No surprise here, but we hear Regal has shuttered 12 of its 542 multiplexes as parent company Cineworld remains in Chapter 11 bankruptcy.
Those 12 include Anaheim Hills 14, Calabasas Stadium 6, Westpark 8 in the Los Angeles market; Crow Canyon Stadium 6 in the San Francisco area, the Broadway Faire in Fresno, CA; Richland Crossing Stadium in the Philly area, Parkway Plaza Stadium 12 in the Seattle-Tacoma market, Greenville Grande Stadium in North Carolina, Middleburg Town Square Stadium 16 in Cleveland-Akron, Sherwood Stadium 10 in Portland, OR, Colonnade Stadium 14 in Las Vegas, and the Amarillo Star Stadium 14 in Texas.
Sources tell us that many of these theaters are older venues and run down, and it’s not shocking to see them go to the wayside. Of the bunch, we hear an exhibitor might make a play for the lease of Calabasas Stadium given its upscale locale. AMC has been buzzed. How is that? The landlord on the Calabasas Stadium 6 is Caruso Management, and they’re already in business with the No. 1 exhibitor with properties at The Grove in Los Angeles and The Americana in Glendale, CA.
Also not jarring here is that all of the venues which have closed are among the 20 leases that Regal is rejecting in its Chapter 11 filing. Now, even though leases are rejected in a Chapter 11 filing, that doesn’t mean that Regal has completely abandoned the properties; they could still work out a deal with the landlord. But a closed theater, is a closed theater.
Cineworld as part of its bankruptcy asked the court to reject 20 unprofitable but still active Regal leases because its U.S. theater portfolio was a big contributor to its financial hole. It, like most chains, reached agreements with landlords to postpone rent payments during Covid, but said that now average monthly rent owed was up by almost 30% (year-to-date in July from full-year 2019) due to the impact of deferred payments. Unloading the leases would save the Cineworld estates about $12 million, “reduce high fixed operational costs and better position the Debtors to conduct competitive operations going forward,” the filing said. A hearing on this is set for Oct. 6.
While Regal, like all major chains, closed due to COVID starting in mid-March 2020, the chain reopened cinemas for Warner Bros.’ Tenet where they could in late August 2020 (NYC and LA proper weren’t permitting theaters to be open then), however, when the major studios began moving big tentpoles to 2021 and beyond, Cineworld decided to close down again until a supply of features returned, which was March 2021. Why didn’t Cineworld claim bankruptcy during Covid? Sources say that filing Chapter 11 is an easier prospect now for the chain since exhibition returned online versus during the thick of Covid when the entire sector was in a sling.
Critical vendors such as studios and concession suppliers, and other services required to running a movie theater can be expected to get paid first as they’re required means for Cineworld to run its business. In early September, Deadline reported that a U.S. Bankruptcy Court judge granted Cineworld immediate access to approximately $785 million in a financing facility so that they meet ongoing obligations to vendors, suppliers, employee salaries and benefits.
While Regal parent Cineworld reported encouraging results for the period ending June 30, 2022 today (a lot of that had to do with a robust summer and global hits Doctor Strange in the Multiverse of Madness, Top Gun: Maverick and Jurassic World: Dominion, the chain remained bleak on the immediate future, projecting that the box office wouldn’t return to pre-pandemic levels until 2025.
“This has been a challenging period for Cineworld due to the unprecedented impact of the COVID-19 pandemic on our business and its lagging and continuing disruption to film schedules,” said Cineworld CEO Mooky Greidinger.
Deadline has reached out to Regal for comment and will update the story when we hear back.