Shares in Cineworld have plunged after it confirmed it will temporarily close all of its cinemas in the UK and US as it struggles with the pandemic-induced lack of new films to draw in audiences, including the twice-delayed new James Bond instalment.
Some 45,000 employees will be out of work because of the closures, including about 5,500 staff in the UK and 20,000 in the US, as well as contractors such as cleaners and security workers. Staff were informed on Sunday.
The world’s second biggest cinema operator said its 127 Cineworld and Picturehouse UK cinemas its 536 Regal cinemas in the US would shut from Thursday.
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Cineworld’s share price plunged at the start of trading on Monday by as much as 60% to a record low of 15.6p per share. That was below the levels reached during UK and US lockdowns from March. The sell-off eased slightly after initial trading, with shares down 27% at 29p.
The cinema industry has been caught between coronavirus pandemic safety measures in some of the world’s biggest markets, which have limited audience numbers, and the delay of key films that might tempt those audiences back.
The latest film in the Bond franchise, No Time to Die, had been rescheduled to November, but this week was delayed until 2 April 2021, a year later than initially planned. The industry was also rattled by DIsney’s decision to release its live-action Mulan remake straight to its streaming service, bypassing cinemas.
Cineworld said it would monitor the situation closely as it waited for distributors to plan the launch of the blockbusters that account for a large proportion of multiplex sales.
Mooky Greidinger, the Cineworld chief executive and a member of the family that owns more than a quarter of the company’s shares, said: “This is not a decision we made lightly, and we did everything in our power to support safe and sustainable reopenings in all of our markets – including meeting, and often exceeding, local health and safety guidelines in our theatres and working constructively with regulators and industry bodies to restore public confidence in our industry.
“Cineworld will continue to monitor the situation closely and will communicate any future plans to resume operations in these markets at the appropriate time, when key markets have more concrete guidance on their reopening status and, in turn, studios are able to bring their pipeline of major releases back to the big screen.”
The dearth of tentpole releases during the pandemic has dealt a heavy blow to Cineworld’s finances, with all sites across the group closed between mid-March and late June. Cineworld lost $1.58bn (£1.2bn) in the first half of 2020 as revenues slumped by two-thirds to $712m. Some 113 Cineworld cinemas are still running in eastern Europe, although 11 cinemas in Israel are also closed.
The Labour party has criticised the UK government for not offering specific help to the cinema industry and other sectors that are heavily affected by restrictions, arguing that they will be viable when large gatherings are allowed again.
The government will this month reduce the amount of financial support available to support employment, with the coronavirus job retention scheme for furloughed workers making way for a less generous job support scheme.