Cineworld will not be the only business that must temporarily close its doors for the second time after suffering from weak demand during the pandemic.
“Despite everything governments are doing to restart economies, a lot still comes down to consumer appetite for doing certain things and going the cinema has not proved to be the resilient leisure activity it was once thought to be,” said Russ Mould from AJ Bell.
“Most of the problems have been out of Cineworld’s hands. The primary driver to go to any cinema is the film slate and there just hasn’t enough big-name releases to draw in a crowd since big screens reopened in the summer. Cineworld and other operators have tried to get the message across that their theatres were safe and clean, but that communication hasn’t been enough.
“Cineworld was loaded up with debt going into the crisis and now it seems inevitable that it will have to raise a substantial amount of money to help it continue servicing debt.
“Shareholders have suffered a 50%+ slump in the share price upon the latest news and any equity raise is likely to be done at a discount to the already-depressed market price. That may prompt Cineworld to see if can use more debt rather than equity to prop up the business.
“The decision to push back the release of the new James Bond film, No Time to Die, to April 2021 means there is now a six-month wait for this blockbuster film. Will Cineworld have to wait this long before reopening or will it be confident enough to return earlier?
“There are several other big-name films scheduled for release over Christmas which could be a big enough draw, suggesting that Cineworld may only have to wait a few months. However, studios are going to be very nervous about risking a release in this climate and if James Bond can be delayed then so can other releases.