Cinemas around the world are in trouble. I know, I know, this is shocking, right? Well, the truth is that with each passing quarter, the financial disclosures from the large cinema chains are getting more and more grim. We have AMC talking about how the company needs to finish 2020 strong or face serious financial consequences (aka going out of business). And now, with Cineworld (parent company of Regal Cinemas and the #2 theater chain in the world), we’re beginning to see that the losses are massive, but there may just be hope for the future.
Speaking to investors (via THR), CEO Moshe Greidinger talked about the current financial report for Cineworld, with an after-tax loss of $1.58 billion over the past six month period. Yes, that should raise some eyebrows, as that is an absolutely ridiculous loss for the company. But with theaters beginning to reopen and only a couple of major markets left in the US to go (Los Angeles and New York), the CEO believes the worst is behind them. Of course, he is quick to say that nothing is certain.
“There can be no certainty as to the future impact of COVID-19 on the group,” said the CEO. “If governments were to strengthen restrictions on social gathering, which may therefore oblige us to close our estate again or further push back movie releases, it would have a negative impact on our financial performance and likely require the need to raise additional liquidity.”
Well, while it looks like there are no major reclosures on the horizon (at least not with President Trump in power in the US), studios have already begun to push films from fall 2020 to 2021. This is definitely not what Cineworld wants, and it may only be the beginning. So, even with theaters open, we may see revenues continue to struggle due to the lack of product.
So, does this mean Cineworld, and thus Regal Cinemas, is going out of business if COVID-19 surges and theaters are forced to close again? Well, not necessarily. Though the company will need to secure more money, Greidinger doesn’t foresee this as a problem.
“The expectation of the directors is that waivers will be obtained based on the current status of the negotiations with the group’s lenders and therefore the interim financial statements have been prepared on a going concern basis,” he explained. Basically, if Cineworld needs it, the additional money will be there.
Again, it can’t be stressed enough that these financial disclosures are always positioned in a way that makes the company look the best. The last thing Cineworld wants to do is come out and say, “We’re totally fucked, guys. Like for real, for real.” So, honestly, the truth is that times are tough for Cineworld, as is the case with just about every major theater chain around the world, but the CEO doesn’t think this is an existential threat. At least, not at this moment.
But hey, no one knows what the future holds, as this pandemic has been an unprecedented, devastating roadblock for theaters, who were already struggling. So, it’s hard to say what’s going to happen for the rest of 2020, let alone 2021 and beyond.
