Shares in Cineworld
slumped as much as 8% in London on Tuesday, as the group announced the details of a new deal with Warner Bros. and outlined plans to reopen in the U.S. and U.K.
The stock opened 4% higher but then rolled over as trading got under way. The world’s second-largest movie-theater chain said on Tuesday that it had signed a multiyear deal with AT&T’s
Warner Bros. Under the deal, beginning in 2022, Warner Bros. films will be shown in Cineworld theaters in the U.S. in a 45-day window of theatrical exclusivity. In the U.K., that window will be 31 days, extended to 45 days for bigger films.
In the past, the theatrical window was typically as long as 90 days. Cineworld Chief Executive Mooky Greidinger criticized rival chain AMC
in summer 2020 after that group signed a deal with Universal to shorten the theatrical window to just 17 days.
The movie-theater sector has been battered by the COVID-19 pandemic, with many cinemas closed for much of the last year as millions of housebound watchers turned to streaming alternatives like Netflix
Cineworld stock has fallen by more than 50% since the beginning of 2020.
As the world emerges from the pandemic, analysts say the extent to which cinema demand will rebound is unclear, following a year that has seen a drastic shift in consumer behavior.
“The deal with Warner Bros. should mitigate some of these concerns, and give it the edge over streaming giants for a period of time,” said Susannah Streeter, an analyst at Hargreaves Lansdown.
“Deals like this are likely to provide the blueprint for the industry going forward, helping cinemas lure in fans eager to glue their eyes to new releases as soon as they can,” Streeter added. “The window though is small and so advertising spend may be forced to rise to get seats filled before films drift to devices.”
The movie-theater chain also outlined its plans to reopen its American Regal cinemas in April for the first time in six months, linked to the opening of “Godzilla vs. Kong” and “Mortal Kombat.” Cineworld theaters in the U.K. — its second-largest market — will reopen in May under current government guidelines.
Cineworld’s share slide was in line with a generally downbeat day of trading. The FTSE 100
the index of London’s top stocks by market capitalization, fell 0.3%, in line with many of the major European indexes.
“Equity benchmarks in Europe are in the red due to worries that some countries will defer their reopening plans due to new coronavirus-related restrictions,” said David Madden, an analyst at CMC Markets. “Rising COVID-19 case figures in a number of continental European countries has led to tougher measures being introduced in a bid to keep a lid on the virus.”
German Chancellor Angela Merkel announced on Tuesday that the country would extend its national lockdown until April 18, with an even stricter shutdown in place from April 1 to April 5 over the Easter period.
Travel stocks led the charge into the red in London, with shares in tourism group Tui
tumbling along with airlines EasyJet
— which owns British Airways. InterContinental Hotels Group
stock also fell, as did shares in hotel and restaurant owner Whitbread
The price of oil is down, with benchmark Brent crude
futures trading near 4% lower, below $62.10 a barrel. Shares in London-listed major oil companies BP
and Royal Dutch Shell
Home builders made up some of London’s gainers, with shares in Barratt
climbing along with Crest Nicholson
— which said that it now expects full-year profits in 2021 to be ahead of expectations.