Cineworld Group to file bankruptcy after poor attendance, affecting 505 US theatres

The world’s third-largest movie theatre chain Cineworld Group plc, which owns 505 Regal theatres across the country, is preparing to file for bankruptcy in the US. 

The United Kingdom-based company said it’s faced a loss of income due to poor attendance since reopening theatres in 2021 and there not being enough films produced. 

Cineworld Group had a net debt of $5 billion at the end of 2021, according to a report by The Hollywood Reporter. 

After struggling financially since reopening theatres in 2021, strong performances from movies like ‘Top Gun: Maverick’ opened 2022 with box office success. Despite this, momentum is expected to stall toward the end the year.

This follows with a predicted drop in admission ‘due to a limited film slate that is anticipated to continue until November 2022 and (is) expected to negatively impact trading and the group’s liquidity in the near term,’ the company said.

The chain almost filed bankruptcy in 2020 before receiving help from creditors after the pandemic hit the company hard. 

Cineworld’s stock, which opened at $1.90 on March 4, fell to as low 11 cents as of August 19. This is a decline of 94 percent

The movie theatre chain cites low attendance and postponed movies as factors in the company’s loss of revenue. Movies like Top Gun: Maverick (pictured) came out this summer after being put back by nearly two years

Success at Regal from 2021, which saw the theatre chain receive an increase of 123 percent in box office revenue from 2020, did not carry over into 2022. Despite the increase, the $627 million in revenue represented only a small percentage of admissions before the pandemic.

Because of the pandemic, Cineworld placed approximately 5,500 staff on furlough while closing all of its branches worldwide. 

Total admissions at the theatres in 2021 went up to 56 million in 2021, an increase from 30 million in 2020. In 2019, admissions were at 177 million.

Cineworld’s stock pricing, which opened on March 4 at $1.90, has dropped to as low as 11 cents as of August 19. This is a decline of 94 percent.

In the fall of 2019, just before the pandemic, the stock sat at a previous high of $8.40. The near three-year decline is a drop of 98 percent. 

Of the company’s total worldwide income, the US represents 68 percent as compared to 19 percent from the UK and Ireland and 13 percent from the rest of the world. 

Major films which had been promised to have been released by now such as Avatar 2 and Avatar 3, have still not hit box offices.

Because of the pandemic, Cineworld placed approximately 5,500 staff on furlough while closing all of its branches worldwide. This affected all of its 751 branches

And long-anticipated action thrillers such as the latest James Bond film and Top Gun Maverick were also seriously delayed.

Top Gun Maverick was released in May of this year after an almost two-year delay from June 2020.

Another possible factor leading to the decline of Cineworld’s admission revenues is a rise of streaming viewership.

Shows on services like Netflix, Hulu and Prime Video surpassed viewership of cable TV for the first time ever in July.

The record marks the first time that streaming has overtaken cable in US viewing habits, capturing over a third of American eyeballs.

Streaming services attracted 34.8 percent of total US television viewing, while cable managed 34.4 percent, according to a release by ratings company Nielsen.

Viewership increased by 23 percent from the previous year while cable decreased by 9 percent.

Services like Netflix, despite its recent woes hemorrhaging subscribers – shedding a million subscribers this year alone – still gained a market share of eight percent.

Its performance was boosted by the nearly 18 billion minutes of Stranger Things that viewers watched, complemented by the nearly 11 billion minutes of combined viewing of Virgin River and The Umbrella Academy.

What may assist movie theatres are the decisions being made by some services, like WarnerBros Dicovery’s soon-to-be HBO Max-Discover+ combination, to not push blockbuster releases through streaming.

A recent decision by CEO David Zaslav to lay off 70 of HBO’s employees is part of a ‘strategic shift’ for the company to have a more theatrical focus.

 Because of this new strategy, the company recently canceled the released of the $90 million film ‘Batgirl’ in addition to ‘Wonder Twins’ and ‘Scoob!: Holiday Haunt.’

Zaslav added that the company ‘will be on theatrical, and when we bring the theatrical films to HBO Max, we find they have substantially more value.’