The impact of COVID-19 on the global cinema business (as at 26/3/20).
The impact of COVID-19 on the global cinema business (as at 26/3/20)
The US rescue package contains a number of measures that will help American cinemas to navigate through the closure period and come out the other side. The specific measures that were welcomed by the sector are a $454 billion loan guarantee fund (enabling cinema circuits to pay their fixed costs), expanded SBA programs for small businesses (which will help the smaller cinemas rather than big chains), advanced tax deductions to workers payable now and other tax breaks, the tax credit for businesses that retain their workforce during the shutdown, and expanded unemployment benefits. The package will now go to the President for signature.
US exhibitor AMC has reviewed its original position in the light of the agreed US government measures yesterday. The chain had previously laid off or furloughed most of its cinema staff (26,000 out of 27,000) but it has now also furloughed all its corporate staff (600 employees) including its CEO. The plan includes not working at all or reduced hours working. The reasoning is to cut back its costs as far as possible so the business survives.
In the UK, Cineworld has reviewed and gone back on its original stance regarding laying off employees. It has now offered to furlough all hourly-rate employees, which is now underwritten by the government.
In Mexico, major exhibitor Cinepolis is to close all its domestic sites from 26th March 2020 until further notice. The company says it has no plans to lay off any staff for now.
Norway’s government has launched a rescue package for cultural industries worth around EUR24m, compensating for loss of ticket sales (in the case of cinema) as well as expenses linked to cancellation costs of any events.
Across the Nordic territories, film agencies are offering flexibility on grants, payback periods and project deadlines. On the macro-economic side, Nordic governments are offering support for employees and freelance workers.
However, we are also hearing cases of retailers, including cinemas, struggling to negotiate with landlords to cancel rents and service charges for the period when such retail spaces are shut to the public and generating no revenue. For a cinema, rent is one of the biggest fixed costs.
On the distribution side, 20th Century Studios and Searchlight have both brought forward the digital releases of The Call of the Wild and Downhill respectively to this Friday 27th March. The Call of the Wild was released on 21 February and earned $62.3m domestically, whilst the smaller Downhill was a Valentine’s Day release and grossed $8.3 in North America.
