‘No Time to Die’ Delay Shows Plight Facing Theater Chains

(Bloomberg) --

At the start of the pandemic, movie-theater operators thought life would begin to look normal again by now. Instead, many are facing a second reckoning.

More bad news came Friday, when Bloomberg News reported that Metro-Goldwyn-Mayer canceled the November debut of the new James Bond movie, “No Time to Die,” one of the few big films left on the 2020 calendar. The picture is now scheduled for April 2021, a year after its original premiere date.

“Absent a miracle, the box office will regress in the coming weeks,” said Shawn Robbins, chief analyst at BoxOffice Media LLC. “Cinemas and audiences are presently at the mercy of natural and political forces largely beyond their control.”

The grim reality for theaters prompted S&P Global Ratings to cut its rating for AMC Entertainment Holdings Inc. this week, saying that a default may be looming. And the Sunday Times reported that Cineworld, Britain's biggest cinema chain, is set to announce the closure of all its U.K. sites as soon as Monday. As many as 5,500 jobs are at risk.

With no new big films to show, smaller exhibitors are cutting hours to reduce costs. In the final weekend of September, the number of theaters operating in North America fell by about 100, according to researcher Comscore Inc. The total could rebound this weekend with AMC, the largest operator, saying it expects to be 80% reopened by mid-month.

But with few fans willing to go to the theaters, Hollywood studios are unwilling to release their big 2020 films. Before MGM's decision, numerous other major pictures -- including Walt Disney Co.'s “Black Widow” -- had been pushed back, leaving cinemas in an awkward place: allowed to operate, but with nothing to show.

The performance of “Tenet,” the only major summer-movie release, underscores the dilemma. Released Sept. 3 in the U.S., the $200 million production has been No. 1 at the box office for four straight weeks, yet has generated just a little over $40 million in domestic ticket sales. Fear of catching Covid-19, social-distancing rules, and a continued shutdown in New York and Los Angeles are all keeping fans away.

‘Huge Slate'

The drought caught theater operators by surprise. Chief executive officers from the largest companies, including AMC, touted their improving prospects with the imminent release of “Tenet” and other big features. Then Disney made the surprise announcement that it would debut the live-action remake of “Mulan” on its streaming service Disney+ for $30.

“They have a huge slate coming for the balance of 2020,” AMC CEO Adam Aron said of Disney on an August conference call. “We will benefit mightily from Disney titles in 2020 with or without ‘Mulan.'”

But the dearth of new films has left theaters struggling to cover the cost of being open -- some are cutting hours and closing their doors once again. More than two-thirds of smaller U.S. theaters are at risk of bankruptcy or closure, an industry trade group said last month.

The 2020 calendar still has a few big films on tap. Disney will release the animated feature “Soul” on Nov. 20, and Comcast Corp.'s Universal Pictures plans to release “The Croods: A New Age,” a few days later. AT&T Inc.'s Warner Bros. has two big December releases: “Dune” and “Wonder Woman 1984.”

But those dates could slip if consumers remain frozen by fears of Covid-19 or if theater reopening plans get set back. And even with their auditoriums open, exhibitors will continue to lose money if too many seats go unsold. S&P warned that AMC's losses could accelerate now that it's open again.

“Given our expectations for a high rate of cash burn, we believe the company will run out of liquidity within the next six months unless it is able to raise additional capital, which we view as unlikely, or attendance levels materially improve,” S&P said.

©2020 Bloomberg L.P.