Cineworld's (CINE) shares plummeted on Monday morning, after the group said that it would temporarily close its cinema venues in the US and the UK.
Cineworld, which operates 536 theatres in the US and another 127 locations in the UK, warned last month that the tightening of coronavirus restrictions could force it to raise more funds on top of the $361m (£279m) that it sourced over the first half of 2020. The group recorded a loss of $1.64bn for the six months to June, after having to shut its screening sites from March until later in the summer. Around three-quarters of its theatres were open in September. Cineworld’s auditor PwC said that it was unable to present the company as a going concern.
The company cited the closure of major markets, such as New York, as part of its rationale for closing its doors. Coronavirus restrictions, a rising infection rate and low audiences have made production studios reluctant to release films to market. Cineworld elected to shutter its screens after it was revealed that the release of the latest James Bond instalment, No Time to Die, was to be delayed again.
The entertainment industry remains in dire straits, with around half of its workers still on furlough in the UK. Roughly 45,000 Cineworld employees stand to be affected by the closures. Pressure has also come during lockdown from streaming providers such as Netflix (US:NFLX), which brought forward the release of blockbuster basketball series The Last Dance to fill the gap vacated by cinemas and sports cancellations. Cineworld said that it is considering options to raise fresh funds.
The news rippled across the cinema sector, with shares in smaller UK rival Everyman Media (EMAN) falling by more than a tenth after Cineworld’s announcement. “Although the delay of the latest 007 blockbuster prompted the decision, Bond isn’t the villain in this piece,” said Hargreaves Lansdown senior investment and markets analyst Susannah Streeter.
