Coming to a theater near you: a marquee with no movie titles on it, but instead big letters that say “gone out of business.”
With movie houses nationwide closed by the coronavirus, big cinema chains like AMC Entertainment and Regal Cinemas parent CineWorld are at risk of filing for bankruptcy in the coming weeks or months — desperate moves that could result in hundreds or even thousands of theaters being shuttered for good, industry experts warn.
In a Wednesday note to investors, Loop Capital analyst Alan Gould wrote that he expects one quarter of movie theater screens in the US will close in the aftermath of the pandemic. Since mid-March, the virus has caused the temporary closure of nearly all of the country’s 40,000-plus screens, and studios’ delay of premieres for a slew of summer blockbusters.
The big and unanswered question, according to experts: How long will the COVID-19 crisis last, and how much pain can landlords take?
“Without ticket and concession revenue, there will likely be a lot of unpaid rent, and it’s anyone’s guess whether the landlords will terminate the leases and evict the tenants or whether they will just deal with it,” says Wedbush Securities analyst Michael Pachter.
“Even if we put the virus behind us, lots of people are going to avoid retail and movie theaters till they are comfortable that they are inoculated against the next iteration of the virus,” Pachter warned.
AMC, which has reportedly hired law firm Gibson Dunn & Crutcher to advise on a possible restructuring, has signaled it’s ready to negotiate major breaks on rent. A recent letter from senior VP Daniel Ellis informed landlords it would stop paying rent in April after shuttering its 630 US theaters on March 17 and furloughing 25,000 workers.
“AMC is willing to discuss with you any suggestions you may have for getting through this crisis and planning for when AMC can reopen and pay rent,” Ellis wrote in the letter, which was first reported on Tuesday by Deadline Hollywood…