Cinema Trade Group Says 70% of Smaller U.S. Theaters May Fail

(Bloomberg) -- Almost three-quarters of small and midsize cinemas in the U.S. are at risk of bankruptcy, and about 100,000 people who work in the industry could lose their jobs as a result of the pandemic, according to the National Association of Theatre Owners.

Exhibitors need government support to recover from the “devastating financial blow” caused by the coronavirus, NATO said Wednesday in a letter to Congressional leaders, joined by trade groups representing film directors and studios.

Theater chains have been among the businesses most severely hurt by the spread of Covid-19. In March, nearly every cinema in the U.S. closed. Almost 60% had reopened as of last week, but the industry is still struggling. Studios are withholding major new movies until November, making it hard for owners to draw crowds and service their debt, while health officials have outright banned reopening in some locations. Operators are also forced to limit ticket sales because of social-distancing rules.

“Theaters need specific relief targeted to their circumstances,” the trade groups and prominent filmmakers including Martin Scorsese and M. Night Shyamalan said in the letter. “We urge you to come together on a bipartisan solution that provides this relief.”

The letter suggests that Congress reallocate leftover funds from the Cares Act to the entertainment industry or enact new legislation giving cinemas an infusion of cash.

Though smaller operators are at higher risk of permanent closure, according to NATO, major chains have also struggled. AMC Entertainment Holdings Inc., the largest theater circuit in the world, issued a going concern notice about its ability to stay in business earlier this year, before obtaining new funds. Cineworld Group Plc, which runs the second biggest U.S. theater chain, Regal, warned earlier this month it may have to raise more money.

AMC said in a release Wednesday that its customers have been responding positively to safety measures adopted as part of its reopening plan, including spacing out seats and cleaning more. The company plans to have about 80% of its U.S locations open by Oct. 9.

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