Cineworld shares slump after AMC Entertainment-Universal agreement

29th Jul 2020 14:16

(Sharecast News) - Cineworld shares slid on Wednesday after US cinema chain AMC Entertainment and Universal Pictures reached a multi-year agreement that will result in films playing in theatres for less time.
The deal will shorten theatrical exclusivity for all Universal Pictures and Focus Features from 75 days to 17 days, at which time the studio will be able to choose to make its titles available across premium video on demand platforms.

This means that rather than having to wait months for some films to reach digital storefronts, people will only need to wait three weekends. The full terms of the deal were not disclosed.

Morgan Stanley said this is a "crystallisation" of its bear case for Cineworld. MS had framed industry-wide PVOD as a 10-30% EBITDA risk, but said this would likely be higher on a lower post Covid-19 revenue/profit base.

The bank said it's likely that other studios and exhibitors will have to follow suit, "ending a decades old theatrical model".

"AMC is the largest US exhibitor, and it is hard to see this paradigm shift not being replicated by other studios and exhibitors such as Cineworld," it said.

At 1420 BST, Cineworld shares were down 11% at 38.18p, having hit their lowest level since April.