Delaying James Bond Means Even More Misery for Movie Theaters

(Bloomberg) -- The bad news is flowing without relent in the film industry, where a major theater chain is poised to close movie houses in the U.S. and U.K. and the next James Bond adventure has been pushed into April because of the global pandemic.

Cineworld Group Plc is within days of shuttering its U.K. theaters and the operations of its Regal Entertainment Group in the U.S., a person familiar with the matter said Sunday. Metro-Goldwyn-Mayer on Friday canceled the November debut -- already delayed from last April -- of the Bond movie “No Time to Die,” one of the few big films left on the 2020 release calendar.

“It’s turned into a nightmare for the theatrical industry, especially cinemas, many of which are on the brink of shuttering once again,” said Jeff Bock, senior media analyst for Exhibitor Relations Co. “The only thing worse than opening theaters before the marketplace was ready, was opening them and then closing again.”

London-listed Cineworld could suspend operations at its U.K. venues -- at a cost of 5,500 jobs -- as soon as this week, and executives were writing to Prime Minister Boris Johnson this weekend to warn that delays to blockbuster releases have made the industry unviable, the person said. Cineworld’s plan to close its U.S. locations isn’t definite and a final decision isn’t likely to be made until Monday or Tuesday.

Fear of catching Covid-19, social-distancing rules, and a continued shutdown in New York and Los Angeles are all keeping fans away. The grim reality for theaters prompted S&P Global Ratings to cut its rating for AMC Entertainment Holdings Inc. last week, saying that a default may be looming.

“Cinemas and audiences are presently at the mercy of natural and political forces largely beyond their control,” said Shawn Robbins, chief analyst at BoxOffice Media LLC.

With no new big films to show, smaller exhibitors are cutting hours to reduce costs. In the final weekend of September, the number of theaters operating in North America fell by about 100, and about 56% of all North American theaters are currently open, according to researcher Comscore Inc. While AMC, the largest operator, says it expects to be 80% reopened by mid-month, any increase could be offset by the possible closures of Cineworld’s U.S. sites.

But with few fans willing to go to the theaters, Hollywood studios are unwilling to release their big 2020 films. Before MGM’s decision, numerous other major pictures -- including Walt Disney Co.’s “Black Widow” -- had been pushed back, leaving cinemas in an awkward place: allowed to operate, but with nothing to show.

“When the content creators decide to move their films, it’s really tough for exhibitors to operate in the traditional manner,” said Paul Dergarabedian, senior media analyst of Comscore.

The performance of “Tenet,” the only major summer-movie release, underscores the dilemma. Released Sept. 3 in the U.S., the $200 million production has been No. 1 at the box office for four straight weeks, yet has generated just a little over $40 million in domestic ticket sales. Its box office sales fell 21% this weekend from the previous weekend, making only $2.7 million in North America. To date, the film has made $307 million in global box office sales, a spokeswoman for Warner Bros said by email.

‘Huge Slate’

The drought caught theater operators by surprise. Chief executive officers from the largest companies, including AMC, touted their improving prospects with the imminent release of “Tenet” and other big features. Then Disney made the surprise announcement that it would debut the live-action remake of “Mulan” on its streaming service Disney+ for $30.

The 2020 calendar still has a few big films on tap. Disney will release the animated feature “Soul” on Nov. 20, and Comcast Corp.’s Universal Pictures plans to release “The Croods: A New Age,” a few days later. AT&T Inc.’s Warner Bros. has two big December releases: “Dune” and “Wonder Woman 1984.”

But those dates could slip if consumers remain frozen by fears of Covid-19 or if theater reopening plans get set back. And even with their auditoriums open, exhibitors will continue to lose money if too many seats go unsold. S&P warned that AMC’s losses could accelerate now that it’s open again.

“Given our expectations for a high rate of cash burn, we believe the company will run out of liquidity within the next six months unless it is able to raise additional capital, which we view as unlikely, or attendance levels materially improve,” S&P said.

©2020 Bloomberg L.P.