Cineworld, the bankrupt owner of Regal Cinemas, said Friday that shareholders may lose all their money regardless of any recovery plan for the company.
The world’s second-largest movie theater chain said its been in talks with “key stakeholders” — read: people it owes money — to come up with a reorganization plan as a pathway to exiting bankruptcy.
It also said it’s received offers from investors to buy some or all of its assets, but there’s no all-cash bid to acquire the entire business.
“Based on the proposals received to date, it is not expected that any sale transaction will provide any recovery for the holders of the company’s equity interests,” Cineworld said.
Ouch.
Cineworld is now on life support. Its shares have plunged by nearly 98% over the last two years.
The company’s troubles notwithstanding, this is a shot across the bow of all theater chains, which are trying to figure out a sustainable business model amid rising popularity for streaming services and home entertainment.
Nearly 40 Regal theaters across the United States will be closing for good this year. Among those in Southern California shutting their doors are:
-Sherman Oaks Galleria 16, Los Angeles
-Metro Point, Costa Mesa
-Yorba Linda & IMAX, Yorba Linda
-Hemet Cinema 12, Hemet
-Parkway Plaza Stadium 18 & IMAX, El Cajon
-Escondido Stadium 16 & IMAX, Escondido, Calif.
While Cineworld hopes to keep most of its theaters worldwide operating, it’s hard to see how investors will feel good about handing over more money after Friday’s warning of a shareholder rout.
Cineworld’s larger rival, AMC Theaters, so far has weathered the storm. But amid ongoing economic uncertainty and growing acceptance of home viewing, the industry will have to find a new batch of secret sauce to make average $10 ticket prices palatable for moviegoers.
My suggestion: A sliding scale that reduces ticket costs for less-popular or poorly reviewed films. This might cut into revenue, but it could boost attendance.
And getting booties into seats is what the movie theater business is all about.
