CULTURE US cinemas offered loans to weather COVID-19

CULTURE

US cinemas offered loans to weather COVID-19

Global Times

02:54, March 31, 2020

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(Photo: VCG)

Cinemas may have historically weathered depressions, world wars, and digital media and streaming services, but they have met their match in COVID-19.

With theaters shuttered for the foreseeable future, unpaid bills piling up and no ticket sales in sight, the era of the shared cinematic experience has been threatened by the COVID-19 pandemic.

In response to the frenetic clamor of thousands of theater owners on the verge of bankruptcy, US lawmakers have included them in a $2 trillion stimulus package that was passed by the Senate on Wednesday, and was then passed by the House of Representatives and signed into law by US President Donald Trump on Friday.

"Without this stimulus package, the entire exhibition industry was facing massive liquidity issues and certain bankruptcies," John Fithian, CEO of the National Association of Theater Owners and the industry's head lobbyist, told the Xinhua News Agency.

"We are grateful for the work of Congress and the administration and those in and out of the entertainment industry who have supported our efforts on behalf of this industry that is so central to our culture and civic life," said the association.

The bill's provisions include a $454 billion loan guarantee fund that enables movie theaters and other businesses to pay their bills while normal operations are suspended.

"It's fundamentally not a bailout. The federal government is not granting money to big corporations to stay alive. This is a loan guarantee system. The federal government is acting as the lender of last resort in circumstances where banks can't," Fithian said.

The association said the bill will also expand the Small Business Administration's expense categories eligible for loan forgiveness, and it is purported to include provisions permitting the deferral of payroll taxes and providing tax credits for businesses suffering massive losses or which retain and pay workers during closures.

It also includes a substantial increase in unemployment insurance benefits for the entire entertainment industry, which is largely comprised of independent contractors and workers who work from gig to gig.

"This bill makes sure that workers can get through this crisis and that there are jobs for them when they're ready to go back to work," said Fithian. "This isn't going to go on forever."

The association's members applauded lawmakers for the bill, which will help the 150,000 entertainment industry workers who have been pink-slipped or furloughed without pay during the crisis.

"With this aid, movie theaters can get through this crisis confident in being able to re-open, knowing their vital, trained workforce is able to weather this pandemic and have jobs waiting for them when it is safe to reopen," the trade group said.

The association has been lobbying for government loans as traditional lenders like banks were unwilling or unable to extend theater owners lines of credit.

Banks refused to lend to them, citing the uncertainty surrounding how long the coronavirus pandemic will last, when theaters can safely reopen, and even how many theatergoers will be willing to come back when they do reopen.

The bill's provisions are expected to last through July, which Fithian believes will be sufficient time for the coronavirus pandemic to subside and for theaters in the country to reopen.

He pointed out that some Chinese theaters have reopened, though people there are not yet flooding in.

"There's never been a situation like this," said Eric Handler, an MKM Partners analyst. "Fear of the unknown is never a good thing for stock prices. We will return to normalcy at some point, but as we ride this out, there's going to be near-term pain."

Industry analysts reported that the five largest theater chains in the country suffered an average 50 percent drop in market value in just the first two weeks of March, while Imax slipped 41 percent.

But many industry insiders remain bullish on the survival of the theatrical exhibition market.

Movie fans "have demonstrated time and time again a desire to experience the magic and wonder of a larger-than-life immersive cinematic experience that can only happen in a large darkened auditorium among fellow moviegoers, enthralled in the on-screen action," Cinemark CEO Mark Zoradi recently assured investors.

"Without a doubt we will get to the other side," said Jim Orr, president of domestic theatrical distribution for Universal Pictures. 

"How long is all of this lasting? Nobody knows."

Paramount Pictures Domestic Distribution President Chris Aronson told Variety, "I think theaters will survive... The landscape might be different, but it'll survive."  


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