Specialist
Former senior executive at Regal Entertainment Group (Cineworld Group plc)
Agenda
- Implications of Cineworld’s (LON: CINE) potential Chapter 11 filing in the US, touching on CAPEX implications and circuit rationalisation
- Additional liquidity risks, including outlook on ongoing Cineplex litigation
- Regal’s competitiveness amid restructuring, highlighting opportunities for AMC (NYSE: AMC) and Cinemark (NYSE: CNK)
- US trading update – attendance and ATP (average ticket price) trends and box office revenue recovery curve in light of film slate delays
Questions
1.
What are your assumptions around the implications of Cineworld potentially filing for bankruptcy in the US, in terms of operations and additional potential impacts?
2.
You mentioned a series of mistakes that Cineworld implemented when it acquired Regal in 2018. Could you summarise those? Do you have any thoughts on whether they can be reversed?
3.
Do you think Cineworld or Regal could regain market share, assuming that potential new shareholders would agree to install recliners?
4.
Do you have a view on expenditure on a screen basis to install recliner seats? What is the trade-off or offset? You mentioned roughly 50% of capacity is lost when installing recliners. Can this be recouped by higher occupancy and potentially pricing?
5.
How do you think installing recliners might impact attendance for Regal in the US in today’s post-pandemic climate, given a shorter theatrical window and potentially weaker film slate?
6.
If Regal filed for bankruptcy, what impact might this have on the circuits themselves? Are we looking at getting rid of rents and leases for the circuits?
7.
You mentioned 10-15% of the circuit being loss-making. What does this mean for Cineworld’s Imax partnership? What’s your view on the premium theatre systems in place? Are there any opportunities to upscale or expand these across the circuit?
8.
What’s the opportunity to expand the large or Imax format across the current US circuit?
9.
Regarding the potential around filing for Chapter 11, Cineworld has stated it doesn’t expect any immediate impact on everyday operations such as circuits and jobs. If you expect a potential circuit rationalisation, how does this feed through to labour costs and potential cost reductions for the operation?
10.
What might a Chapter 11 filing mean for Cineworld’s operations in the UK or the rest of world?
11.
Do you have any views or outlook on the Cineplex litigation? I’m trying to think of possible additional liquidity risks, so could you share any light on timings and possible outcomes under the new circumstances?
12.
Do you foresee any additional liquidity challenges?
13.
Consensus seems to be that cinema attendance was weaker than expected in H1 2022. What is your outlook for attendance in H2 2022 and potentially into 2023?
14.
You’ve mentioned a healthier film slate. What might this look like post-coronavirus? I appreciate there are delays, but I think studios have historically averaged around 150 wide releases per year. Do you foresee studios returning to this number any time soon?
15.
In your previous Forum Interview [see Cineworld – US Revenue & Profitability Opportunities – 29 April 2022], you stated that ticket prices for Regal roughly averaged USD 12, with family movies and premium content driving that USD 2 variance. Have you noticed any changes to ATPs [average ticket prices] in the last few months? What’s your pricing outlook for Regal?
16.
If we assume Regal pursued a full CAPEX strategy in terms of recliners and expanding its Imax partnership, what do you think is the headroom to increase pricing in that scenario?
