What's ahead for Regal amid bankruptcy talks? Fall movies won't solve financial woes
LONDON (AP) — Conditions are dimming at many movie theaters around the world.
Cineworld Group PLC, one of the industry’s biggest theater operators, confirmed this week that it’s considering filing for Chapter 11 bankruptcy protection in the U.S., as it contends with billions of dollars in debt and more empty seats in front of its screens than expected.
The British company, which owns the Knoxville-headquartered Regal Cinemas and operates in 10 countries, said its theaters remain “open for business as usual” as it considers options for relief from its debt load.
Cineworld said it expects to continue operating even after any potential filing, though its stock investors could face steep or total losses on their holdings.
Cineworld faces challenges specific to itself after building up $4.8 billion in net debt, not including lease liabilities. But the entire industry is navigating a tenuous recovery after the pandemic shut theaters worldwide.
To be sure, moviegoers have streamed back into theaters this year to see blockbusters like “Spider-Man: No Way Home,” “Top Gun: Maverick,” and ”Jurassic World: Dominion.” Industry giant Warner Discovery has said it’s doubling down on theaters and moving away from debuting 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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zyhis summer’s $3.3 billion in ticket sales is still running nearly 20% behind the summer of 2019, before the pandemic, as of Aug. 21, according to data firm Comscore. And there don’t seem to be any big hits on the immediate horizon to make those numbers much better.
Cineworld said its admissions levels have recently been below expectations. And with a “limited film slate,” it expects the lower levels to continue until November. That would mean an additional crunch to its finances.
Cineworld said it’s holding talks with lenders and other major stakeholders as it reviews its financial options. It also said it expects “ultimately to continue its business over the longer term with no significant impact upon its employees.” It has about 28,000 workers, according to the company’s website.
Regal's headquarters are located on the banks of the Tennessee River just south of downtown Knoxville. The company reported 664 East Tennessee employees to the Knox.biz 2022 Book of Lists.
Regal operates 6,787 screens in 505 theaters in 42 states and several territories, the company said as of April 30.
Even if employees could make it through intact, shareholders may not. The company warned again Monday that a transaction to ease the debt on its balance sheet could hurt its stock investors.
The company’s stock in London took a 58.3% plunge on Aug. 19 after The Wall Street Journal reported the company was preparing to file for bankruptcy protection within weeks.
Shares of other theater chains also dipped, but nowhere near as much as Cineworld.
Its executives said earlier in August that the next two months will be challenged by a dip in new releases. But they also said they’re hopeful for a strong close of the year.
Cineworld completed a $5.8 billion acquisition of Regal in 2018 to become the second-largest cinema business in the world, based on screens.
Regal operates 6,787 screens in 505 theaters in 42 states and several territories.
Rival AMC Entertainment has also called the upcoming film schedule relatively weak, though it’s optimistic about the end of the year and about 2023.
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This year, about a third less wide-release films have been put into theaters as before the pandemic. Some of that has to do with residual delays in Hollywood’s production pipeline caused by earlier COVID-19 shutdowns and postponements. But it’s also because a lot of movies go straight to streaming.
One of the summer’s most-watched movies, the Ryan Gosling-Chris Evans action thriller “The Gray Man,” played on Netflix.
Unless films like Sony Pictures’ “Woman King,” with Viola Davis, or the buzzy Warner Bros. release “Don’t Worry Darling,” with Harry Styles and Florence Pugh, overperform expectations, the next month or two in theaters lack sure-things before “Halloween Ends” and “Black Adam” arrive in late October. Farther on the horizon, though, are a few sequels that could set box-office records: “Black Panther: Wakanda Forever” (Nov. 11) and “Avatar: The Way of Water” (Dec. 16).
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 food service. Regal renovated Regal Pinnacle 18 in August 2020 with a futuristic lobby design, new bar, premium food and self-serve ticket kiosks.
Regal's other local properties are Riviera on Gay Street and Downtown West Cinema.
AP Film Writer Jake Coyle and Knox News editor Brenna McDermott contributed to this story
This article originally appeared on Knoxville News Sentinel: Regal Cinemas bankruptcy: Fall movies won't solve theater finances
