A re-balancing is taking place among U.S. exhibitors, driven most notably by Cineworld’s bankruptcy. The world’s second-largest exhibitor was forced to file for bankruptcy protection by the one-two punch of crushing debt and the current downturn in the box office as a result of a think slate of films from Hollywood studios.
While overall market dynamics were a challenge for all exhibitors, many of Cineworld’s problems were unique to its circumstances, having gambled on a strategy of global expansion at the height of the market, just prior to the pandemic. In 2018, the UK-based exhibition giant acquired Regal Cinemas in the U.S. for $3.6 billion. In 2019, it announced a second major deal to acquire Cineplex, Canada’s largest exhibitor, for $1.65 billion, which it subsequently backed out of once the effects of the pandemic took hold, but at the expense of being forced to pay a breakup penalty of $1.1 billion.
As part of unwinding itself from its obligations, Cineworld is beginning a process of closing a number of lower-performing locations, announcing that 24 Regal Cinemas will shut down by the end of September. While some closures will be permanent, others will be taken over and reopened by rival exhibitors, who are running the numbers eagerly to identify potential opportunities.
Exhibitor swaps have become frequent occurrences, over the last year. Landmark Cinemas announced that it was taking over the five-screen former CMX Market Cinemas in Closter, New Jersey. When it re-opens at the end of September, it will become the third new location Landmark has opened over the last month, with two additional theatres to follow by the end of the year.
Most new openings are the result of an exhibitor acquiring a new lease on an existing site, rather than completing a new build. The opportunities from lease takeovers are plentiful and attractive.
See also: Landmark Theatres Enters Long-Term Lease With New Jersey Closter Plaza Theatre (Deadline) and Movie theater backs out of Manassas Park deal (Inside Nova)