EXCLUSIVE: As movie theaters have shuttered around the globe due to the ongoing coronavirus pandemic, exhibition is among the front line of industry sectors feeling the crisis. Cineworld Group, which owns Regal Entertainment in the U.S. and is the world’s second biggest circuit, has faced challenges recently, including closing cinemas until further notice, a share price that plunged in mid-March and a backlash from staff and the public as some UK employees were initially laid off last month.
Cineworld Group CEO Mooky Greidinger, a veteran of the exhibition business, addressed those issues and more with us. In the Q&A below, he talks about having improved the offer for UK staff, how Regal is dealing with the situation in the U.S., his views on studio scheduling decisions and why he’s “optimistic” for the time when cinemas come back online. While he believes Cineworld remains on “solid ground,” he cautions that regarding the international box office, “We will need the U.S. to be back in action in order to have the international markets back in action as well.”
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DEADLINE: How are you feeling about the current situation facing Cineworld Group, and exhibition in general?
MOOKY GREIDINGER: I am optimistic. Government plans are changing every day and as we have a big estate, we have a lot of issues to deal with, but in general this is being done. The first message that I get all around, and believe me, I am talking to so many people every day, is that now that most of the world is locked at home, people only now really appreciate what it means to go out and what it means to have some entertainment outside the home — and this is only convincing me more and more that once this is over, people will be back not only in cinemas, but in every place they will be able to be in the open air, to meet people, to see people, to do any social activity that they did before.
I was talking yesterday with a very good friend of mine and he said to me, “I would give anything right now just to sit in a coffee shop and have a coffee.” This is the difference between cooking in your kitchen and going to a restaurant, between having a coffee in your living room and going to a coffee shop, and between seeing a movie at home and seeing a movie outside in the cinema on the big screen.
So, in general if you ask me, and maybe not everyone would say this, but I am optimistic. The only uncertainty we have is of when we are coming back, but I am sure of the success once we do.
DEADLINE: When theaters get the green light, have you been thinking about what kinds of campaign you might launch to encourage people back to the cinemas?
GREIDINGER: I don’t think this is something that we should focus on at this stage; we want to see the “light” first and then plan. Of course when coming back we need our partners, the studios, to set up their schedules and we need to open in a way that we have already a clear lineup ahead of us. We can then plan a softer opening ahead of maybe two weeks of run-ups.
Together, between a great marketing campaign supported by great movies, people will want to go out and will be happy to be in the cinema again.
DEADLINE: How often are you in contact with the studios? What has your reaction been to some of the really big scheduling changes?
GREIDINGER: We are in contact with most of the studios almost twice a week. I think we have received amazing support from most of the studios and I think that the cooperation and understanding is very clear between us and most of the studios. They have their issues and we have our issues, but at the end of the day, this is maybe one of the biggest business partnerships that exists. I was sorry to see that one of the studios decided to go in a different way.
DEADLINE: What are you referring to?
GREIDINGER: The decision to release Trolls World Tour day-and-date with EST was not only a one-sided move against exhibition, but was also a huge business mistake. Trolls should have been a big theatrical movie and now it goes as a direct to video title. Universal made a move which, in my opinion, was something that is undone in such a situation. You do not change the basic rules of the game… especially when your partner is in its worst situation. Everything can be negotiated and any subject can be discussed… They could have pushed it like other studios did, but it is their movie and their decision.
I will add that the other studios have been fully transparent with us and this is very important for me to stress — fully transparent. Not every detail was in agreement, but most of it was.
We fully understand that they need to protect their product, and I would say more than this, we also don’t want them to release a big movie during a time when the cinemas are not really in full power. We will need their support and they for sure will get our support once we are open. I have no doubt we will see from them a clear lineup as soon as there will be an opening date.
DEADLINE: What do you think about statements made by AMC’s Adam Aron recently that America may be enjoying the summer movie season theatrically?
GREIDINGER: First of all, I hope that he is right. Adam is a competitor but he is also a colleague. I would also say that I believe that towards the end of June, we will be able to open the cinemas and hopefully in early July, we will see the first blockbuster released.
Saying that, our responsibility as management and for our employees, customer and our shareholders, is to prepare for a longer closure.
I think that if we look at the situation of the U.S. which got the impact of coronavirus later, after Europe and for sure Asia, there will be a lot to do in general for the industry. I hope it will not take too long.
The U.S. is the leading market of the cinema industry in the world and I hope there will be developments and solutions that will allow us to come back at some point in June. However, if it will be a month, two months or three months later, we will need to be ready for it and this is what we are doing now, preparing ourselves and taking all measures that we need in order to keep the company healthy and safe and ready to come back into business.
DEADLINE: It’s conceivable that some of the overseas cinemas will open before domestic. Let’s say that in France or Germany or Poland they can open in May. At that point, the studios are not likely to be giving over big movies because they would presumably want to wait for domestic. Do you have any idea how you would work it if some of your other markets opened before North America?
GREIDINGER: I don’t see a possibility except in markets that have really, really strong local product. I can only think of France [where Cineworld is not active], maybe it has enough product. But I don’t see a situation where we can open cinemas without the big studio product.
This is one of the things that will probably make us internationally have to wait for the U.S. market to come back, because opening the cinemas means for us to pay full expenses and without the big movies, this is really impossible.
It would not be realistic to open with older movies, with a cheaper price. This is a great idea for 10 or 14 days or some kind of a run-up before the blockbusters are released, but we will need the U.S. to be back in action in order to have the international markets back in action as well.
DEADLINE: Turning to Regal, are you able to continue in any way with refurbishments or has that all stopped?
GREIDINGER: We have stopped all new projects because we need to be careful and responsible from a cash point of view. Saying that, where possible and permitted, we are continuing works on refurbishments that are ongoing, mainly completing works and taking advantage of the fact that we can accelerate the progress. We also need to remember that we have a commitment to the contractors that are there and the contractors that can continue to work are doing so. I would say that expenditure of CAPEX is down, in the region of at least 80%.
DEADLINE: And what about the situation with Cineworld in the UK and some very upset employees there? How has that evolved?
GREIDINGER: (When) we came out with a plan for our employees, out of almost 5,000 employees in the UK, there was a misunderstanding of about 500 employees. You know in today’s culture of naming and shaming, it was very quickly spread in the media and everywhere else.
I would say that we offered the best the company could to all the employees in the UK. We did the same for all the employees in the other countries according to what we had on the table when we had to take the decision.
Two days later, the UK government came with a package, and as you can guess the UK government is a bit richer than Cineworld, which helped us to improve this offer and include also most of our hourly employees. We changed the plan, and I am happy that situation is much better now for the team.
I think that most of our employees understood that it was a big noise in the media but reality was different. I’m confident that once this is all over, if someone will look at what Cineworld Group has done across all the countries in relation to taking care of our employees, and compares it to other companies in similar size, that got into a situation of zero income, it will show that we did the best that we could for our employees, as our team is always a first priority for us.
We have almost 40,000 people around the circuit to take care of and I think we did it in sensible way, with full transparency. In addition to all of the solutions that we offered to our employees, we also created a special hardship fund which is to support extreme cases where people have special situations at home, either from a health point of view or from family situations, etc.
Our HR teams are working tirelessly around the clock with dealing with the big picture on one hand, but also with the individuals so that no-one will be forgotten, and in case of a need, can approach the company and get support. I am proud of the way that we have handled this and if there was a misunderstanding at the early stage, it was not something from any bad intentions and I am fully behind the decisions that we took.
DEADLINE: Are the governments helping you out in other markets?
GREIDINGER: Yes, as you know there are 10 countries so I won’t go through all of them, but in general there are solutions that are coming up almost on a daily basis. Some governments were quicker, some were slower, but the governments understand. We get cooperation and support for our employees in most of the countries and we are working with the government all around in order to improve what we can for our employees.
DEADLINE: What is happening with staff at Regal?
GREIDINGER: Most of the employees at Regal are furloughed and the people that are needed for the business and for keeping the estate and the cinemas in a good condition are on board. We are taking care in supporting employees with special needs. We have the hardship fund, we are also getting support from the Will Rogers Fund in LA and we are working really around the clock to be in touch with our employees to see that things are okay. Most of our cinema managers are on board checking the cinemas, as much as it is allowed to get out of home, seeing that the cinemas will be in good condition, kept well for the day that everybody, all the team will come back and reopen Regal.
DEADLINE: What is the status of the Cineplex deal?
GREIDINGER: No change in the status, we are discussing with the Canadian government and will inform when there will be news.
DEADLINE: When you had your earnings call last month there was a lot of concern about debt. Have you been able to have a situation in place where you’re not paying rent or paying just 50%?
GREIDINGER: I would say that when the cinemas were closed down, everybody was shocked, including our landlords. This is something that had not happened in at least the last 50 years and it was a big shock for everyone.
Over the last weeks, we have been in contact with our landlords in all 10 territories. We see more and more understanding. We are reaching agreements with the various landlords step-by-step on many of our projects. Some of them are not there yet, but they will need to understand that our income is zero, and in no way is it possible to pay full rent when we do not have any income.
I think this is not only the case with us, it’s the case with many retailers all over the world and in some of the places there will be solutions that are introduced by governments and in some places it will be simple common sense between partners.
People understand that our relationship as the big tenants, ranges anywhere between 15-50 years and within this period, if there are three or four months that we will not be paying rent, it is really not a big impact on the general deal and the game will need to be played differently. We cannot pay rent during the time our cinemas are closed for such a reason as the coronavirus.
DEADLINE: Are you concerned about the financial viability of the company going forward?
GREIDINGER: Not at all; I think we are well prepared. We started preparing for this situation two months before the closure, having preliminary talks. We arrived to the situation prepared.
It is a very difficult situation from the point of view, like we said, of dealing with the employees first of all, but also with all our vendors, all our suppliers and the landlords. However, the company is strong and standing on a solid ground and we will be over this, we hope, sooner rather than later and we’ll be back in business.
I think really to summarize it, we are optimistic like I said earlier. People want to be out, we want our customers to be back with us and we want to keep the place of work for our employees. More and more now that people are sitting at home, there is a real hunger to get out, people want to be out and I think that very soon, hopefully, all this will be behind us, and we will continue to be the best place to watch a movie .
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