Cineworld confirms UK and US closures; UK car sales hit two-decade low – as it happened

And finally, shares in Cineworld have closed down 36% tonight.

The closure of sites in the UK and US has wiped a third off the company’s value.

The stock ended the day down 14.2p at 25.2p, which is slightly above its record closing low set back in March (as the UK entered its national lockdown).

At one stage this morning, shares had halved in value - and the bigger picture is that they’ve lost roughly 90% this year -- one of the biggest corporate casualties of the pandemic.

As David Madden of CMC Markets puts it:

Cineworld announced extreme measures this morning, the company plans to temporarily close all 127 of its cinemas in the UK and the same goes for all 536 Regal theatres in the US. The news clobbered the share price. The closures of the cinemas could come as early as later this week.

Up to 45,000 employees could be impacted by the decision. The group said it is considering its liquidity options, so it seems that it is fearful it could run out of cash. The fact the latest James Bond movie – No Time to Die – won’t be released until April 2021 has made matters worse for the struggling business.

Here are our main stories on Cineworld, and the wider crisis in the UK economy, today:

That’s all for today. Back tomorrow. Thanks for following, and best of luck to all Cineworld staff and their families. GW

Cineworld workers on zero-hours contracts in the UK could be left without pay beyond Thursday after the cinema chain’s chief executive said the government’s job support scheme would not save 5,500 jobs.

My colleague Jasper Jolly explains:

Mooky Greidinger, the Cineworld chief executive, whose family trust owns a fifth of the company shares, said the job support scheme “cannot work for us” because it did not help companies earning no income. The comments were contained in a memo sent to employees seen by the Guardian.

The job support scheme is a central plank in Rishi Sunak’s plan for the UK economy as the furlough scheme comes to an end. Under the scheme the government will support a maximum of only 22% of the salaries of workers on reduced hours – significantly less generous than the 80% offered at the start of its predecessor. The new scheme has been criticised by some economists and opposition MPs for not incentivising job retention.

Cineworld on Monday confirmed it would close its 127 UK cinemas after distributors for the James Bond spy franchise delayed the release of the latest instalment, depriving the industry of another potential blockbuster. The chain will also shut more than 500 US cinemas, and a total of 45,000 UK and US workers are expected to be made redundant once contractors, such as cleaners and security guards are included. It is understood workers may be encouraged to reapply for jobs once the cinemas reopen, but there is no clear timeline for that to happen.

In the staff memo, Greidinger wrote: “The UK government announced a new job support scheme last week and as you know, the aim of this is to support viable jobs. This said, the new government scheme places a greater financial burden on employers, which cannot work for us when we have almost no income.”

Here’s the full story:

Credit rating agency Fitch has downgraded Cineworld to CCC-, a very low rating which indicates the company is likely to default on its loans.

In a statement, Fitch says Cineworld is approaching “a short-term liquidity crisis”, and could need new funding by the end of this year.

The agency explains:

The downgrade reflects the temporary suspension of operations in the US and UK, fast-depleting liquidity and the continued, significant uncertainty on the pace of recovery as a result of the coronavirus pandemic. Lower-than-expected cinema attendance across Cineworld’s operating footprint is driving a longer and deeper period of cash burn than we originally anticipated. Our base-case forecasts indicate that, the company’s current liquidity levels may only be sufficient until November to December 2020, assuming no revolving credit facility (RCF) extensions.

The pace of Cineworld’s recovery is highly dependent on cinema attendance and new film releases. Both factors are not in Cineworld’s control and they remain susceptible to the current increase coronavirus cases and the instigation of further lockdown measures. Cineworld’s scale and cash- generative business model are supportive of a rapid recovery if sufficient cinema attendance levels were to return. However, they now face insufficient liquidity in the short term.

Back in the UK...Amisha Chohan, equity analyst at Quilter Cheviot, warns that Cineworld will face a high price if looks for fresh financial support.

She writes that investors might prefer to back a tech company such as Netflix, rather than a cinema chain:

It seems that there is a vicious circle – with concerns over audience levels, the Studios are unwilling to release their strongest content. And without decent content, audience levels are unlikely to return to cinemas any time soon. Cineworld suffers from high debt, and in our view, management will have to seek additional funding to survive. We believe financing will be expensive as seen with the recent private investment of $250m which was at the cost of 11%.

The cinema industry continues to be disrupted by the rise of premium video on demand (PVOD) services, such as Netflix, which offer a more compelling investment case.

Just in: the US services sector continued to grow solidly last month, according to two rival surveys.

Data firm IHS Markit reports there was a solid upturn in U.S. service sector business activity, led by faster rise in new business and a pick-up in overseas demand.

This encouraged US firms to take on more staff (unlike in the UK, where headcounts fell in September).

This left Markit’s US services PMI at 54.6 in September, down slightly from 55.0 in August, but still showing a decent expansion.

The Institute of Supply Management’s services healthcheck has also been released, and it shows that growth accelerated last month. The ISM’s non-manufacturing PMI jumped to 57.8, from 56.9, well into expansion territory (over 50) as firms expanded their headcounts.

Chemicals firm Dow and digger maker Caterpillar are the top risers on the Dow, up over 2.5% each, suggesting Wall Street is more optimistic about economic recovery hopes.

However, soft drinks business Coca-Cola has dipped 0.1%, while credit card operator Visa and sportwear brand Nike are lagging behind, in a sign that consumer spending is weak (a factor behind Cineworld’s woes).

Donald Trump continues to be criticised for his trip to see supporters outside Walter Reed medical center yesterday, but the appearance seems to have calmed the markets.

Wall Street has opened higher, amid speculation that the president could be discharged soon, three days after being taken in for Covid-19 treatment.

The Dow Jones industrial average has jumped by 249 points, or 0.9%, to 27,932 points, while the tech-focused Nasdaq is up 1% in early trading.

Trump’s precise medical condition remains unclear, with the White House’s medical team saying it “has continued to improve”.

The president’s chief of staff says he’s ‘optimistic’ that Trump could be back to the White House later today.

Meanwhile, the security officers who accompanied Trump on his “completely unnecessary Presidential ‘drive-by’” - as one doctor of emergency medicine put it - must now quarantine.

The CEO of the Vue cinema chain, Tim Richards, has warned that small independent picture houses might not survive the pandemic.

He tod Radio 4 this morning today that the absence of major new releases was a blow to the whole industry.

“Our problem right now is we have no movies.

This was a big blow for us. We’re likely going to make it through, I’m concerned about the independents and the small regional operators right now that are going to really struggle and when they close they may not reopen,”

Richards has also warned today that Vue is looking at ‘all options’, following Cineworld’s move.

But he remains hopeful that Vue (which has 91 cinemas with over 880 screens in the UK and Ireland) would get though the crisis.

5 Oct 202009.01 EDT

Rob Davies

Nightclub operator G-A-Y has launched a legal battle against the Department of Health, in an effort to overturn the 10pm curfew on bars, pubs and restaurants.

Amid mounting criticism of the curfew, G-A-Y, which runs the renowned Heaven club at the heart of London’s gay nightlife scene, wrote to the health secretary, Matt Hancock, advising him it was preparing to take legal action.

Law firm Simpson Millar, acting for G-A-Y, questioned the logic behind the “arbitrary decision” to impose a 10pm curfew, a restriction that has sent sales plunging and left many businesses fearing they won’t survive the winter.

Here’s the full story:

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Chancellor Rishi Sunak has suggested he could be open to providing more help to the entertainment industry in future, at the “appropriate time”.

However, he didn’t have any last-minute help to prevent Cineworld temporarily closing its UK venues from Thursday.

The Press Association has the details:

Chancellor Rishi Sunak said he would be interested in helping the entertainment industry recover with a Eat Out To Help Out-style scheme at the right time.

In an interview after his Tory conference speech, Mr Sunak again defended the cut-price meals scheme from claims it could have added to the spread of Covid-19.

Asked whether something similar could be used to help the ailing entertainment sector, he said:

“Lots of ideas have been put to me and I think there’s an appropriate time to deploy interventions like that.

“It might not be the right time to deploy an intervention like that but I’m very sympathetic to the idea, at the appropriate time, we should be doing what we can to drive our recovery.

Here’s the latest on Odeon’s plans:

Time for a quick recap.

Cineworld, Britain’s largest cinema chain, has confirmed it is mothballing all its screens in the UK and the US, due the impact of Covid-19 on the industry.

The move could mean up to 45,000 job losses, including over 5,000 in the UK.

The company told the City this morning that:

In response to an increasingly challenging theatrical landscape and sustained key market closures due to the COVID-19 pandemic, Cineworld confirms that it will be temporarily suspending operations at all of its 536 Regal theatres in the US and its 127 Cineworld and Picturehouse theatres in the UK from Thursday, 8 October 2020.

News of the closures broke on Sunday morning, upsetting and angering staff who hadn’t been informed by the company at that stage.

CEO Mooky Greidinger blamed the decision on the lack of major blockbuster releases, including the delayed James Bond film. He explained:

We are like a grocery shop with no food. We had to take this decision”

Shares in Cineworld promptly halved when the London stock exchange opened at 8am, and are currently down 40% at 23p (down around 90% this year).

Cineworld also warned that it is looking at all possible ways of raising more funds, amid talks of a debt restructuring.

Boris Johnson has urged people to go to the cinema and help the sector, but the Prospect union has criticised the government for not providing more help.

Other cinema chains are also facing the consequences of the pandemic, with Odeon deciding to close a quarter of its cinemas on weekdays.

The pandemic has also hit the UK car industry, which just posted its weakest September sales figures since 1999. However, sales of more environmentally friendly cars did rise, as buyers shunned diesel and petrol models.

A survey of the UK services sector has found that firms kept cutting jobs last month, despite a rise in activity.

In the eurozone, service sector activity fell following the introduction of tighter curbs. Economists fear Europe could suffer a new downturn this winter, as the pandemic continues to hit growth.

Sky News is reporting that Cineworld’s lenders are preparing for a debt restructuring, due to the imminent temporary closure of its cinemas in the UK and US.

They say:

Lenders to Cineworld Group have parachuted in advisers for urgent talks on the company’s $8bn (£6.2bn) debt mountain as it mothballs hundreds of cinemas on both sides of the Atlantic.

Sky News has learnt that a syndicate of banks has appointed FTI Consulting to negotiate with the stricken multiplex operator following a pitch process last week.

City sources said on Monday that the announcement about the temporary closure of roughly 660 Cineworld sites in the UK and US - which sent its shares crashing by more than 50% - was likely to presage a formal debt restructuring.

5 Oct 202007.38 EDT

Odeon to close a quarter of cinemas during the week

Mark Sweney

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Odeon is to shut a quarter of its cinemas during the week as a dearth of Hollywood blockbusters and the second wave of the pandemic keeps movie-goers at home.

Odeon, which operates 120 cinemas in the UK and Ireland, has contacted members of its Limitless loyalty scheme to say that some of its outlets will move to a weekend-only model from this Friday.

The shift to Friday through Sunday opening, which sources say was made before the announcement that the premiere of the latest James Bond film is to be delayed until next April, comes as rival Cineworld moves to temporarily shut all of its cinemas in the UK and the US.

Odeon, which is owned by AMC Theaters, the world’s largest cinema chain with over 1,000 outlets, blamed the lack of almost any new films.

In an email to customers, the company said:

“We look forward to reopening full time when the big blockbusters return,”

“But in the meantime, we promise to bring you a great choice of big-screen films to enjoy at the weekends.”

Cinema owners are stuck in a grim cycle as distributors and studios hold back the release of high profile films, from the next instalment in the Fast & The Furious franchise to Marvel’s Black Widow, amid concerns audiences won’t go and see them (as Cineworld’s CEO Mooky Greidinger explained earlier)

In the past week the top 10 films in cinemas in the UK and Ireland made less than £2m at the box office. Last year, an average week notched up £24m.

The UK retail sector suffered a drop in customers last week, as new Covid-19 restrictions and a burst of autumnal rain kept people at home.

That’s according to analytics firm Springboard, which found that retail footfall dropped most sharply in the evening -- after the government brought in a 10pm closure for pubs and restaurants.

Springboard reports that:

• Footfall across all retail destinations throughout the UK declined by -3.5% last week from the week before
• Footfall across retail destinations declined by -8.4% between 7pm and 11pm and -14.8% between 11pm and 7am
• UK footfall fell each day between Wednesday and Saturday, averaging -7.1%, no doubt in part a consequence of the severe rain across the UK
• Footfall across all retail destinations is now 31.4% lower than 2019

Bectu, which represents workers in broadcasting, entertainment, communications and theatre, agrees that major studios must bear the blame for Cineworld’s closures:

Philippa Childs, head of Bectu, says:

“Confirmation that Cineworld is mothballing all its cinemas will be devastating for everyone who works there.

“Cinemas are currently able to operate safely so this decision is entirely the result of distributors choosing to delay the release of blockbusters in the hope of making extra money further down the line. This is short-sighted in the extreme and if other chains follow Cineworld’s lead it’s hard to see how there will be a fully functioning industry to return to in six months’ time.

Bectu will be working with the UK Cinema Association to pressurise distributors to follow Christopher Nolan’s lead in bringing pictures forward to help maintain a functioning cinema industry.

[Nolan’s Tenet is one of the few blockbusters to hit the screens in recent months].

Childs also warns Cineworld not to treat its staff badly (many are on zero-hours contracts).

“It is our expectation that Cineworld will continue to fulfil its legal obligations with respect to its employees, retain as many as possible, and that those it has to let go will be done so on as positive terms as possible.

“The pandemic continues to highlight those industries which build their considerable success on the back of workers who are paid badly and have zero job security. This is an unsustainable situation that has to change if we are to build any form of resilience into the workforce.”

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The boss of Cineworld, Mooky Greidinger, has told Sky News that there was “no alternative” to the temporary closure of sites in the UK and US.

Greidinger blamed the movie studios decision to postpone several major releases, such as Black Widow, The King’s Man and Wonder Woman 1984 since the pandemic began.

The delay to No Time To Die on Friday was the final straw, as a new Bond film is always the biggest movie release of the year in the UK, Greidinger explained.

This has forced Cineworld to close for the second time this year, as it didn’t have the goods to offer customers.

“From a liquidity point of view, we are bleeding much bigger amounts when we are open than when we are closed.

We are like a grocery shop with no food. We had to take this decision”

Greidinger argued that these delays are a mistake:

People are saying to us that they feel safe in the cinema, so I guess it is a wrong decision by the studios to move the movies in such a way.

But he also pointed out that cinemas remain closed in New York, and parts of California, which is encouraging the studios to hold new releases back.

Boris Johnson has told reporters this morning that people should go out to the cinema and support the industry: