Cineworld, a British cinema company and the world’s second-largest movie theater chain, is expected to close all of its US movie theaters this coming week, after a brief reopening in mid-summer, according to WSJ, citing a source familiar with the matter.
The final decision to close more than 500 US theaters could be announced as early as Monday or Tuesday, the source said. Cineworld operates US theaters under the Regal brand, the largest and most geographically diverse theater circuits in the US, consisting of 7,211 screens in 549 theaters in 42 states. Regal began reopening theaters in July/August as public health restrictions eased, but indoor capacity was limited.
Readers may recall, in mid-September, even though Hollywood released Christopher Nolan’s “Tenet,” that didn’t necessarily mean consumers flocked back to indoor commercial spaces to watch the flick as the virus pandemic showed little signs of abating. Shown below, one Regal theater in Baltimore was a ‘ghost town’ around the release of Tenet.
No one at the movie theater. pic.twitter.com/uJrDo7KZZp
— Alastair Williamson (@StockBoardAsset) September 12, 2020
Potential drivers behind the closures, which by the way, the source said “isn’t definite,” could be due to low foot traffic at theaters; it actually might make sense for theaters to shutter operations, layoff employees, tap the equity or debt markets, and formulate a relaunch plan when a vaccine is commercialized. Otherwise, as seen this past summer, a premature reopening will be perceived by consumers as irresponsible.
Another driver could be the lack of big-budget film releases, with the new James Bond movie, “No Time To Die,” had to postpone its release to 2021. With the lack of exciting films and consumer behavior shunning indoor theaters, there’s really no need to keep theaters open.
According to Reuters, Cineworld warned investors on Sept. 24 that it may have to raise a second round of cash early next year if the coronavirus pandemic persists. The movie theater operator had enough funds to keep operating after reporting a massive $1.6 billion loss for the first six months of 2020 as revenues crashed by 67%.
“There can be no certainty as to the future impact of Covid-19 on the group,” Cineworld said in a statement.
The anemic box office open is more evidence that consumers aren’t ready to step back inside theaters anytime soon. The National Association of Theatre Owners (NATO) outlined smaller theater chains face a bankruptcy wave:
“If the status quo continues, 69% of small and midsize movie theater companies will be forced to file for bankruptcy or to close permanently,” NATO wrote in a written statement.
Suspending operations could be Cineworld’s best bet to survive the virus pandemic. It’s only a matter of time before other large chains do the same.