Embattled Cineworld says ticket sales have failed to recover fast enough despite surge of big-budget films
- Admissions rocketed 487% to 82.8m in the first half of 2022
- Cinema operators are facing massive competition from streaming platforms
- Cineworld Group filed for Chapter 11 bankruptcy in the US earlier this month
Cineworld Group says ticket sales have not recovered as quickly as expected despite the removal of Covid-related restrictions.
The struggling cinema chain said demand in the US, its largest market, experienced a slow start this year due to the Omicron variant’s emergence and a lack of major new blockbusters.
Admissions did grow significantly as lockdowns were lifted, rocketing 487 per cent to 82.8million in the first six months of 2022, but this was still almost 40 per cent below pre-pandemic volumes.
Recovery: Cineworld’s ticket sales skyrocketed by 487% to 82.8m in the first six months of 2022, but this was still almost 40% below pre-pandemic volumes
Cineworld is now warning it expects total admissions in the next two financial years to stay below 2019 levels, partly because external forecasts predict a smaller quantity of theatrical releases.
Cinema operators have not just struggled over the past few years with a dearth of audience figures and enforced closures but increasing competition from popular streaming platforms like Netflix and Amazon Prime.
Financial pressures have been exacerbated at Cineworld by its debt-laden £2.7billion acquisition of American chain Regal Entertainment in 2017, which made it the world’s second-largest cinema chain.
Big-budget sequels, such as The Batman, Top Gun: Maverick and Doctor Strange in the Multiverse of Madness, did provide a much-needed boost to its revenues.
As a consequence, the business saw revenues shoot up by 417 per cent to more than $1.5billion, and post-tax losses tumble by 43 per cent to $293.8million.
Yet the weaker-than-expected rebound in demand led to the company shedding another $144.9million in cash and reducing its immediate and medium-term outlook.
Three weeks ago, it filed for bankruptcy in the US in order to undertake a restructuring, lower its massive debt pile and access near-term liquidity.
Alicja Kornasiewicz, the chair of Cineworld Group, said: ‘The lingering impact of the Covid-19 pandemic contributed to us continuing to face pressures, particularly in relation to our balance sheet and liquidity position.
‘This led us to initiate a Chapter 11 restructuring process in the US that aims to create a more effective business and strengthened capital structure to better position Cineworld for the future.’
The London-listed firm expects to do strongly in the final quarter from a slew of blockbuster winter releases, including Black Adam, the superhero movie Black Panther: Wakanda Forever and adventure epic Avatar: The Way of Water.
However, eToro analyst Adam Vettese said ‘the curtain may well be coming down’ for Cineworld, given the cost-of-living crisis and competition from streaming services.
He added: ‘The pandemic was just a big nudge to consumers who had long since begun to change their movie-consuming habits. Like other defunct media technologies such as the video cassette and DVD, the cinema looks, unfortunately, to be circling the drain.’
Cineworld Group shares were down 4.8 per cent to 2.95p during the late morning on Friday. Since the start of 2022, their value has plummeted by around 90 per cent.