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MAGGIE PAGANO: Blockbuster debt drama at Cineworld sets a worrying trend for the cinema industry
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When was the last time you went to the cinema? If you did go in the last year, then you are in a minority and it was most likely to see Top Gun: Maverick, one of the top ten highest grossing films of all time, taking £1.5bn at the box office.
Yet despite the release of blockbusters like last year’s Bond movie, No Time to Die, Maverick and Thor: Love And Thunder, visits to the cinema have crashed since the pandemic.
Last weekend, there were 50 per cent fewer visitors to the UK’s 800 or so cinemas. The weekend before that – what would normally be considered prime holiday leisure time – the numbers were 53 per cent down.
Even the world’s second-biggest cinema chain, Cineworld, is not betting on a revival in visitors any time soon
Year on year, audience numbers are a staggering 75 per cent lower. The picture in the US is no brighter. Year on year, visits to the cinema are 68 per cent lower. More worryingly, the outlook is unlikely to lighten up over the coming months until Black Panther: Wakanda Forever is released in November and Avatar: The Way Of Water arrives on the big screen in December.
Even the world’s second-biggest cinema chain, Cineworld, is not betting on a revival in visitors any time soon. Its audiences are down this year by around a third compared with the same period in 2019. Cineworld also warns there are not enough new releases to keep cinema goers coming, partly because so many production schedules were put on hold during lockdown.
The cinema chain is in such poor shape that it is considering filing for Chapter 11 bankruptcy in the US as well as insolvency in the UK. For now, the 5,000 jobs at the 128 UK cinemas – which includes the Picturehouse chain – are safe.
In contrast, US cinemas are starting to close. Cineworld’s boss and biggest shareholder, Mooky Greidinger, is having to eat humble pie after his mad dash for expansion over the last few years. It was a costly spending spree, topped by buying US giant Regal for £3bn two years before the pandemic, and then aborting Canada’s Cineplex deal in February 2020 just as the pandemic arrived.
There has been much coverage of the eight-day walkout called by Unite at the port of Felixstowe, prompting fears of massive supply chain disruptions and empty shelves in supermarkets
As a penalty, Cineworld paid another £850m fee taking debt to £7.5bn. There’s no easy way out. Greidinger and his bankers are working on a rescue plan which could involve swapping debt for equity, raising new capital or going private.
Or going bust. But if investors agree to a rescue package, they may want board changes, possibly even Greidinger’s head as the price for his over-ambition. Whatever form the restructuring takes, the meatier question for investors is whether they believe the age of the cinema is dying out or that we are still in a post-lockdown hiatus. It’s a tough call.
The brilliance of dramas being created by streaming services such as Netflix makes it far too comfortable – and cheaper – for many to not budge from the living room. Cinemas will need to re-invent themselves if they are to wean audiences off the sofa.
Dockers’ strike
There has been much coverage of the eight-day walkout called by Unite at the port of Felixstowe, prompting fears of massive supply chain disruptions and empty shelves in supermarkets.
But it may just be that Unite has overplayed its hand, and was a little quick with the conga dancing on the picket line. Although Felixstowe is the UK’s second biggest port, handling nearly half of all imported freight, most of the goods are not ‘just in time’ products but most are scheduled well in advance.
This means there shouldn’t be too much disruption. Reading between the lines, the two sides are not that far apart. Unite wants a pay deal to cover inflation of up to 10 per cent. The port operator, Hutchison Ports, has offered 7 per cent with a £500 one-off payment with another deal due to be negotiated again in the new year. That sounds as though there is room to manoeuvre.
Bad Apples
A group of Apple employees are resisting the company’s latest plans to return to the office for at least three days a week. It’s a bitter irony. Apple has done more than any other technology group to allow workers to not only work from home but WFA (work from anywhere). Watching how Tim Cook gets his bad apples back in a row is going to be fascinating.