It has only just opened a 12-screen multiplex in Plymouth’s £53million The Barcode but financial speculators are betting that Cineworld’s fortunes will nosedive amid competition from streaming services such as Netflix and Amazon Prime.
The company, which has brought 4DX and IMAX screens to the Ocean City, may be planning to open more cinemas around the country but it has also emerged as the most shorted business in the UK.
That means financial institutions are effectively betting on Cineworld’s shares losing value and are engaged in borrowing shares to sell and buy back at a cheaper rate, in order to make a killing from the fall in value.
At the time of writing (Monday, November 25, 2019), 11.5% of Cineworld’s shares are in the hands of 11 sort-selling institutions, typically hedge funds, according to Short Interest Tracker.
Those speculators have been put on alert by Cineworld’s US$3.3billion debt pile (the company is UK based but reports finances in the US currency), the threat from streaming services and concerns that 2020 will be light on blockbuster movies.
Cineworld, a FTSE 250 company, reported a 13% fall in half-year profits in August, and has seen a 23% crash in share price during 2019.
The company is remaining bullish with Mooky Greidinger, chief executive, saying: “The short position has no real substance.”
He said: “This business has been in the industry for a long time and has had all kinds of ups and downs. The streaming threat is non-existent in my eyes.”
Cineworld will also have opened venues in York and Warrington before Christmas 2019, and vice president operations Shaun Jones said that despite the advance of streaming, with new channels joining Netflix and Amazon Prime in the coming months, cinema will continue to attract huge audiences by giving a not-to-be-missed destination experience.
“Cinema has a brilliant future,” said Mr Jones, as he attended the debut screening at the Cineworld in Plymouth’s Drake Circus The Barcode leisure development in October 2019. “Anybody can build a home cinema. But this is about the experience, and customer service.”
He said multiplexes such as the new one in Plymouth have a range of screens, of different sizes and offering regular 2D screenings alongside 4DX and IMAX, and said: “This gives cinema-goers the opportunity to watch a movie in the way they want to watch it.
“And 4DX is tried and tested, it’s not a gimmick, but a very popular format, and we are the only company in the UK to offer it.”
Cineworld’s 4DX screen at The Barcode (Image: Penny Cross / Plymouth Live)
Mr Jones – whose favourite movies are the Indiana Jones series – began his cinema career in the early 1980s, at a time when Cineworld had only about 30 cinemas. Today it has 125 in the UK with more on the way and a “refurbishment programme” for its estate.
“I started in the days of ET and The Goonies,” Mr Jones reminisced. “They said VHS meant cinemas would die, but they didn’t.”
And he has no fear of the advance of on-demand channels and said: “I think streaming actually helps. It gets people interested in movies, and they will watch them in the way they want to.
“When the new Star Wars film (Star Wars: The Rise of Skywalker) comes out they will watch in in 4DX and IMAX and then stream it.
Blockbusters – what’s done well, and what’s coming
In the UK and Ireland the top five grossing films in the first six months of 2019 were, Avengers: Endgame, Captain Marvel, Aladdin, Toy Story 4 and Dumbo which grossed US$213.7million.
Cineworld is confident about the remainder of 2019 with the recent releases of Frozen 2, Jumanji: The Next Level, The Aeronauts, Midway, Last Christmas, Le Mans ‘66, and 21 Bridges, and the forthcoming arrival of Knives Out, Charlie’s Angles, Black Christmas, Cats, Little Women, Playing with Fire, A Beautiful Day in the Neighbourhood, Spies in Disguise and, of course, Star Wars: The Rise of Skywalker.
Big releases for 2020 include: The Voyage of Dr Doolittle, Sonic the Hedgehog, Godzilla vs Kong, Peter Rabbit 2, The New Mutants, The Secret Garden, Legally Blonde III, Saw 9, Fast and Furious 9, Wonder Woman 1984, Top Gun: Maverick, Escape Room 2, Monster Hunter, Death on the Nile, Dune and West Side Story.
“People also want to get out of the house, and have the same experience. And we have introduced Starbucks (now a feature of many Cineworld venues) to improve the customers’ journey.”
He said cinemas also offered a value-for-money option and said: “Even across recessions cinema is seen as an affordable entertainment option, compared to things like the theatre, even bowling.”
Source: Plymouth Herald