Reuters
- Cineworld is indefinitely shutting all of its UK and US cinemas, Sky News said Monday.
- The Wall Street Journal reported Sunday Cineworld was considering closing all of its Regal Entertainment Group movie theaters in the US after large-scale releases were postponed.
- Cineworld will be shutting 536 Regal theaters in the US and 127 Cineworld and Picturehouse theaters in the UK from this Thursday.
- Sky News said the decision is expected to result in 45,000 job losses, with 6,000 in the UK.
- The company’s London-listed stock was last down almost 40% from Friday’s close.
- Visit Business Insider’s homepage for more stories.
Shares in Cineworld lost over a third of their value on Monday after the chain announced it is indefinitely shutting all its UK and US cinemas due to COVID-19.
Sky News reported Monday Cineworld will cut tens and thousands of jobs as early as Thursday, as the company plans to close 536 Regal theaters in the US and 127 Cineworld and Picturehouse theaters in the UK.
The Wall Street Journal reported Sunday Cineworld Group is considering closing all of its Regal Entertainment Group movie theaters in the US after several large-scale releases were delayed.
In London, Cineworld’s shares were down 38% from Friday’s close at around £24.47 ($31) on the FTSE MidCap index as of 10:56 a.m. ET.
According to Sky News, the decision affects 45,0000 employees and 6,000 workers in the UK. Sky News said the firm hopes to rehire the employees when the hibernation ends.
"We were bleeding much bigger amounts when we are open than when we are closed - we are like a grocery shop with no food," Cineworld's CEO Mooky Greidinger told Sky News.
The decision is prompted by the delay of several high-profile movie releases. Last week MGM scrapped plans to bring Daniel Craig's final James Bond movie "No Time to Die" to cinemas in November, pushing this back to April next year.
Other famous franchises have also opted to delay some of their upcoming titles, such as Marvel movie Black Widow and the latest sequel of Universal's Fast and Furious, which have also been shifted to spring 2021.
The release of Christopher Nolan's summer blockbuster "Tenet" was meant to be a shot in the arm for the industry after months of hibernation following widespread global coronavirus lockdowns.
The company said: "In turn, without these new releases, Cineworld cannot provide customers in both the US and the UK - the company's primary markets - with the breadth of strong commercial films necessary for them to consider coming back to theaters against the backdrop of COVID-19."
The company faced a backlash over the weekend, as employees said they found out about the firm's plan to shut theaters, which was unconfirmed at that stage, via social media.
"The delay to the next James Bond film was the straw that broke the camel's back, but Cineworld was a little bloated before the pandemic struck," Neil Wilson, chief market analyst at Markets.com said. "Net debt of over $8bn – thanks mainly to two large leveraged acquisitions in recent years - and a market cap of $540m by the close on Friday left Cineworld in a difficult position to refinance if punters were not coming through the doors."
Wilson added: "Without the Bond franchise to draw people in there was little option – closing its theatres at least gives it a chance to preserve cash and wait for things to improve."
The movie industry has suffered ever since COVID-19 lockdowns began in March. With the UK facing a second resurgence of COVID-19 cases, speculation is mounting whether the country is headed for another coronavirus lockdown which would further weigh on an industry already ravaged by the pandemic.
Dave Portnoy, a former sports punter turned investor and the face of the retail investing boom told Business Insider in June he would never invest in movie theaters at the moment.
"Movies centers are one that I'm a little bit [wary of] because obviously that's severely hit by COVID and that's something that I think people can access without going to a movie theater," Portnoy said. "That is one very depressed industry that I'm reluctant to buy," he added.
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