European markets are down as much as 10% this morning. Entertainment shares are being hit hard, and UK-based Cineworld, which owns U.S. outfit Regal Cinemas, has taken another sharp downturn.
The London-listed company was trading at £0.26 ($0.32) per share earlier today, down 42% from the market opening this morning, before recovering to around £0.38 ($0.47). In just one week it has fallen from £1.06 ($1.31) per share (a drop of more than 70%), and was trading as high as £2.22 ($2.74) earlier this year.
Cineworld operates 9,518 screens at 790 sites in 11 countries, encompassing the Regal chain, which it bought for $3.6BN two years ago, and also the Brit indie Picturehouse Cinemas. The company is set to buy Canada’s Cineplex in a $2.3BN deal, struck in December, which would see the combined entity also become North America’s largest exhibitor – no word yet on if the current financial situation could prove problematic for that deal.
Last week, in an earnings call, Cineworld CEO Mooky Greidinger warned that a further downturn could see the company breach its debt, but insisted that it “stands on solid ground”.
However, the problems for cinema owners show no signs of abating. Theaters around the world have shuttered as authorities attempt to stem the spread of Covid-19. Even those that remain open, including in the U.S. and UK, are suffering from a lack of product as distributors delay their major releases to avoid the crisis. For those that continue to operate in the coming weeks, there will be no Mulan, Peter Rabbit 2, A Quiet Place II, or No Time To Die (to name but a few) to attract audiences.
There are green-shoots of recovery in China, where recent reports have said some cinemas could reopen next month as the virus begins to be controlled, but most of the rest of the world is likely to experience a lengthy lockdown period that would significantly harm the exhibition business.
Further exhibitors are also suffering significant drops in share price. UK chain Everyman has fallen 33% today, while France’s Gaumont is down 11%.
Elsewhere in the Euro entertainment space, ITV shares were down more than 13% today, Italy’s Mediaset was down more than 8%, while the Germany-based ProSiebenSat.1 Media was down north of 11%, to name just a few.
Central banks have been making a co-ordinated effort to ease the burden on markets but have been unable to ease the decline as of yet.
In the U.S. this morning, trading was temporarily halted as stocks plunged. AMC Entertainment, the U.S. outfit part-owned by Wanda that also owns major European chain Odeon, experienced a 20% decline. The company announced on Saturday it would cap attendances in the U.S. at 50% to comply with coronaries preventative measures, a move replicated by numerous other chains.