Cinemas reopen Fizzle plans, can cinemas survive?

Showplace Cinemas in Evansville, Indiana opened for the first time in two months on June 14. But just two weeks later, the cinema was forced to close its tent again.

It was not the government that closed the business, it was the law of supply and demand.

“We were not making money,” says Mick Stieler, the company’s president.

The state limited theaters to 50% of their capacity, yet even at a huge discount, ticket sales didn’t come close to filling those socially distant places. Stieler discovered that he was losing more money with the open theater than with the closed one.

“I thought we would do twice what we did,” he says. Who knows how long it will take the public to feel good to go out. They are not ready yet. I think maybe September or October. “

Stieler is not alone. Panic is spreading throughout the exposure industry as coronavirus cases increase across the country. With each passing day, bringing news of new infection centers from the deep south to the west coast, hopes of a great national return to the movies seem to diminish. Now, the unthinkable seems to be happening. Theaters could remain essentially dark for most of 2020, a scenario that has become more likely as one tent image after another has shifted to 2021 or beyond.

“When we can get out again, the movies, theaters, and viewers will come together as a classic experience,” said Greg Foster, a consultant at Apple and CJ Entertainment. “But for now, goodwill and hope are not enough.”

Scheduled to debut in August, Christopher Nolan’s “Tenet” and Disney’s “Mulan” were intended to kick-start things, but both films have seen their openings delayed multiple times. Nolan’s film is moving forward with its release, particularly in international markets that have been able to slow the spread of the coronavirus. “Tenet” will begin its phased release in 70 overseas territories on August 26, followed by selected cities in the United States on Labor Day weekend. It is unclear how willing the public will be to leave their homes during the health crisis. But if “Tenet” is successful, it will be a boon to foreign exhibitors who haven’t had much new product to show as they have started to restart business.

“They are ready for business, but they need Hollywood products to survive,” says Chris Aronson, head of national distribution for Paramount Pictures.

Theater owners around the world hope that other major studios will follow suit. However, part of the problem is that studios are reluctant to release these hugely expensive movies when public health officials in major markets like New York and California will not allow theaters to reopen. Exhibitors prevail over studio executives to move forward anyway.

“If any major film distributor wants to wait until 100% of markets are open for business, they will be waiting until a vaccine is widely available,” says John Fithian, head of the National Association. theater owners. “That means there will be no theatrical revenue for at least a year. They need to adopt a completely new business model. We are experiencing a pandemic. “

Summer Movie Box Office Bust Coronavirus

But Fitihian’s plan is risky. With budgets in the range of $ 175 million to $ 200 million, “Tenet” and “Mulan” would have to receive approximately $ 700 million worldwide to make a profit. For a movie like “Tenet,” which is shrouded in secrecy and dependent on turns to keep viewers interested, a tiered global release increases the likelihood of it being hacked and its mysteries revealed in a way that affects its popularity. Other studio executives are struggling to respond to the constant setbacks and setbacks, because when “Tenet” or “Mulan” move, that has sparked other major studio releases, from “A Quiet Place Part II” to “Top Gun: Maverick “, to change their plans

“We are not going to be the first to come out,” says Aronson of the sequels to “Quiet Place” and “Top Gun.”

Some suggest that the exhibition industry should look for smaller films that have focused on opening during the pandemic, such as Solstice Studios’ “Unhinged” with Russell Crowe and Sony’s romantic comedy “The Broken Hearts Gallery.” They carry smaller budgets, so they don’t need to break box office records to make a profit. For multiplexes, it would be an opportunity to have new content to display for the first time in months.

But the owners of the theaters are not convinced that the public leaves the house to see any movie.

“I’m not so sure it’s a winning model for us,” says Nic Steele, founder and owner of Eclipse Theaters in Las Vegas. “The smallest movies don’t pay the bills.”

For that reason, Steele chose not to open his location, even when Nevada officials gave the go-ahead to theaters to resume business. Spending the resources to hire employees, restock inventory, and make the place COVID-compliant only to close again, he says, could be disastrous.

“I don’t expect us to reopen until December or 2021,” he says. “I don’t think the environment is cozy enough or profitable enough. There are many more obstacles beyond state government that allow us to reopen. “

Meanwhile, major chains like AMC and Regal, which have billions of dollars in debt, are getting desperate. In some cases, they have renegotiated the terms of their debt agreements. Even though that gave them more clues and allowed them to pay their leases and insurance, they cannot operate indefinitely as they go deeper and deeper without the possibility of income coming soon. The result may be a cascade of Chapter 11 filings, similar to what happened in the commercial space with the J.Crew and Brooks Brothers bankruptcies.

“The industry emerging from the pandemic will look very different,” says Hal Vogel, a veteran media analyst. “These are very indebted companies and they will not be able to get out of all that debt. That means a business that was already shrinking will become even smaller and more consolidated. “

The pressure is even more intense for smaller operators. Thomas Wienholt started the spring with high hopes. Horizon Cinemas, the theater chain he runs with his father and brother in suburban Maryland, opened its fifth location on March 6, and Wienholt felt good about the mix of franchise and superhero movies that Hollywood was destined to send to your screens. Ten days later, a disaster struck and the state ordered theaters to close their stores.

“It is difficult when you have built something for life and they tell you you have to close,” says Wienholt. On the Horizon website, there is a link to a petition urging Maryland Governor Larry Hogan to allow theaters to open, but Wienholt acknowledges that is only part of the problem. The movie business won’t work if it doesn’t have new box office hits to screen.

“You can play old movies and there is something of interest,” he says. “But when you run seven days a week, there are plenty of seats to fill.”

In Vidalia, Georgia, Sweet Onion Cinemas reopened its doors shortly after Governor Brian Kemp lifted the state ban. Only a few dozen people came to the shows every weekend, a fraction of the typical number.

On July 5, the theater posted on its Facebook page that after many prayers, the owners had decided to permanently close the theater.

“This afternoon and tonight will be our last set of movie schedules,” the owners wrote. “It has been a great 19 years and we will miss seeing you. Stay safe and God bless you. “

City Base Cinema in San Antonio, Texas also attempted a reopening in May, but had to close again. “It just doesn’t make sense from a public health perspective,” says Jim Hampton, a company spokesman. The owner, he says, “wants to encourage others to be safe and stay and take refuge on the spot.”

Cinemark Theaters, the third largest theater circuit in North America, has reopened five theaters in Texas and Florida. In a court statement filed in federal court last week, the company’s executive vice president of operations, Steven Zuehlke, said he was unaware of any COVID broadcasts in those theaters or in other theaters in those states.

But many clients, and health experts, still see it as a risk not worth taking.

“I won’t be attending a movie anytime soon,” says Shawn Gibbs, dean of the Texas A&M University School of Public Health. “My family and I are not exposing ourselves to situations that increase our risk. I’m going to the grocery store. I don’t have to go to the movies. “

Gibbs notes that theaters are cool, dry environments without exposure to sunlight, which means the virus could survive longer there. He says that anyone who goes to a theater should wear a mask, and should only go to places where the masks
are required.

Paula Cannon, an associate professor of microbiology at USC’s Keck School of Medicine, says she would require wearing masks for the duration of a movie – that is, without exception, to eat popcorn. She noted that air conditioning units have been shown to spread virus droplets, and wearing a mask is the only defense against that.

But if a theater made the requirement and ordered viewers to sit at least six feet away, then it might not be as risky as other interior spaces, she says.

“I would feel more comfortable in a movie theater where customers were separated than I would be in a restaurant,” she says. “Movie theaters have a unique location. It is easier for them to establish and maintain a regulated space. “

He adds that the sooner people adopt masks in all public spaces, the sooner they can reopen more theaters and other companies.

“If we want good things like theaters, we have to pay the price,” she says. “The price is that people do what they need when they’re not in the theater to make it safe enough to go to theaters.”