On the same day, AMC, the country’s largest cinema chain with 11,000 screens, was involved in an entirely different action: restructuring the election of board members to prevent a hostile takeover. The financially troubled company would not receive any incentive money as the bill bans large or publicly traded companies from participating. Regal and Cinemark, the country’s other two theater chains, would also be on the sidelines.
Although the 5,593-page stimulus bill was passed overwhelmingly in both Houses of Congress, President Trump has harshly criticized the perceived excesses in the proposed legislation, and it remains unclear whether he will sign it. However, many of these excesses fell under the broader expenditure schedule to which the Aid Act was attached. he didn’t mention “Save Our Stages”. It is also possible that lawmakers have the votes to override a veto.
If Trump signs the bill, it would conjure up a story of two fates in the cinema. Independent businesses, which make up half of the country’s 40,000 screens, would celebrate a cash infusion that could save many of their businesses. But big chains would stare into the abyss, reversing the narrative of the 21st century entertainment industry that favors big corporations.
“This bill causes mixed feelings,” said Patrick Corcoran, spokesman for the National Association of Theater Owners. Through lobbying, the group known as NATO secured funding for theaters that were not originally part of the package. “This grant will really help this industry,” he said. “But it’s not going to help publicly traded companies and they are also employing a lot of people.”
He called the restriction “myopic”.
The money offers theater owners a bright spot in a year when screens went dark, customers stayed away, and studios withheld new releases, forcing theaters to renegotiate terms with lenders and landlords. The few theaters that reopened had to be content with small films – and an audience of 10 or 20 percent of their normal volume.
The pandemic halted the predominant form of American personal entertainment: in 2019, 268 million Americans and Canadians, or 76 percent, went to a movie theater at least once, according to the Motion Picture Association’s annual report; These moviegoers bought tickets for an average of almost five films over the course of the year. By comparison, 150 million Americans attended at least one annual sporting event in 2018, according to a US Travel Association study of consumer behavior.
Streamers rushed to fill the void, increase content, and increase attendance. One studio, Warner Bros., has chosen to move all releases to its streaming service for the next 13 months, starting with Wonder Woman 1984 this week, at the same time as the theaters, potentially further undercutting the box office.
The business cycle would alleviate all of these losses. Under the terms, eligible theaters would receive up to 45 percent of their lost revenue from April to December 2020, capped at $ 10 million and monitored by the Small Business Administration. You could then use that money to cover rent, payroll, and other expenses.
Theaters that lost at least 90 percent of their revenue from April to December 2020 compared to April to December 2019 can apply as soon as the bill goes into effect. Those who lost at least 70 percent can do so two weeks later. Another phase after Q1 2021 could award an additional grant equal to half of the previous total to companies that continue to struggle. NATO believes that there is sufficient funding to cover all eligible applicants.
For many theaters, those funds could mean the difference between reopening in 2021 – if it’s hoped vaccinations will be widespread and movies and customers will come back screaming – and never get that chance.
“The dire reality is that without this package, many of our theaters would not be able to turn their projectors back on,” said Todd Halstead, executive director of the Independent Cinema Alliance, which represents hundreds of independent theater groups across the country. “It’s not a panacea. But it’s a great help. “
The group estimates that the survival of up to 70 percent of independent theaters would be at risk without them.
One such company is Studio Movie Grill. The Dallas-based dine-in theater chain began in 2020 with 34 locations in 10 states and 6,800 employees. Now founder and CEO Brian Schultz says the company only has 300 employees and recently had to file for bankruptcy protection. It is to be hoped, however, that many of its locations will reopen and employees will be hired again.
“The pandemic got us into Chapter 11. This funding will allow us to get out,” he said.
The original $ 10 billion package launched last summer focused on music venues. However, working with the music-centric National Independent Venue Association, NATO successfully campaigned for lawmakers to add $ 5 billion.
These lawmakers sought this week to position themselves as friends of the movie business. Senator Amy Klobuchar (D-Minn.), Who was one of the key architects of “Save Our Stages” along with Senator John Cornyn (R-Tex.), Did an interview with Hollywood magazine Variety Theater Scholarships this week. “It’s very rare for something to be launched in July and six months later with more money it gets intact,” she said.
Eligibility for the funds requires that the theaters are privately owned and meet one of the following criteria: employ fewer than 500 people, only work domestically, or operate in 10 or fewer countries. AMC, Regal and Cinemark all fall short of the standard. This deepens the concerns of these chains, especially AMC. The country’s largest cinema company has billions in debt and could soon be forced into bankruptcy protection and restructuring.
AMC boss Adam Aron declined to comment through a spokesman. A spokeswoman for Mooky Greidinger, who runs the Regal parent Cineworld, said he was unavailable. A Cinemark spokeswoman didn’t return a call for comment.
However, the chains are not all arranged in the same way. Dallas-based Cinemark, with 4,500 screens in the US, had large cash reserves prior to the pandemic and is considered the best financially eligible. 7,000-screen shelf in the US is considered a bit weaker, although Cineworld, which owns theaters in Europe and the Middle East, could get a boost. AMC, based in Leawood, Kan., Kansas City, with more than a quarter of the screens in the country, is in the worst of it.
The company is majority-owned by China’s Dalian Wanda Group and has entered the pandemic with at least $ 5 billion in debt as it has seen more theater investments in recent years. Executives have repeatedly warned Wall Street that cash is running low. Over the summer, the company restructured its debt, reducing it by more than half a billion dollars to generate more cash flow by 2021. Further borrowing would be possible, but unlikely given the high interest rates.
The company’s move this week to postpone the years when board members are elected – essentially preventing wholesale replacements – can potentially buy it more time.
Some analysts expect AMC to step into bankruptcy protection, which would allow it to reorganize with new leases and likely fewer theaters. It is possible for outside buyers – studios or even independent theater owners – to step into venues that AMC has to sell at distressed prices. Even those optimistic about the future of cinema acknowledge that when business returns, AMC will likely look different.
Despite all the difficulties theaters have faced, most studios want them to come back as they are still the best hope of generating high revenue for their films on the biggest budget. For example, Disney intends to keep releasing its biggest films in theaters despite the success of its streaming service Disney Plus. Many of Hollywood’s creators have also expressed hope that the distribution channel will continue to thrive.
Oscar winner Aaron Sorkin, whose most recent film “The Trial of the Chicago 7” was released on Netflix this fall, said Tuesday he wished the theaters would be back soon.
“Nothing will replace the experience of being part of an audience, all laughing at the same time, gasping for breath at the same time, crying at the same time, and being silent at the same time,” Sorkin said on the iHeartRadio podcast. Hell & Hochwasser with John Heilemann. ““ People want that. The films are what we do on Friday and Saturday nights, the films are where we meet, what we do with our families, what we do on vacation. “
Although independent theater owners generally believe the chains are essential to the business, some say the incentive is not essential to these large companies. These companies have other options, such as issuing shares or AMC’s current debt war, opening new lines of credit.
“I would like to exchange a grant for access to the capital they have,” said one theater owner, who spoke on condition that he was anonymous because he did not want to be perceived as a competitor’s critic.
NATO’s Corcoran said his group would continue to fight for new stimulus packages under the Biden administration, as well as tax breaks and other measures. He said there would be additional efforts for independent theaters as well – while the incentive puts many theaters on a solid footing for now, it only covers losses in 2020. New difficulties could arise if vaccination rollouts are delayed and the virus continues to spread through 2021, keeping films on shelves and in theaters closed.
For some it is already too late.
Eclipse Theaters, a luxury eight-screen theater in downtown Las Vegas, was waiting to reopen this fall as studios seemed ready to release new films. But when the virus began to rise again and the studios postponed their releases, the theater’s owner, Nic Steele, decided not to reopen. Earlier this month, he said the venue may remain closed permanently.
In an interview on Tuesday, Steele said he could look elsewhere.
“It was difficult but we will find new ways,” he said. In the meantime, he has carried out an action for 2020: He has started a streaming platform.