A day after some U.S. cities order movie theaters to shut down, cinema stocks see declines across the board
Entertainment stocks continued to take a hit on Monday as the spread of the novel coronavirus throughout U.S. cities forced the closures of bars, restaurants and movie theaters, while leading many major publicly traded companies to suspend certain business operations.
At this point, almost all sectors have been impacted by fears over the spread of COVID-19. On Sunday, following a weekend in which social media was flooded with photos and video of people interacting with crowds, the mayors of both New York City and Los Angeles made the decision to close bars, prevent dine-in seating at restaurants and shut down movie theaters.
On Monday, shares of movie-theater chain AMC Entertainment were down more than 19%. Shares have fallen more than 31% in the last five trading days, and nearly 63% in the last month.
Movie theater stock movements
- AMC Theatres (AMC): -19.25%
- Regal Cinemas (CINE): -15.14%
- Cinemark Holdings (CNK): -31.09%
- Marcus Corp. (MCS): -26.65%
- Imax Corp. (IMAX): -17.57%
Regal on Monday said it’s closing all of its theaters across the country indefinitely. The theater chain didn’t say when it might reopen, but the Centers for Disease Control and Prevention has recommended a halt to gatherings of more than 50 people for the next eight weeks.
While governments have forced the closure of some theaters in some cities and states, not all theaters have completely shut down. AMC late last week announced increased precautions to prevent the spread of COVID-19, complying with the latest guidance from the CDC.
“AMC is proactively taking action to cut in half the number of tickets that we will make available at all our U.S. theaters,” AMC CEO Adam Aron said in a statement March 13. “With this action, we are facilitating the ‘social distance’ between guests who still want to see movies on a big screen.
“These are uncharted times in the United States. We are very closely monitoring the guidance of the CDC,” Aron continued. “We are complying with all directives from federal, state and local health and government authorities, and with our unilateral move to reduce capacity and increase social distancing we are going beyond what governments are requiring of us.”
While Regal no longer trades publicly in the U.S., the U.S.-listed shares of Cineworld, the U.K. company that owns Regal, were down 15%. Shares of Cinemark dropped more than 31% on during trading on Monday and Imax shares fell more than 17%. Marcus Corp., which operates movie theaters, hotels and resorts, saw shares fall 26%.
Even shares of cinema advertising network National CineMedia fell 9%.
The full impact of the coronavirus spread on the theater-going business is unclear, and how this pandemic changes moviegoers’ and studios future behaviors when it comes to the exhibition are yet to be seen. “With the movie exhibition industry coming to a screeching halt, the question we keep getting from investors and media executives (outside of the film industry) is why aren’t movies that would have been released in theaters being redirected and released online, direct-to-consumer,” Lightshed media analyst Rich Greenfield wrote in a blog post for clients on Monday.
“Even with the entire U.S. movie exhibition shutting down, we would not expect any major film studio to embrace DTC release models for blockbuster films,” he continued. “Sorry consumers.”
Hollywood, along with the rest of the world, is facing an unprecedented situation as the spread of the virus changes things rapidly. The financial loss for Hollywood has yet to be fully recognized. Financial analysts told TheWrap that when the coronavirus first began taking a toll in the U.S., the impact would cost the box office at least $5 billion in global revenue and possibly more if the pandemic persists well into the summer.
Over the weekend, Disney decided to make “Frozen 2” available on its streaming service Disney+ three months ahead of schedule. And on Monday Universal said it will release its upcoming animated film “Trolls World Tour” via video-on-demand on April 10, day-and-date with its planned theatrical release, as well as offering digital home rentals for current releases “The Invisible Man,” “The Hunt” and Focus Features’ “Emma” as early as this Friday — months earlier than expected.
Cinema chains weren’t alone in taking a hit amid concerns over the coronavirus, as the S&P dropped 11% and the Dow Jones Industrial fell roughly 12%.
Shares of Viacom fell more than 16%; Netflix saw shares fall more than 12%; Lionsgate shares dropped more than 11%; Sony and NBCUniversal parent Comcast saw shares drop more than 8%; and shares of Disney were down more than 7%.