However, AMC has been able to leverage its unique meme-stock standing with retail investors to avoid a debt crunch. AMC’s debt load amounted to about $5.5 billion as of this summer. Cineworld’s net debt stood at $8.9 billion as of the end of 2021, or $4.8 billion excluding lease liabilities. Not that AMC Theatres, led by Adam Aron, doesn’t also have a big debt burden. Adds a veteran studio executive about the evolving bankruptcy situation and its impact on the theatrical business: “On a scale of one to 10, this is a three.” “While we acknowledge the relatively weak film slate cited by Cineworld is something that all exhibitors are facing, with a major slate gap between mid-August and late October, we view Cineworld’s balance sheet concerns as a company-specific issue,” B. Riley Securities analyst Eric Wold wrote in a late August report. publicly traded exhibitors in a better position than Cineworld.
“More challenging is the fact that the operators, for the most part, lease the cinema sites - possible under master lease agreements - and the lease liabilities are capitalized, thereby forming by far the larger part of the debt burden.”īut others see most U.S. “The cinema operators globally, with the possible exception of Cinemark, are debt-burdened, having been acquisitive prior to the pandemic, and have undergone constant programs to upgrade to meet the demand for the state-of-the-art cinematic experience, in terms of screens, sound and seating,” says Knox. Investors seemed to hit the panic button for the broader exhibition sector when Cineworld warned about a likely restructuring, sending the stocks of its peers lower as well. “Typically, businesses with such characteristics are not able to sustain high debt levels.” “Cinema operators are distributors with weak profit margins and high fixed costs,” says Moody’s analyst Fiona Knox. While the box office made a notable recovery this summer - although not to pre-pandemic levels - the debt-laden Moshe “Mooky” Greidinger-run Cineworld, which operates 747 sites and 9,139 screens in 10 countries, warned Aug. 17 that it was struggling to get through the summer doldrums for Hollywood tentpoles amid a dearth of new releases. Box Office: 'Black Adam' Heads for Solid $60M Opening While 'Ticket to Paradise' Travels in Style
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