Yesterday, movie theater giant Cineworld announced that beginning October 8th, it will be indefinitely closing down all cinemas in the US and UK, putting 45,000 jobs at risk. Shares of Cineworld closed down 25% today after the news, leaving shares down nearly 85% in the past 5 months.
The decision comes after numerous highly-anticipated upcoming movies decided to postpone their releases. The latest James Bond film “No Time to Die” was initially due in April 2020, then postponed to November and now it has been rescheduled for release on April 2nd 2021. The Fast & Furious sequel F9 is another movie which has been postponed until May 2021.
With a Net Debt of $8.2B after two highly leveraged acquisitions, roughly $150m in cash at the end of August, and an undrawn $110m credit facility, the company is running out of ammunition. The futures of major movie theater owners such as AMC and Cineworld are extremely uncertain as their businesses are subject to the path of the virus, the choices of government officials, and the whims of movie studios. This is all while their chief competition, streaming services like Netflix and Disney+, are growing rapidly.