Cineworld shares are down more than 60% as concerns mount that the world’s second-largest cinema chain is about to file for bankruptcy.
The company that owns the Picturehouse chain in the UK is battling a $5 billion debt. Like other cinema chains, Cineworld was hit by the pandemic.
Cineworld recently said that post-Covid customer levels were lower than expected and blamed “limited” film releases. The Wall Street Journal reported that Cineworld is preparing to file for bankruptcy, reducing its share price.
Cineworld has been contacted for comment. The firm was hopeful that blockbusters like the latest Bond film, Top Gun: Maverick and Thor: Love and Thunder would pull back the audience post the Covid restrictions.
But it said earlier this week: “Despite gradual recovery in demand since reopening in April 2021, current entry levels have been below expectations.
“These low penetrations are because of a limited film slate which is anticipated to continue till November 2022 and is expected to negatively impact the business and the group’s liquidity position in the near term.”
Cineworld has 9,189 screens across more than 750 sites. It operates in 10 countries, including the UK, the US, Poland and Israel, and employs more than 28,000 people.
Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said Cineworld had “failed to lure back enough moviegoers to help pay back its enormous debts”.
“Hopes had been raised that first spies, then superheroes, then fighter pilots would prove to be the magic bullets for the company, but there simply haven’t been enough blockbusters coming through to break the spell of misfortune,” she said.
But Peter Williams, a former non-executive director at Cineworld, told the BBC he thought cinema ticket prices were “too low”. “I’ve always felt that the ticket price or headline ticket price is almost too low. I mean, it is still a very cheap night out,” he said.
He added that while Cineworld is likely to face a major restructure, he believed that it would emerge as “a viable business”.
“This is a big business, and people still want to go out and go to the cinema.”