its theatres since they reopened on July 1. The number demonstrates that some people have been reluctant to return to theatres: In the three months ended Sept. 30, 2019, Cineplex reported 17.5 million people walked through its doors.
“We can’t comment on Cineworld’s decision, and it has no impact on us in Canada. While we are always reviewing and refining our operating plans, we are staying the course and will proudly continue offering a safe, comfortable and welcoming movie-going environment for Canadians,” Cineplex spokeswoman Sarah Van Lange said in a statement Monday.
Last week, the Movie Theatre Association of Canada sent an “urgent request” to Ontario Premier Doug Ford to keep theatres in the province open. The letter followed a decision by Quebec Premier François Legault to close cinemas, museums, bars and libraries in “red-alert” areas, including Montreal and Quebec City, for 28 days. MTAC wrote that movie theatres “are exceedingly safe.”
The provincial government has responded with some public-relations support: Cineplex invited press to a photo opportunity on Tuesday at one of its theatres in downtown Toronto with Ontario Minister of Heritage, Sport, Tourism and Culture Lisa MacLeod. Ms. MacLeod will “enjoy the magic of the movies on the big screen,” and will “observe the comprehensive health and safety protocols implemented at the theatre to help stop the spread of COVID-19,” according to the invitation.
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