UK newspaper: "Cineworld forced into crisis talks by lack of Hollywood blockbusters"

[Leo Enticknap]

Here.

Cineworld forced into crisis talks by lack of Hollywood blockbusters

The world's second largest cinema operator admits recent admission levels have been disappointing

Shares in cinema giant Cineworld have plunged to a record low after it warned a lack of big film releases this year will hammer ticket sales and could force it into a rescue deal.

The world's second largest cinema operator said recent admission levels had proved disappointing, with lower ticket sales expected to continue until November "due to a limited film slate".

The lack of big hits is expected to run down cash at Cineworld and the company is now in talks with shareholders over a potential restructuring deal.

Any rescue deal "will likely result in very significant dilution of existing equity interests in Cineworld", it warned.

The update sent shares diving by more than 50pc to a record low of 10p. Its shares are down 97pc since 2019, with the business now valued at just £137m.

Cineworld has been struggling under a huge $8.4bn (£6.9bn) debt pile, which became a millstone once Covid hit and forced the closure of cinemas around the world.

Losses hit $3bn in 2020 and the company lost another $576m in the first since months of 2021.

Cineworld must also pay hundreds of millions in damages linked to past takeovers. Former shareholders of Regal successfully sued over the price Cineworld paid for the US chain in 2018. Cineworld agreed to pay out $170m as part of a settlement.

It also faces the prospect of paying more than £700m in damages to Canadian rival Cineplex, after a separate bungled takeover in 2019. A legal fight over the damages is ongoing.

Earlier this year, Cineworld struck a deal to delay payments to former Regal shareholders, saying the arrangement would help to "maximise its liquidity".

A number of DC films including The Flash and Aquaman 2 have been pushed back to 2023 due to Covid production delays.

Cinemas have also been facing growing competition from streaming sites, which are producing their own films.

Spy thriller The Gray Man and romantic comedy Persuasion, adapted from the Jane Austen novel, were shown exclusively in cinemas for just one week before being released more widely on Netflix.

Cineworld is the second UK cinema operator to be hit by the lack of blockbusters this year.

Vue was forced into a £1bn bailout by its lenders in July. The deal wiped out shareholders and was said to have cut its valuation in half to around £650m.

Tim Richards, its chief executive, blamed the thin slate of film releases for the chain’s woes.

"When Omicron hit, everyone got really nervous again and more films got pulled... The audiences are there. But the problem is, we don't have that consistency [in films being released] and we're gonna have big gaps." Mr Richards said.

Top Gun: Maverick has proved a major hit, grossing over $1bn in box office sales worldwide since its release in May.

However, Mr Richards said last month that "there has been nothing in between" big hits like Tom Cruise’s fighter jet film.

In other words, medium budget dramas and comedies have disappeared from theatres, leaving only megabudget superhero crap and the odd arthouse title that breaks out.

[Mark Gulbrandsen]

While over here in the USA we claIm to have had a very strong June and the movie chains here feel positive about things... So what's up in the UK that makes things so bad?

[James Biggins]

So what's up in the UK that makes things so bad?

Inflation. Energy/Fuel price rises. etc. etc.

You name it, we got it.

[Mark Gulbrandsen]

We have all that too, but theaters here are doing pretty good coming out of covid. There has to be a reason the U.K. is not seeing similar results...

[Leo Enticknap]

I read this article as suggesting that Cineworld's worldwide operation was in difficulties, not just its UK business. It makes specific mention of their takeovers of Regal (USA) and Cineplex (Canada), both of which have underperformed (relative to expectations) since.

Of course its hardly surprising that their CEO should blame the lack of movies available (a reason largely outside his control), and if the rest of the industry is now in a sustained recovery, that explanation is open to question. I wonder if part of Cineworld's problem is that they are heavily based in traditional (stadium seats, popcorn, etc.) 'plexes. From what I'm seeing in these parts, the high end combined cinema/restaurant businesses (the ones with business models based on $15-20 a seat for prime time, and in the expectation that customers will also spend $20-40 on an at-seat meal), and have largely bounced back. possibly because their target demographic is middle to high income white collar workers, who are traditionally the last to have to cut back leisure spending in response to the economy going south. But the more traditional theaters,and arthouses, still don't seem to have recovered their pre-pandemic audience numbers. Admittedly, though, that's a very subjective impression, based on what I see at the times I show up as a service tech.

The one thing that does not seem to be in any doubt is that Top Gun appears to have been the first universal crowd-pleaser in a long time, despite one manager I was talking to fearing that it would only appeal to over 40s. If so, the takeaways from that, IMHO, are that the superhero cycle has run out of steam, and the old Hollywood craft skills of a decent script, decent acting, decent visuals that do not rely too much on CGI (if you want video game aesthetics you can have them at home), and ditching the preachy woke crap are what are needed for a sustained recovery.

[Jon Dent]

I'm not sure the superheroes and CGI use in general have run out of steam, more that the films on offering lately have featured incredibly lackluster characters.

The heart and soul of Marvel was Captain America and Iron Man (and to a lesser extent Spiderman). They brought real emotional stakes and drama to the movies they were in together, and audiences were invested. Since their departure, Spiderman has been the only character that has any real personality left, and audiences responded well to that last Christmas. The rest? Boring characters at best, absolutely vacant characters at worst. And the complete clusterfuck over at Warner and DC isn't even worth wading into.

It'll be interesting to see what happens with Black Panther this Thanksgiving. The original was huge but it was also positioned at just the right time with just the right character. Unfortunately, Chadwick is gone, and I'm not 100% sure the sequel will have the same appeal.

And I'm also curious how Avatar: Way of Water will do. The owner thinks it'll do amazing. I don't. The visual style that was groundbreaking in 2009 is now fairly commonplace, and that alone won't draw people in the same way now.

[Buck Wilson]

They have us running an absolute skeleton crew. Axed box office entirely, no usher, just a couple in the concession stand and a manager. 3 employees in the building (decently busy 10 plex in a locked market)for any given weekday. Auditoriums generally don't get cleaned between shows

[Steve Guttag]

I see that Top Gun: Maverick is heading to VOD this month (way too soon) and Paramount + in the near future (even more too soon). Seriously, this movie still is bringing people in...get that home crap 6-months to a year away from the theatrical debut. There is zero need to rush this one home. If they waited until the winter holidays, I could see that some but there is no need for just a 3-month window.

[Marcel Birgelen]

The heart and soul of Marvel was Captain America and Iron Man (and to a lesser extent Spiderman). They brought real emotional stakes and drama to the movies they were in together, and audiences were invested.

It was the first Iron Man (2008) movie that started this whole "extended universe" and with the death of Iron Man in the last Avengers movie, that universe died for many people. Anything happening right now is just afterplay. Maybe Guardians of the Galaxy still has some life in it, but who was really anticipating yet another Thor movie?

And I'm also curious how Avatar: Way of Water will do. The owner thinks it'll do amazing. I don't. The visual style that was groundbreaking in 2009 is now fairly commonplace, and that alone won't draw people in the same way now.

Avatar was somewhat of a watershed moment for CG, much like Toy Story, which was the final proof that you now could make a cartoon movie completelty in CGI. Despite earlier advances by e.g. George Lucas with his Star Wars prequels, Avatar was the definitive proof that you could essentially pull a live-action movie out of a computer if you really wanted. It was also a watershed moment for Digital 3D and is probably what pushed Digital Cinema over the edge. I don't see any of those things happening with the new Avatar movie, even though Disney will probably market the crap out of it.

[Pete Naples]

We have all that too, but theaters here are doing pretty good coming out of covid. There has to be a reason the U.K. is not seeing similar results...

Mark,

In the US you likely aren't seeing anything like the economic disaster we have here.

Energy price up 54%, and will rise further.
Road fuel price up.
Food prices up.
Inflation currently running at 10% and rising.
We are seeing strikes by railway workers, postal workers with more likely to join in. This is in protest at pay freezes over the last 3-4 years and the companies now offering what are in real terms pay cuts. Meanwhile their executives collect bonusses with figures in the million sof pounds.
Foodbank use is up massively. I'd never even heard of foodbanks until a couple of years ago.
Many people come winter will be faced with the choice of heat or eat. Local authorities are preparing to host 'warm-hubs' in public buildings where people who cannot heat their homes can seek warmth.
I recently read about a plan to reduce some schools to 3 days per week, because the LA cannot afford to heat them.
I believe people will die this winter, of hypothermia, in their own homes. In the UK, in 2022.
Cineworld did themselves no favours over the pandemic over their treatment of staff, they kneejerked and fired everybody, the day before the government furough scheme was announced. There has been negative publicity over the various court cases and financial difficulties and a massive movement to 'shop local. Many of my inependant customers have seen a marked rise in attendance.
Other operators faced similar difficulties but appear to have come out better.

We have a government which fails to govern. This economic freefall needs action to address it NOW. Instead they are focussing on a farcical leadership contest that is little more than a high-school popularity based slanging match. Something like 160,000 white, middle-class resident mainly in the South East of England get to decide our next Prime Minister. We the working and voting public have no say.

This country is badly broken.

[James Biggins]

Mark,

In the US you likely aren't seeing anything like the economic disaster we have here.

This country is badly broken.

I'll try and avoid the politics of the matter by saying that this is the situation in a nutshell.

For a lot of people in the UK, 'disposable income' no longer exists. Moviegoing comes low on priorities if you're struggling to balance your budget.

[Pete Naples]

https://news.stv.tv/entertainment/ci...box=1660916191

"Cineworld is preparing to file for bankruptcy “within weeks”, according to reports.

It comes after a plummeting in shares in the company.

The Cineworld Group also owns the Picturehouse chain in the UK and Regal Cinemas in the US.

It has blamed a “limited” film slate for weak audiences in recent months.

There are currently eight Cineworld Cinemas in Scotland, including the flagship site in Glasgow’s city centre.

Across the UK, it has another 87 locations in England and 5 locations in Wales.

Cinemas were among the venues closed during the coronavirus pandemic, hitting sales hard.
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They have also been hampered by a slowing in film production for cinematic release during Covid.

And theatres face a battle against streaming giants, with increasing numbers of films being released on platforms for audiences to watch at home.

Cineworld has so far declined to comment.

However, the company told the London Stock Exchange: “Despite a gradual recovery of demand since reopening in April 2021, recent admission levels have been below expectations.

“These lower levels of admission are due to a limited film slate that is anticipated to continue until November 2022 and are expected to negatively impact trading and the group’s liquidity position in the near future.”

At the end of the last financial year, the company was saddled with around £4bn in debt.

It has said that it is considering restructuring its balance sheet in order to protect its future."

[Geoff Jones]

It would make sense for AMC to buy some Regal locations from them, at least here in CO. Regal already has exit lights shining across the screens and washing out the image. AMC wouldn't have to change a thing.

[Leo Enticknap]

In the US you likely aren't seeing anything like the economic disaster we have here.

I'll try to keep this as apolitical as possible.

In broad terms, I agree that we have not been hit as hard (yet), because of two factors: the almost complete disappearance of Russian natural gas from international energy markets hasn't affected America as badly as it has Europe, and the midterm elections take place in less than three months, at which a lot is at stake for the swamp creatures. If the Democrats lose either House of Congress, then there will be a lame duck administration for the next two years (and possibly a prolonged government shutdown when the President vetoes a Republican-passed budget), with the result that they are pulling out the stops and doing everything they can to soften the blows until November. A recent example of this is releasing some of the Strategic Petroleum Reserve, which is part of the reason why gas (as in petrol) prices dropped around 20% in the last month from all time record highs in mid-July. They are hoping that my mindset will be that thank goodness I'm now "only" paying $4.90 a gallon rather than the $6 I was paying a month ago, and forget that before the start of this year, it was typically in the mid $3-4 range. There almost certainly won't be a general election in the UK until 2024, meaning that the political class isn't really feeling any pressure, and prefer to concentrate on stabbing each other in the back while the energy crisis that you describe (and which they fundamentally have no short-term answers for) looms.

Nevertheless, we have been whacked by inflation and stagnant wages, and I'm a little surprised that the leisure and entertainment industries haven't been hit harder than I'm seeing evidence of. Here in the Inland Empire (a vast swathe of exurbia that stretches along a valley corridor for around 70-80 miles east of Los Angeles), the economy is dominated by warehousing and logistics: big rigs (lorries), monster trains hauling 200-300 TEU containers and cargo jets overhead are everywhere you look. So you'd expect us to be the first to feel the pinch when consumers affected by the downturn stop buying Ikea couches and massive flatscreen TVs off the boat from Shanghai, but you wouldn't know it looking at the stores and restaurants in Redlands and Riverside. They seem to be crowded to pre-pandemic levels again. Whether this is the calm before the storm I don't know, but something weird is happening.

Bringing this back to cinemas, your comment that Cineworld got things wrong that other operators got right is interesting. The chains that seem to have come out of this in the strongest position (in the USA) seem to be those that do the combined cinema/restaurant thing. The mall 10-plexes that just offer stadium seating and popcorn seem to be in more significant trouble. Back in January I was sent to do a site survey at a 15-plex that had been closed since the start of the pandemic: essentially, the owners wanted a ballpark figure for how much they'd need to spend on projection and sound to reopen it. The person who showed me round commented that she didn't think it would be viable to reopen that site unless they could put leather recliners and a restaurant offering in. The last time I drove past it, the building was still boarded up. I fear that what is fundamentally behind this is that customers who can only afford to spend $20 a person going to the movies (ticket and popcorn) can no longer do so, whereas those who can spend $50-100 a person on an evening out (more expensive ticket and a restaurant meal) haven't really felt the pinch - yet, at any rate.

[Mark Gulbrandsen]

Mark,

In the US you likely aren't seeing anything like the economic disaster we have here.

Energy price up 54%, and will rise further.
Road fuel price up.
Food prices up.
Inflation currently running at 10% and rising.
We are seeing strikes by railway workers, postal workers with more likely to join in. This is in protest at pay freezes over the last 3-4 years and the companies now offering what are in real terms pay cuts. Meanwhile their executives collect bonusses with figures in the million sof pounds.
Foodbank use is up massively. I'd never even heard of foodbanks until a couple of years ago.
Many people come winter will be faced with the choice of heat or eat. Local authorities are preparing to host 'warm-hubs' in public buildings where people who cannot heat their homes can seek warmth.
I recently read about a plan to reduce some schools to 3 days per week, because the LA cannot afford to heat them.
I believe people will die this winter, of hypothermia, in their own homes. In the UK, in 2022.
Cineworld did themselves no favours over the pandemic over their treatment of staff, they kneejerked and fired everybody, the day before the government furough scheme was announced. There has been negative publicity over the various court cases and financial difficulties and a massive movement to 'shop local. Many of my inependant customers have seen a marked rise in attendance.
Other operators faced similar difficulties but appear to have come out better.

We have a government which fails to govern. This economic freefall needs action to address it NOW. Instead they are focussing on a farcical leadership contest that is little more than a high-school popularity based slanging match. Something like 160,000 white, middle-class resident mainly in the South East of England get to decide our next Prime Minister. We the working and voting public have no say.

This country is badly broken.

Pete,

Its exactly the same here. I think what happened is that Regal went wacko doing new builds and at least over here they were converting all projectors to Laser. Then COVID hit. They never recovered from all that. The odd thing is that they built a new 14 screen Plex near where I used to live in Utah. And they built it a stones throw from where a 14 screen Cineplex went bust. AMC did similar, but they also sold stock. Their stock was very high for 6 to 9 months till COVID. Also, how come the theater chains don't have their own.streaming channels. Seems they missed the boat on that.