Cineworld Group plc, the second-largest movie theater chain in the world, which owns Regal Cinemas and 505 theaters in the United States, is planning to file for bankruptcy.
The London-based corporation claims low attendance since the reopening of theaters in 2021, which did not match corporate expectations, and a lack of film production as the causes for its financial loss.
According to a report by The Hollywood Reporter, Cineworld Group had a net debt of $5 billion by the end of 2021.
Beginning 2022 with high performances from films such as ‘Top Gun: Maverick,’ enthusiasm is projected to wane towards the end of the year.
This follows a forecasted decline in admissions ‘due to a restricted film slate that is likely to remain through November 2022’ and is expected to severely impact trade and the group’s liquidity in the near future, according to the business.
After the pandemic severely impacted the firm, the chain nearly filed for bankruptcy in 2020 before seeking assistance from creditors.
The theater chain’s success in 2021, which resulted in a 123% rise in box office revenue from 2020, did not continue into 2022. Despite the rise, the $627 million in revenue was a negligible proportion of admissions prior to the epidemic.
Due of the pandemic, Cineworld placed around 5,500 employees on unpaid leave and closed all of its locations globally.
The total number of admissions to theaters in 2021 increased from 30 million in 2020 to 56 million in 2021. In 2019, there were 177 million admissions.
As of August 19, Cineworld’s stock price, which started on March 4 at $1.90, has fallen to as low as 11 cents. This represents a 94% reduction.
In the fall of 2019, shortly prior to the pandemic, the stock price peaked at $8.40. The almost three-year fall is a 98 percent loss.
68 percent of the company’s worldwide revenue comes from the United States, compared to 19 percent from the United Kingdom and Ireland and 13 percent from the rest of the globe. Major films, such as Avatar 2 and Avatar 3, which were expected to be in theaters by now but have not yet debuted, have not yet reached box offices.
Long-awaited action thrillers like the newest James Bond film and Top Gun Maverick were also significantly delayed.
Top Gun Maverick was released in May of this year, about two years after its original release date of June 2020.
Streaming viewership is on the rise, which may also be a role in the loss of Cineworld’s admissions income.
In July, streaming services such as Netflix, Hulu, and Prime Video eclipsed cable television for the first time ever.
Streaming has surpassed cable for the first time in US watching habits, capturing more than a third of American viewers.
According to a press release by Nielsen, streaming services garnered 34.8% of total US television viewership, while cable managed 34.4%.
The viewership climbed by 23% from the previous year, but cable subscriptions declined by 9%.
Despite Netflix’s recent struggles, which have resulted in a million subscription losses this year alone, the company increased its market share by eight percent.
Its performance was bolstered by the roughly 18 billion minutes of Stranger Things viewed by viewers, who also viewed approximately 11 billion minutes of Virgin River and The Umbrella Academy combined.
Some providers, such as WarnerBros Dicovery’s soon-to-be-launched HBO Max-Discover+ combo, have made the choice not to promote blockbuster releases through streaming.
The recent move by HBO’s CEO David Zaslav to fire off 70 staff is part of the company’s “strategic transition” toward a more theatrical focus.
The business recently scrapped the release of the $90 million feature ‘Batgirl,’ as well as ‘Wonder Twins’ and ‘Scoob! : Holiday Haunt,’ due to this new policy.
The firm, according to Zaslav, “will be on theatrical, and when we bring theatrical pictures to HBO Max, we discover that they have significantly higher value.”