Cineworld, the world’s second-largest exhibitor, is bracing for a harrowing and consequential passage through the second quarter. On the one hand, the quarter will see a promising show of new blockbuster releases, including titles such as DR. STRANGE IN THE MULTIVERSE OF MADNESS (5/6), TOP GUN: MAVERICK (5/27), and JURASSIC WORLD: DOMINION (6/10). This augurs well for the company’s future since the performance of exhibitors is closely tied to the strength of the Hollywood film slate.
On the other hand, a covenant test is scheduled to take place in June to evaluate the status of the company’s recovery, with significant implications for how the company’s $5B in debt will be managed going forward. Last week, Cineworld warned that there is a risk that it will not pass the test if its upcoming box office results do not measure up to expectations.
In addition, Cineworld is saddled with a court-ordered obligation to pay a $1B penalty for backing out of a planned acquisition with Cineplex, Canada’s largest exhibitor. Cineworld is appealing this judgment, and when the dust settles it may be that a somewhat lower settlement is agreed to by the parties.
While Cineworld’s future is clouded by these uncertainties, company executives are expressing optimism for the long-term, with a gradual return over the next two years to the levels of moviegoing and revenues seen in 2019, the last full year prior to the pandemic.