Two great movies, ‘The Last Picture Show’ and ‘Cinema Paradiso’ highlight the iconic role the cinema had in local communities. Over the years most people will be able to benchmark various landmarks in their lives by referencing cinema visits; ranging from going to see films with their families and friends; to what for many is a memorable occasion, the first date.
However, sadly the world of cinema has drastically changed post Covid 19 and I wonder if and when it will return to its former glory.
Today, cinemas face the greatest challenge they have ever experienced. In March most cinemas closed and despite re-opening in the Summer, they have simply failed to become economically viable as fewer people attend and the major studios pull back on product.
The world`s second largest chain, Cineworld has shut 536 cinemas in the US and a further 127 in the UK. This has resulted in putting around 45,000 jobs at risk. The CEO of Cineworld, Mooky Greidinger observed that without new films it was like `being a grocery store with no meat or food.` Perhaps the key driver for this action by Cineworld is the postponement of the new Bond film, ‘No Time to Die` to Spring 2021.
AMC, the world`s largest cinema chain will cut opening hours at various cinemas across the UK with immediate effect.
Covid 19 has come at an awful time for both groups. Cineworld is carrying $8bn of debt and AMC has debt of about $10bn. Whilst both groups have negotiated low interest rates for their Debt Mountains, it still represents around 6 to 7 times operating profit for both groups; a high multiple that certainly does not help their credit rating.
Apart from the Bond movie push back Disney, Universal, Warner Bros, Paramount and Sony have all held back on opening films that would have been released this year. These include ‘Black Widow’, ‘Wonder Woman 1984’, ‘Ghostbusters’, ‘Godzilla v King Kong’ and ‘Dune’.
If cinemas do not open to mass audiences what is the economic viability of producing tent pole films with budgets of c. $200bn? Sure, there is a pent up demand for product by the streamers but not at this cost. So, are we going to see a shift towards smaller Budget films? One can only say ‘Who knows?’ In these strange and uncertain times the world’s landscape is changing at a pace and in a direction that has wrong footed just about everyone including Politicians, Economists, and last but perhaps not least, Film Producers.
Meanwhile, take comfort and indulge yourself. Turn the lights down low, switch the phone off and play the lovely, wonderful ‘Cinema Paradiso’. I guarantee you will feel better afterwards