The second-largest movie theatre chain in the world is going to declare bankruptcy have caused shares of Cineworld to drop more than 60%.
The business, which also controls the UK’s Picturehouse franchise, is battling with $5 billion in debt.
Cineworld, like other movie theatre businesses, suffered greatly from the pandemic.
Recently, Cineworld claimed that post-Covid consumer numbers were lower than anticipated and attributed this to “restricted” movie releases.
The Wall Street Journal revealed that Cineworld is getting ready to declare bankruptcy, which caused its stock price to plummet.
After Covid limitations, the company had hoped that blockbusters like the most recent Bond movie, Top Gun: Maverick, and Thor: Love And Thunder would bring moviegoers back.
However, it stated earlier this week: “Recent admission levels have been below expectations, notwithstanding a modest resurgence of demand since reopening in April 2021.
The group’s liquidity situation and trading are projected to suffer in the short term as a result of these lower admittance levels, which are attributable to a constrained film schedule that is anticipated to last through November 2022.
Over 750 locations house 9,189 screens under the Cineworld banner.
More than 28,000 people are employed by it, which conducts business in 10 nations including the US, Poland, Israel, the UK, and the US.
In order to assist pay off its large debts, Susannah Streeter, senior financial and markets analyst at Hargreaves Lansdown, claimed that Cineworld had “failed to lure back enough moviegoers.”
“Hopes had been raised that first spies, then superheroes, then fighter pilots would prove to be the magic bullets for the corporation, but there just haven’t been enough blockbusters coming through,” she added.
The news sources , however, was informed by Peter Williams, a former non-executive director at Cineworld, that he believed movie ticket prices were “too cheap.”
“I’ve always thought the ticket cost, or the headline ticket cost, is almost too low. It’s still a rather affordable night out, I guess,” he replied.
Even though Cineworld will probably undergo a significant reorganisation, he continued, he thought it will eventually become “a profitable business.”
“Even though it’s a large industry, people still want to go out and see a movie.”
During the height of the pandemic, the film industry was one of the most affected, with many theatres closing for extended periods of time or running at reduced capacity.
Due to the temporary closure of some of its theatres and the postponement of some blockbuster releases by film studios, Cineworld reported a significant loss for the first six months of 2020.
The movie industry behemoth issued a warning in September 2020 that it might need to gather additional funds in the event that Covid-19-related film delays or additional coronavirus restrictions arise.
At a time when theatres are scrambling to recover from their Covid losses, Jurassic World Dominion, Top Gun: Maverick, Doctor Strange, Elvis, and Minions: The Rise of Gru are some of the big releases that have kept viewers going through the doors.
One of the biggest box office successes of the year thus far is Jurassic World Dominion, but Cineworld’s owner claims that it hasn’t been enough to keep the theatre chain afloat. Hollywood has reportedly published fewer blockbuster movies than would have been expected in a summer before the outbreak, according to those in charge of admissions. Comparing the same period this year to the same period in 2019, total box office receipts are down 32%, or about a third.
Not all factors are related to the quantity of releases. For many years, streaming services have been a danger to movie theatres, but recently, the competition for content has increased.
The Gray Man and Red Notice, two movies made by Netflix at a cost of hundreds of millions of pounds, were released directly into customers’ homes.
As a result, theatres have had to work harder to persuade patrons that getting out of bed to go to the movies is worthwhile.
Avatar and Black Panther sequels will both be published between now and Christmas, which gives some promise for the autumn and winter release calendar.
But the fact that many other significant titles are being streamed directly is telling. The Lion King and Aladdin, two successful live-action remakes from Disney, were both released in 2019. However, Pinocchio, their upcoming big film, will air exclusively on Disney+.
