Regal Cinemas Parent May Close All U.S., U.K. Screens as Exhibitor Industry Deals with Further Movie Release Delays

In a stunning blow to the movie theater industry, Cineworld, parent to Regal Cinemas, may re-shutter all screens in the United States and United Kingdom. The nation’s No. 2 theater chain had just announced on social media the re-opening of all screens in North Carolina.

Cineworld Oct. 4 tweeted, “We can confirm we are considering the temporary closure of our U.K. and U.S. cinemas, but a final decision has not yet been reached. Once a decision has been made we will update all staff and customers as soon as we can.”

Media reports say the move by the second-largest exhibitor in the world, after AMC Theatres, comes following Metro Goldwyn Mayer and Universal Pictures’ decision to further delay the release of the new James Bond movie, No Time to Die, until April 2021. That followed Disney’s previous decision to further delay the release of Marvel Studios’ Black Widow, among other tentpole releases, until 2021.

Regal runs 546 theaters (7,211 screens) in the U.S., in addition Cineworld’s 128 theaters in the U.K. and Ireland. The company lost $1.6 billion through June 30.

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The industry has been grappling with the effects of the coronavirus pandemic since March when screens worldwide were forced to close. Industrywide revenue is down more than 75% year-to-date.

AMC Theatres, which has re-opened about 75% of its domestic screens, reportedly has enough liquidity to continue operating about six months. That’s because operating largely empty theaters is costing the chain about $115 million monthly in overhead expenses.

As a result, S&P Global Ratings Oct. 2 downgraded the parent company’s fiscal rating to CCC- from CCC+. The lower grade makes it harder for the chain to borrow money.

“A liquidity crisis is all but inevitable even if the company were to fully re-open all of its theaters,” S&P wrote in a note.

Specifically, the report contends cinema attendance will remain constrained by consumers’ health and safety concerns and social-distancing measures until an effective treatment or vaccine becomes widely available.

The firms believes a vaccine won’t be widely available until mid-2021, with the exhibitor industry not fully recovering to 2019 levels until 2022.

Michael Pachter, media analyst with Wedbush Securities, argues that going to the movies should not be a life and death decision for families.

“Theatrical exhibition is in the middle of a perfect storm,” Pachter wrote in a note over the summer. “Theater closures not only deplete cash reserves and sources of liquidity, but may alter consumer behavior indefinitely.”

Analyst: Coronavirus Pandemic Could Hurt Disc Sales

On the heels of Netflix adding nearly 16 million subscribers in 90 days and increased transactional VOD sales, consumer migration toward digital distribution during the coronavirus pandemic is undisputed.

New data from London-based GlobalData suggests shutdowns in the economy worldwide, including many retailers, has undermined sales of packaged media, including DVD and Blu-ray Disc as consumers question discretionary spending on home entertainment.

“It is clear streaming services are becoming integral to consumers’ lives and the numerous lockdowns across the world are encouraging people to spend more time in front of the TV or on a laptop,” analyst Zoë Mills said in a statement.

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Mills said increased streaming video could have a detrimental impact on the sales of DVDs for retailers not only during the lockdown but after as well as consumers are tied to these subscriptions and have less of a reason to purchase a physical movie.

Specifically, Mills said the home video market would be undermined by the lack of new releases driven by pushbacks and delays of theatrical titles by studios. The analyst cited the newest James Bond movie with Daniel Craig, No Time to Die, which saw its theatrical release delayed from April to November — if not longer. The postponement means the packaged-media release won’t happen until 2021.

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“Previous James Bond releases have offered a boost in retail sales and while this will instead be felt in 2021, for retailers already in trouble, with no notable releases this year, 2021 may be too far away,” Mills said.

‘Daniel Craig Collection’ of Bond Films Shooting to 4K UHD Oct. 22

The Daniel Craig Collection, with four James Bond films starring the actor, will come out on 4K Ultra HD with Dolby Vision Oct. 22 from MGM and 20th Century Fox Home Entertainment.

The collection includes Casino RoyaleQuantum of SolaceSkyfall and Spectre, and features the extended unrated version of Casino Royale and includes select special features on Casino Royale and Skyfall.

Casino Royale features crew commentary, and Skyfall features commentary by director Sam Mendes and commentary by producers Michael G. Wilson and Barbara Broccoli and production designer Dennis Gassner.

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Craig is currently in production on his fifth installment as James Bond in the franchise’s 25th feature film No Time to Die, set for U.S. theatrical release on April 10, 2020.

The Quarter-Billion-Dollar Spat

In the corporate annals of executive buyouts, few are as crazy as Metro Goldwyn Mayer’s (MGM) decision to purchase the equity stake of fired CEO Gary Barber for $260 million.

That’s on top of the $15.4 million golden parachute Barber got after unexpectedly getting the axe in March – just five months after privately-held MGM extended his employment contract through 2020.

Media reports suggest there had been friction between Barber and Kevin Ulrich, the boss at investment group Anchorage Capital — MGM’s largest investor — over the future of the studio.

Apparently, it was a quarter-of-a-billion-dollar rift.

Indeed, as part of the buyout — which involved MGM tapping into its credit facility — Barber agreed to customary “standstill provisions” that prohibit him from competing directly on MGM-related matters for a three-year period.

If Barber, who, since his ouster, had reportedly been trying to line up creditors to acquire MGM, was such a threat, why not keep him on the payroll?

Barber, together with Roger Birnbaum, helped MGM Studios emerge out of bankruptcy in 2010 through the usual cost-cutting restructuring taken by companies under Chapter 11 protection or in M&A crosshairs.

The executive in 2017 spearheaded complete ownership of premium TV network Epix from partners Lionsgate, Viacom and Paramount Pictures. Barber revitalized the “James Bond” franchise with box office hits Skyfall and Spectre. The next installment — Bond 25 — is slated for release in 2019.

Barber hired reality TV whiz Mark Burnett (“The Voice,” “Survivor,” “Shark Tank”) as president of the TV group and digital.

In home entertainment, Barber distributed MGM’s vaunted catalog and new releases to the highest bidder, with 20th Century Fox Home Entertainment winning rights to SpectreSkyfall, Death WishEvery Day, RoboCop, Poltergeist, “Vikings,” “Get Shorty,” “The Handmaid’s Tale” and “Teen Wolf,” among others. The Fox agreement expires June 30, 2020.

Notably, Universal Pictures Home Entertainment will distribute Bond 25 in packaged media thereafter. The studio’s parent, Comcast recently inked a direct-access deal with Epix for its cable operations.

Sony Pictures Home Entertainment distributes the “Jump Street” franchise and The Magnificent Seven, while Warner Bros. Home Entertainment distributes the “Hobbit” trilogy, CreedMaxMe Before You, Tomb Raider and Everything, Everything.

Paramount Home Media Distribution has DVD/Blu-ray rights to Sherlock Gnomes and Ben-Hur.

Regardless, home entertainment revenue in 2017 dropped 55% to $91.9 million from $206.5 million in 2016.

Hardly enough to pay off Barber.

MGM Studios 2017 Home Entertainment Revenue Plummets — Without James Bond

MGM Studios March 28 reported fiscal 2017 (ended Dec. 31, 2017) home entertainment revenue of $91.9 million, which was down 55% from revenue of $206.5 million during the previous-year period.

MGM attributed the decline to comparisons with the global release of Spectre during the prior-year period, strong digital sales from the latest James Bond installment starring Daniel Craig; Rocky-themed boxing drama Creed, ongoing revenue from other recently released films, and the tail-end of the studio’s worldwide home entertainment promotion (i.e. catalog sales) for the James Bond franchise.

Spectre, which is distributed by 20th Century Fox Home Entertainment, generated $36.2 million in disc sales, according to The-Numbers.com. Creed — distributed by Warner Bros. Home Entertainment — generated $25.3 million.

Fiscal 2017 also included revenue from recent film releases, primarily worldwide digital revenue for The Magnificent Seven and Ben-Hur, home entertainment revenue for The Belko Experiment, plus ongoing revenue from Spectre, The Hobbit trilogy and additional library content.

Home entertainment revenue from TV content topped $33.8 million, up 1% from $33.6 million in 2016.

Finally, MGM announced that its senior management team would continue to run the company following the March 21 termination of CEO Gary Barber.

Gary Barber Out as CEO of Metro-Goldwyn-Mayer

Gary Barber, chairman and CEO of Metro-Goldwyn-Mayer Holdings, has been let go after eight years in the position. No reason was given for the move.

Media reports suggest disagreement between Barber and the board on the future of the venerable studio, whose franchises include James Bond movies, “The Voice,” “Survivor” and “The Handmaid’s Tale,” among others. MGM also owns multiplatform distribution channel Epix.

The studio, which includes MGM Home Entertainment, has formed an “Office of CEO” to oversee day-to-day operations while a new CEO is found.

MGM said it would provide a business update March 28 when it reports fourth-quarter fiscal results.