Curtain up at Cineworld as lockdown ends, but threats remain

Cineworld’s shares, which have already more than tripled from a low of 25p last October, jumped by another 4% early this week, says Naomi Ackerman in the Evening Standard: box-office receipts for the first weekend after cinemas were allowed to reopen in the UK “smashed expectations”. Not only has attendance “soared”, but revenues were increased further by punters “splashing out on popcorn and other treats”. All this raises hopes that the chain can recover from a disastrous 2020, when it suffered an “eye-watering” £1.7bn loss and was forced to seek a £900m bailout from investors.

It’s not just the UK powering Cineworld’s recovery, says James Warrington in CityAM. The reopening of 167 cinemas in the US means that 97% of its screens are now active, while restrictions are due to be relaxed in Poland and Israel. CEO Mooky Greidinger expects a “good recovery in attendance over the coming months” thanks to a “full slate of films” including action-thriller F9, which has already had “record breaking” success in Asia. While cinemas face intensifying competition from the rise of streaming services, Cineworld has signed an “exclusive deal” with Warner Bros securing a 45-day window of exclusivity following films’ release from next year.

The streamers strike back

Still, the threat from Amazon and Netflix isn’t going away, says The Wall Street Journal. Amazon is nearing a deal to buy the Hollywood studio MGM Holdings for almost $9bn. If the tie-up goes ahead it “would mark Amazon’s second-largest acquisition in history after its $13.7bn purchase of Whole Foods in 2017”. It would also highlight “the premium that content is commanding” as streaming wars “force consolidation and drive bigger players to bulk up with assets that help them compete”.

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Amazon’s shareholders should beware, says Nils Pratley in The Guardian. It’s true that any Amazon takeover of MGM will “probably get a regulatory thumbs up”, as owning the film studio behind the James Bond franchise “does not create a licence to kill when the competition includes beasts the size of Comcast, AT&T and Disney”. However, Amazon now runs an “astonishing” span of businesses, including computing and supermarkets, so there is a very real risk that its “many adventures in unrelated fields” means that it “ties itself into knots” and ends up as a “confused conglomerate”.

The size of Amazon’s $9bn offer for MGM has “astonished” many rival studios, say Brent Lang and Cynthia Littleton in Variety. The problem for Amazon is that while MGM has an “extensive library of over 4,000 film titles”, including classics such as Four Weddings and a Funeral and The Silence of the Lambs, many of the most popular ones have already been heavily “exploited”. Worse, MGM’s deal with Barbara Broccoli and Michael Wilson gives them “final say” over marketing and distribution decisions related to the Bond franchise, complicating any plans to debut Bond films on Amazon Prime or create spin-off series.