LONDON (AP) — Conditions are darkening at many cinemas around the world.
Cineworld Group PLC, one of the industry’s largest movie theater operators, confirmed this week that it is considering filing for Chapter 11 bankruptcy in the United States as it faces to billions of dollars in debt and more empty seats in front of its screens than expected.
The British company, which owns Regal Cinemas headquartered in Knoxville and operates in 10 countries, said its cinemas remain “open as usual” as it considers options for debt relief.
Cineworld said it plans to continue operating even after any potential filings, although its equity investors could face significant or total losses on their holdings.
Cineworld faces challenges of its own after racking up $4.8 billion in net debt, not including rental debt. But the industry as a whole is navigating a tenuous recovery after the shutdown of pandemic cinemas around the world.
Sure, moviegoers returned to theaters this year to see blockbusters like “Spider-Man: No Way Home,” “Top Gun: Maverick,” and “Jurassic World: Dominion.” Industry giant Warner Discovery said it was doubling the number of theaters and moving away from early films on its HBO Max streaming service.
Warner Discovery is selling its 344,000 square foot Knoxville hub but plans to retain a workforce in East Tennessee.
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According to data firm Comscore, zyhis summer’s $3.3 billion in ticket sales are still nearly 20% behind the pre-pandemic summer of 2019 as of August 21. And there don’t seem to be any big hits on the immediate horizon to improve on those numbers.
Cineworld said its admission levels recently fell short of expectations. And with a “limited movie slate,” he expects the lower tiers to continue through November. This would mean further tightening of its finances.
Cineworld said it was in discussions with lenders and other major stakeholders as it considered its financial options. It also said that it “ultimately expects to continue its operations for the longer term without significant impact on its employees”. It has about 28,000 workers, according to the company’s website.
Regal’s corporate headquarters is located on the banks of the Tennessee River, just south of downtown Knoxville. The company reported 664 East Tennessee employees to Knox.biz’s 2022 Listings Book.
Regal operates 6,787 screens in 505 theaters in 42 states and several territories, the company said as of April 30.
Even if the employees could walk away unscathed, the shareholders might not. The company again warned on Monday that a move to reduce debt from its balance sheet could hurt its equity investors.
The company’s shares in London fell 58.3% on August 19 after the Wall Street Journal reported that the company was preparing to file for bankruptcy protection within weeks.
Shares of other movie chains also fell, but nowhere near as big as Cineworld.
Its executives said earlier in August that the next two months will be challenged by a drop in new releases. But they also said they were hoping for a strong end to the year.
Cineworld completed a $5.8 billion acquisition of Regal in 2018 to become the world’s second largest screen-based cinema company.
Regal operates 6,787 screens in 505 theaters in 42 states and several territories.
Rival AMC Entertainment also called the upcoming movie schedule relatively weak, though it is optimistic for the end of the year and for 2023.
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This year, about a third fewer blockbuster films have been released in theaters than before the pandemic. Part of this relates to residual delays in Hollywood’s production pipeline caused by prior COVID-19 shutdowns and postponements. But it’s also because a lot of movies go directly to streaming.
One of the most-watched films of the summer, the Ryan Gosling-Chris Evans action thriller “The Gray Man,” has premiered on Netflix.
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Regal was founded in Knoxville in 1989 and has made key investments in the area.
It renovated its location at West Town Mall 9 into Cinebarre in July 2018, a full-service restaurant with in-theater dining service. Regal renovated Regal Pinnacle 18 in August 2020 with a futuristic lobby design, new bar, premium food and self-service ticket kiosks.
Other local Regal properties are Riviera on Gay Street and Downtown West Cinema.
AP Film screenwriter Jake Coyle and Knox News editor Brenna McDermott contributed to this story