The value of Cineworld stock has decreased by more than 60% as concerns mount that the second-largest movie theater chain in the world may be about to file for bankruptcy.
In addition to owning the Picturehouse chain in the UK, the company is having problems repaying $5 billion in debt.
Like other theater companies, Cineworld was negatively impacted by the outbreak of the virus. In a recent statement, Cineworld attributed lower-than-expected post-Covid customer numbers to “limited” movie releases.
The Wall Street Journal reported that Cineworld is preparing to file for bankruptcy, which caused its share price to crash.
The studio had hoped that blockbusters like the most recent Bond film, Top Gun: Maverick, and Thor: Love and Thunder would lure moviegoers back after COVID limits.
This week, it was pointed out that recent admission numbers haven’t met expectations, even though demand has been steadily going up since the hospital opened again in April 2021.
Due to a limited film schedule that will last until November 2022, it is expected that these lower admission levels will have a negative effect on trade and the group’s cash flow right away. A total of 9,189 screens are spread among Cineworld’s more than 750 locations.
It works in ten countries and has more than 28,000 employees. Some of these countries are the United States, the United Kingdom, Poland, and Israel.
According to Hargreaves Lansdown senior financial and markets analyst Susannah Streeter, Cineworld “failed to lure back enough moviegoers to help pay back its hefty debts.”
The BBC was informed by Peter Williams, a former non-executive director at Cineworld, that he thought movie ticket prices were “too low.” He stated that while Cineworld would likely go through a big reorganization, “a sustainable business” would eventually result from it.
COVID closure impacted on Cineworld beyond recorvery
During the worst of the pandemic, many theaters had to close for long periods of time or run with fewer seats. This hurt the movie business.
Cineworld said that it lost a lot of money in the first half of 2020 because it had to close some theaters temporarily and move the release of big blockbuster movies.
The titan of the film business warned in September 2020 that it might need to raise more money in the event that COVID-19-related production delays or new coronavirus restrictions arise.
Challenging Periods
Huge movies like Jurassic World Dominion, Top Gun: Maverick, Doctor Strange, Elvis, and Minions: The Rise of Gru have kept people coming through the doors while cinemas struggle to recoup from their COVID losses.
However, Cineworld’s owner claims that it hasn’t been sufficient to maintain their financial stability. They assert that Hollywood’s choice to release fewer blockbusters than would have been typical during a summer before the epidemic is what caused the drop in attendance. Total box office revenue is down 32%, or a third, from the same time last year.
Not everything is dependent on the quantity of releases. Streaming services have been a threat to movie theaters for a long time, and now there is more competition for content.
The production of The Gray Man and Red Notice, two films that Netflix released directly to viewers’ homes, cost hundreds of millions of pounds.
As a result, theaters have had to work harder to convince customers that getting up from the couch to go to the movies is worthwhile.
Both the Avatar and Black Panther sequels will be available between now and Christmas, which is encouraging given the fall and winter release schedules for both films.
But it’s telling that so many other important releases are going straight to streaming services. Disney released The Lion King and Aladdin in 2019 as two popular live-action remakes. However, Pinocchio will be making a direct move to Disney+ for their upcoming big release.
