Cinemas Reel from Delayed Film Releases
Movie Theater Shares Stumble
As studios suspend more film releases or opt to stream them, cinemas are feeling a heightened financial strain. Regal-owner Cineworld Group, the second-largest movie theater chain in the world, announced it is closing all 536 of its theaters in the United States. The company will also suspend operations at 127 theatres in the United Kingdom. The combined closings will leave roughly 45,000 workers unemployed.
The announcement follows the second postponement of the new James Bond film, “No Time to Die.” The movie has now been delayed by a full year—it was first scheduled for release in April 2020. It’ll now appear in theaters in April 2021. The James Bond film is not alone. Over the past several months, many studios released hit films like “Mulan” and “Trolls World Tour” on digital platforms, bypassing cinemas altogether. Cineworld CEO Mooky Greidinger compared the empty movie theaters to a grocery store without food. “We cannot operate for a long time without a product,” Greidinger said.
Like many companies that depend on large in-person gatherings, Cineworld has had a rough year. September’s mid-year financial report saw revenue decrease by 70% compared to 2019. As the market opened on Monday morning after the announcement, Cineworld shares fell by 57%. AMC Entertainment (AMC) shares also fell 11.2% yesterday.
Theater Chains See Ripple of ‘Tenet’ Disappointment
The announcement highlights theaters’ dependency on creative output from production companies. As studios delay releases in an attempt to wait out the pandemic, movie theaters are forced to do the same. Only one major motion picture has been released in theaters since the start of the COVID-19 pandemic. That was “Tenet,” which spurred the reopening of major movie theaters owned by Regal, AMC Entertainment, and Cinemark (CNK) in August. Warner Bros. (T) repeatedly delayed the release of “Tenet” until a majority of American movie theaters could reopen under COVID-19 safety guidelines.
“Tenet” underperformed by all measures. While the movie cost $200 million to make, it earned a mere $45.1 million at American and Canadian box offices. The film could be found at about two-thirds of American theaters when they reopened in August. Those theaters were forced to open at reduced capacity and with stringent new cleaning routines.
Those precautions failed to reassure consumers in the North American market, where films have earned over $11 billion per year for the past five years. Overseas, where COVID-19 case numbers were lower, “Tenet” fared better, earning $262 million at the international box offices so far.
However, studios weren’t completely comforted by the moderate success of “Tenet” abroad. After the film’s disappointing North American release, Warner Bros. pushed the release of “Wonder Woman 1984.” Disney (DIS) also delayed the release of 10 new films.
What’s Next for the Theater Industry
The Regal Cinemas closure casts a relatively long shadow over the film industry as the coronavirus pandemic continues. Most American movie theaters closed in March, and while many theaters reopened in August for the “Tenet” release, theaters in Los Angeles and New York City are still closed.
Citigroup (C) analysts say the industry is experiencing something of a domino effect. Studios are hesitant to release big films because audience numbers are so low, but audience numbers will remain low until there’s big content that draws people to theaters. Cineworld Group is calling the Regal Cinemas closure temporary, but the National Association of Theatre Owners said that if studios keep delaying releases and theaters are forced to remain empty, the United States could lose up to 69% of smaller theaters.
Over half of the entertainment and arts industry’s workers are still on furlough, and many hope the Regal Cinemas closure will put pressure on legislators to provide the industry with more economic relief money. Cineworld’s CEO has written to Andrew Cuomo, New York’s governor, to ask that theaters be allowed to reopen—especially as indoor dining restarts in New York City. Additionally, on September 30, filmmakers and cinema owners wrote a letter to legislators asking for financial relief that could help make sure theaters will re-emerge after the pandemic’s end.
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