On the brink of bankruptcy, movie theaters struggle to withstand COVID-19 losses
Many films have been delayed or released for streaming during the pandemic.
By Arielle Mitropoulos, Stephanie Wash and Mary Kathryn Burke
ABC News – Americans have been going to the movies for more than a century, but for the first time in recent history, cinemas will be shuttered for the foreseeable future.
The closings have delivered a crushing effect on Hollywood, as highly-anticipated movies such as James Bond’s “No Time to Die,” “Mulan” and “Wonder Woman 1984” were forced to push back their release dates due to concerns over the coronavirus.
Since theaters closed their doors in March, their shares have plunged precipitously.
Shares of AMC Entertainment Holdings Inc, the American movie theater chain, were were trading AS HIGH AS $15.26 a share on April 22, 2019. Shares have since tumbled to $3.23 as the chain, like its peers, closed theaters on March 17. Thousands of employees have been furloughed, and the salaries of senior executives have been cut.
However, despite hovering on the brink of bankruptcy, merely a week ago, the movie theater chain announced plans to raise $500 million, which would permit it to survive into the fall. AMC operates around 1,000 theaters worldwide, with 630 of them in the U.S, employing 25,000 workers.
In its presentation to investors, AMC asserted, “We cannot predict when or if our business will return to normal levels,” or if other closures will be warranted after reopening if the rate of infection increases again. In addition, social distancing measures would restrict the number of people allowed in a theater at any given time.
Cinemark, a rival of AMC, has also seen its shares plunge, and 17,500 hourly theater employees have been laid off.
The future of movie theaters, in the age of coronavirus, remains uncertain. The waters are uncharted and it is clear that a new normal model must be constructed.
Mark Malinowski, vice president of Global Marketing for Showcase Cinemas, told ABC News that he and his team have been meeting every day to plan for an “eventual reopening,” with a plan to accommodate customers in a vastly “different world.”
The experience at the cinema will no longer be simple “bringing people to see a movie.” Of utmost importance, Malinowski explained, will be safety and protecting both customers and employees.
He said seating would look like a “checkerboard pattern,” so that people will not sit next to each other, but capacity in the theater will be at about 50%. Further, said Malinowski, there will be protective measures such as glass protection, antimicrobial surfaces and sneeze guards to minimize direct contact between employees and customers.
Malinowski added that Showcase is looking into technology, modeled after techniques developed in China, South Korea and Singapore, such as a kiosk that can scan a crowd and determine temperatures.
In an age of increasing digital streaming, Malinowski remains optimistic about the future of movie theaters.
“We think people need to go to the movies — and I think even more now that we’re cooped up in the house,” he said. “People are going to want to see them. So we just have to do it in a way that is, you know, putting safety first.”
Working in coordination with local government, he believes theaters will reopen gradually, “based on what’s happening in those specific markets or communities.”
In a statement to ABC News, a Cinemark representative wrote, “Cinemark is currently working toward a midsummer opening date, contingent upon health and safety regulations, as well as availability of studio content. The first release currently scheduled is Christopher Nolan’s TENET set for July 17.”
“It is important to note that the theatrical exhibition’s return to ‘normalcy’ may span multiple months, driven by staggered theatre openings due to government limits, reduced operating hours, lingering social distancing and a ramp up of consumer comfort with public gatherings,” the statement added.
Several movie theater chains are still unsure how they will move forward. In a statement provided to ABC News, a representative for Regal Cinemas wrote that the chain has still “not made a decision when to reopen,” adding that before any measures are taken to lift restrictions, the company must ensure the safety of all guests and employees.
The impact of the coronavirus crisis is only made worse by the fierce competition from the world of online streaming.
Streaming services such as Netflix have greatly benefited from the COVID-19 pandemic, with its membership surging as a result of stay-at-home confinement across the country. According to its first quarterly report to shareholders of the year, 15.77 new paid subscribers new paid subscribers since Jan. 1, for a total subscriber count of over 182 million globally.
Its stock price wavered at around $252 six months ago, ultimately closing at a full closing price of $433 on Monday.
However, Netflix believes that this growth is potentially only a temporary spike, and although it projects an additional 7.5 million paid subscribers in the second quarter, this number is “mostly guesswork,” the company said in a letter to investors, given the uncertainty surrounding consumer behavior when subscribers are no longer confined to their homes.
In the age of the coronavirus, the future of movie theaters is fraught with uncertainties.
Top executives agree that it is critical for theaters to demonstrate concerted efforts of cleanliness in order to make both customers and employees feel safe. However, such measures will greatly increase costs, and when juxtaposed with social distancing precautions, it is uncertain how profitable they will be.
ABC News reached out to Marcus Theaters and Harkins Theaters for comment, but did not hear back. AMC, IPIC and Alamo Drafthouse declined to comment.