Yahoo Finance Cinema industry braced for further closures as Cineworld warns over 45,000 job losses
The beleaguered cinema industry has been plunged further into crisis as Cineworld cut up to 45,000 jobs and mothballed all its UK and US sites, prompting rivals to warn a swathe of screens across Britain could go dark forever.
Cineworld – the biggest cinema chain in the UK and second largest in the world – will close 127 Cineworld and Picturehouse theatres in the UK from this Thursday after the latest James Bond blockbuster was delayed until next year. It will also shut 536 Regal theatres in the US.
Meanwhile, Odeon unveiled plans to cut back opening hours at screens across Britain and the boss of Vue warned that all options are on the table in a battle to save cash amid growing desperation over winter demand.
Cineworld intends to reopen the venues after the worst of Covid has passed, but did not give a date on when this might happen.
An estimated 5,500 jobs are at risk in the UK. In a memo to staff, Cineworld bosses said that a new subsidy scheme for part-time workers is not enough to prevent mass lay-offs. Cineworld’s shares crashed as much as 60pc following the announcement and later closed down 36pc, or 14.3p, at 25.2p.
The decision comes after film studio MGM once again delayed the release of the forthcoming James Bond film No Time To Die, pushing the date back from November to next year.
Experts warned that further cinema chains are likely to follow Cineworld’s lead as a second wave of Covid hits release schedules. It is feared many sites could close forever.
Nigel Parson, an analyst at Canaccord Genuity, said more film slate postponements and cinema closures are now inevitable. Tim Richards, chief executive of Vue, said that his firm will try to avoid redundancies but cannot rule out closures and job losses.
He said: “We have tried to keep all of our staff on board and we continue to do our best to keep everything open.
“But right now we are being forced to look at all possible options available to us, so we have not hit a landing yet and we haven’t discounted anything yet.”
Meanwhile, Odeon, which operates 120 cinemas in the UK and Ireland, has written to members of its Limitless loyalty programme to say a quarter of its cinemas will only open on weekends from Friday. Staff at these sites will now be placed on shorter working hours.
Analysts at Citi said: “It seems there is a vicious circle – with concerns over audience levels, the studios are unwilling to release their strongest content. And without decent content, audience levels are unlikely to return.”
Cineworld’s plight has been made worse by its high levels of debt, which reached $8.2bn (£6.3bn) at the end of June, against net assets of $1.3bn. The chain loaded up on debt to complete the £3.6bn takeover of US chain Regal in 2017. Its market value is just £346m.
Bosses said the company is continuing to assess its liquidity options, with all possibilities under consideration.
Cineworld is now facing a major restructuring of its debt pile, after its lenders drafted in advisers from FTI Consulting to negotiate with the cinema chain, Sky News reported.
One option likely to be proposed by Cineworld’s banks is a company voluntary arrangement, which could mean some venues are closed forever.
Workers at the chain reacted angrily to the closures, accusing the business of “abhorrent” behaviour towards staff.
Mooky Greidinger, chief executive of Cineworld, said the decision had not been one “we made lightly”.
