Despite a 59% drop in revenue for the six months to June, exhibition giant Cineworld this week announced that they are considering a U.S stock market listing, either for Cineworld itself or Regal as a stand-alone company. It was a strangely buoyant announcement despite the revenue dip, as Brandon Blake, our expert entertainment attorney, will break down for us further.
With the delta strain of the coronavirus leading to on-and-off closures both domestically and internationally, it’s no surprise that the revenue news was not positive. The released figures represent a 70% decline in attendance over the period. On the plus side, there is also a narrowing of their operating losses from $1.34B to only $208.9M in the year-on-year figures.
Still, the company was upfront about their confidence in the outlook for films, including the reintroduction of a longer film release window, and they feel that a rebound in the sector is inevitable. They could have a point. Cinema attendance offers a low-frills, low-cost day out at a time when people are hungry to escape the grip of their couch. Cineworld emphasized their ‘resilient performance in a very challenging market’, alongside the ‘strengthening of (their) liquidity position’ and ‘tight control over (their) operating costs and cash usage’ as reasons to sustain their confident position.
Regarding the decision to head to the stock exchange, the matter is not yet set in stone. However, Cineworld rightly points out that several publicly listed cinema companies have a presence on the stock exchange, many with a wide domestic investor following that it would make sense to leverage. Perhaps they also noticed the recent ‘meme stock’ rally around AMC and want their share of the pie, although that’s pure speculation, of course.
Cinemas have been allowed to operate, mostly without restriction, across all Cineworld territories since June, and there’s an impressive slate of crowd-drawing movies due to release soon, including new Marvel installments, Bond, Dune, Matrix, Top Gun, and many more. Coupled with a slow, but steady, increase in admissions, Cineworld has boldly predicted that their 2022 revenue could approach their pre-pandemic 2019 figures, given the right recovery roadmap. Will we see them achieve it? It’s a little too early to tell, but we wish them luck.
