Market Loop - Cineworld on the brink of bankruptcy

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22nd August 2022

Bite-sized business news from the UK and beyond

Good morning Last week a chain of coffee shops in Russia formerly owned by Starbucks was reopened the latest major company rebranding after a months-long Western corporate exodus from the country. Stars Coffee not only resembles the name of the US coffee giant, but the logo is also very similar.

How is this allowed to happen? Russia is the Wild West for intellectual property right now. The Russian government said businesses can use patents held by owners from countries deemed “unfriendly” (i.e., the US) without paying. And savvy Russian entrepreneurs have also started applying for trademarks like Coca-Cola, Mercedes Benz and Pampers to produce their own versions.

Today's stories

Cineworld on the brink of bankruptcy
Workers at UK’s biggest port begin strike

LEISURE
Cineworld on the brink of bankruptcy

What happened?
On Friday reports emerged that Cineworld, the world’s second biggest cinema chain, is making plans to file for bankruptcy as early as this week.

How did we get here?
The company, which owns Cineworld and Picturehouse brands in the UK and Regal Cinemas in the US, said its business has been hit by lagging audience numbers, which was compounded by a lack of summer blockbusters.

It says the weak film pipeline will likely continue until November, potentially complicating efforts to cut its $5bn debt pile.

Earlier this year, the company said it was looking for new sources of cash, as it faces a £700m dispute over its failed acquisition of Canada's Cineplex.

The pandemic may have changed cinema going habits for good
Cineworld operates 751 sites in 10 countries and admitted 95m moviegoers in 2021, up 75% on 2020 but well below the 275m who attended before Covid.

In 2019, the time between a film’s cinema release and being available to buy or stream was just over 16 weeks. This window was essentially suspended in the early period of the pandemic, and studios and cinemas are now jostling to establish some new norms.

Many films are now either released concurrently on the big screen and/or exclusively on streaming platforms or with only a few weeks gap between the cinematic and streaming availability.

Unsurprisingly this has lessened the appeal of going to the cinema.

Looking ahead: This isn’t the first time Cineworld has been on the brink of bankruptcy. During the height of the pandemic in 2020 when screens were closed, the company prepared to enter bankruptcy before lenders provided it a $450m rescue loan.

This time round the Cineworld’s lenders could swap their debt for equity in the company, giving them control. A similar arrangement was done for rival Vue last month.

Other stories to keep you in the loop

Retail sales rise despite cost of living crisis
Plans to cut energy bills if peak-time use avoided
Energy price cap could pass £6,000 for first time in new forecast
Consumer confidence hits rock bottom amid 'acute concerns' about cost of living
Twitter staff are warned upcoming bonuses will be half what they expected
Matalan founder faces fresh tussle with lenders over chain's future

INDUSTRIAL ACTION
Workers at UK’s biggest port begin strike

What happened?
Yesterday almost 2,000 workers at the UK’s biggest container port in Felixstowe began an eight-day strike in their first industrial action since 1989.

What’s the dispute about?
Pay. Bosses offered employees a 7% wage increase plus a single payment of £500 but this was rejected with unions arguing it needed to be at least 10%, to match the current rate of inflation.

Half of Britain’s container trade comes into Felixstowe
Electronics, furniture and frozen food are just some of the goods that come through the port. It handles around 4m containers a year from 2,000 ships. Officials said that they expect significant delays to deliveries which will impact supply chains.

This is just the latest example of industrial action by workers demanding a decent wage
In the past few months workers in several industries including rail, airline and law have walked out over pay. Pressure is mounting on the incoming prime minister to do more to help with the cost of living. But so far the two candidates, Liz Truss and Rishi Sunak, haven’t given much detail of what they would do.

With inflation set to rise to again to 13% this autumn and government support to be determined, it’s likely there’ll be more workers taking to the picket lines demanding higher pay.

Stat of the day

The English Premier League expects to make £6bn in revenue this season (way more than other leagues) thanks to lucrative international TV deals

Interesting links from around the web

Annual leave 2023: how to get 47 days off work next year (using just 19 days of annual leave)
What your stress dreams are really trying to tell you
Self-made millionaires, CEOs and early retirees share their favourite books about building wealth

Monday Pick

The Cornrow is the home of the Modern Black Aesthetic

Founded by sisters Kemi and Lara they curate the best in Black creativity from across the Diaspora including homeware, books and lifestyle products

Get 10% off your first order with code MARKETLOOP at checkout

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Market Loop - Cineworld on the brink of bankruptcy

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