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Finance editor Nial Dixon gives his take on the decline of Cineworld and the cinema industry
Fears of Bankruptcy have loomed for the worlds No. 2 cinema, Cineworld, after prolonged absence of attendance and a weak year for film.
The Company is officially making plans for Bankruptcy, and with that has landed a 60% share price drop.
The company has subsidiaries in the US and UK like Picturehouse Cinemas which has managed to accumulate just under $5bn of debt.
Cineworld have also blamed the lack of film releases post covid and the customer levels just not being to what they expect.
One former non-executive director at Cineworld believes the prices are too low and thinks a night out to the cinema is very inexpensive.
Not sure if the solution to getting people back to the cinema is by upping the prices but maybe it might help with their debt problem.
This could end up with the number of cinemas and screening reducing massively and the industry transitioning to more of a luxury experience for the few and not the many.
Cinemas just aren’t popular right now, maybe it’s a phase that’ll come back like vinyl but for now we will definitely see a decline in them.
It’s not as if we’ve only just noticed cinemas are failing but we kind of hoped they’d get back on their feet after the pandemic.
One of Cineworld’s main rivals AMC, which you may have heard of from the meme stock frenzy, has somehow coped through the pandemic due to streams of funding from individual investors.
This frenzy was generated by reddit groups that decided to invest heavily into different companies. Why? Well, I guess the pandemic was boring and there was nothing else to do.
Moral of the story is if you’re going to be a cinema company in 2022 make sure you have a bunch of crazy investors backing you.
By Nial Dixon
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