Studios "Must Be Willing to Take a Hit" to Keep Cinema Chains From "Falling Apart": Analyst

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The new James Bond film's delay has left the slate a "virtual ghost town during the months of October and November," says B. Riley's Eric Wold as cinema stocks fall sharply and speaks out against state restrictions.

B. Riley analyst Eric Wold in a Monday report commented on the delay of the latest James Bond film until April amid the ongoing coronavirus pandemic and what it means for the exhibition industry, arguing that Hollywood studios must take a financial hit to help out exhibitors.

The 007 movie's postponement "creates [a] two-month calendar gap," he said. "With the news late Friday that No Time to Die is being moved from November 2020 to April 2021, the already shaky near-term film slate that we have been concerned about since June has now become a virtual ghost town during the months of October and November."

He also assumes that at least one of two animated films scheduled around Thanksgiving, namely Soul and The Croods: A New Age, will "move out of their slots," meaning that "the industry's film slate could essentially be on hold until December."

Wold also had some words for Hollywood studios and local authorities. "While we can understand the studios' desire to hold releases until the release environment is perfect, we also believe studios must be willing to take a hit to feed the industry and keep the exhibitor group from completely falling apart," he said.

And he argued that theater safety protocols are "not well appreciated" by states. "We are still surprised by the state-level restrictions that have continued to be placed upon theater operators while indoor dining and other entertainment options are facing much less severe restrictions," Wold explained. "We have been to the movies three times since the pandemic began (twice in Texas and finally this past weekend in the Bay Area) and have never felt anything less than comfortable about the cleaning procedures and consumer acceptance of the mask and distance requirements. We hope that state and local governments notice these cleaning procedures at some point before the exhibition industry is irreversibly harmed."

The analyst predicted that exhibitors will look to "preserve cash with studios not playing ball."

Cinema stocks opened the week lower despite the broader market moving higher. The London-listed shares of Regal owner Cineworld, which earlier in the day had said it would close its theaters in the U.S. and U.K., were down nearly 40 percent as of early afternoon London time.

In the U.S., AMC Theatres' stock was down more than 12 percent as of 9:45 a.m. New York time, while Cinema shares were down just less than 12 percent. Marcus Corp.'s stock dropped 7 percent, and Imax's stock fell less than 6 percent.