“Cineworld Group plc (OTCMKTS:CNNWF) will be hoping for blockbuster levels of bookings when it opens its cinemas once more, after a year of shocking losses.
Cineworld (OTCMKTS:CNNWF)'s Theatres To Reopen In April
Its Regal theatres in the US are the first in the queue to reopen in April with movie fans in the UK allowed to take their seats again from May.
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After major movie studios delaying big releases, the world’s second largest chain was forced to lock up its theatres across the world, and wait for the flood of panic over the future of the industry to subside.
Cineworld’s share price plunged 86% between February and October. But after it grabbed hold of fresh financial lifelines and vaccine rollouts lifted the curtain on a more positive picture, its share price has staged a comeback, rising by around 350% since its low.
A swift recovery will be crucial given the company is saddled with high levels of debt but there are fears some movie fans may have got a little too comfortable watching releases from the comfort of their sofas, and might be slow to return to the big screen.
The Deal With Warner Bros
The deal with Warner Bros should mitigate some of these concerns, and give it the edge over streaming giants for a period of time. It will have the right to show the studios' films for 31 days before being available on other services. That window could be extended to 45 days for films that open to an agreed box-office threshold. Deals like this are likely to provide the blueprint for the industry going forward, helping cinemas lure in fans eager to glue their eyes to new releases as soon as they can. The window though is small and so advertising spend may be forced to rise to get seats filled before films drift to devices.
The capacity of cinemas will still be reduced to 50% when they reopen, which will limit the pace of the chain’s recovery as it also means that sales volumes of merchandise and refreshments will also be lower. However, there is hope that the reopening will prove to be a new uplifting scene in what has been a very sorry story for Cineworld over the past year.’’
Article by Susannah Streeter, senior investment and markets analyst, Hargreaves Lansdown.
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