Faced with a dismal box office, movie theaters are struggling under the burden of debt

The box office of “Top Gun: Maverick” now seems like a thing of the past for the world’s biggest cinema operators.

After several films, including the “Top Gun” sequel, “Minions: The Rise of Gru” and “Thor: Love and Thunder” brought waves of audiences back to cinemas, the film industry is facing a serious dry spell.

Since Sony Pictures’ Brad Pitt actioner Bullet Train premiered earlier this month and grossed $30 million in its opening weekend, there hasn’t been any realistic potential for success in Hollywood. In fact, there are a few valuable potential hits in the release schedule for Warner Bros. -until its debut on October 21. “Black Adam”, DC’s superhero movie starring Dwayne Johnson.

Ticket revenue drought has put a lot of pressure on some of the biggest movie theater chains. This latest lull was caused by a number of factors, including production delays caused by COVID-19, a bottleneck at visual effects companies and the industry becoming more popular as more films move to streaming services instead of theaters.

Regal owner Cineworld, the world’s second-largest theater operator, said this week that the dim outlook had forced it to look for options to ease its massive debt burden. The company said it was in “active discussions” with stakeholders to explore options for finding liquidity or restructuring the balance sheet. The company said it had $8.9 billion in net debt as of Dec. 31, which includes $4 billion in lease liabilities.

“Despite a gradual recovery in demand since the April 2021 reopening, recent access levels have been lower than expected,” the British company said in a statement on Wednesday. “These lower admission levels are due to a limited film slate expected to continue until November 2022, which is expected to have a negative impact on trading and the Group’s liquidity position in the near term.”

Cineworld shares fell almost 60% on Wednesday. Cineworld CEO Mooky Greidinger was unavailable for comment.

Vue International, another British theater company headquartered in London, said last month the lenders would take it over in connection with the restructuring.

AMC Theaters CEO Adam Aron tried to reassure investors Thursday by weighing in on the struggles of rival Cineworld. Leawood, Kan.-based AMC, the world’s largest theater circuit, narrowly avoided bankruptcy in the wake of the COVID-19 pandemic, which shuttered theaters around the world. A group of enthusiastic private investors helped save the company stockpiling and defending it online, often through humorous memes, a practice practiced by Aron.

In a written statement, Aron acknowledged the weak box office performance that was expected, but said he remained “quite optimistic” about the company’s theater recovery. He also touted an upcoming new security called AMC Preferred Equity — or APE, in a nod to the retailer’s nickname for himself — which will begin trading on the New York Stock Exchange on Monday.

“AMC ended the second quarter of 2022 with more than $1 billion in liquidity thanks to significant cash raised in calendar years 2020 and 2021,” Aron said. “As such, we remain confident about AMC’s future.”

AMC stock fell $2.07, or 10%, to $19.29. Its debt is approximately $5.4 billion, according to a regulatory filing.

This is not the first time that Aron has publicly responded to a setback from his biggest competitor.

In December, when a Canadian court ordered Cineworld to pay about $1 billion in damages for undoing its merger with Canadian chain Cineplex, Aron tweeted a picture of the cash. “Anything that disrupts or undermines our biggest competitor is an opportunity for AMC,” he said in a tweet.

The financial struggles of major theater chains have raised specters that the long-predicted shrinking of movie theaters in the United States and elsewhere in the world only delayed the box office in the first half of the summer.

Since the start of the prime summer movie season, movie ticket sales have totaled $3.2 billion, still down about 20% from the same period in 2019, according to data company Comscore. August has been brutal, with revenue for the month down 43% compared to the same month three years ago, before the pandemic.

This weekend sees the release of Universal Pictures’ “Beast,” starring Idris Elba, and “Dragon Ball Super: Super Hero,” based on the venerable anime series. Neither is expected to do much businessthough a “Dragon Ball Super” win over the weekend would be a real win for its distributor, Crunchyroll.

Theaters and studios are waiting for the hope that a handful of upcoming releases could become breakout hits. They include “The Woman King,” TriStar’s historical action drama starring Viola Davis; “Don’t Worry Darling,” Warner Bros. -thriller directed by Olivia Wilde; and “Bros,” Universal’s R-rated gay romantic comedy starring and written by Billy Eichner.

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