Cinemex Holdings USA, Inc. and Cinemex USA Real Estate Holdings, Inc, which operate the CMX theater chain in Florida, filed for bankruptcy this past weekend, citing the coronavirus pandemic as the main reason for closing.
“We are in a state of complete uncertainty as to when we can re-open our theaters and when our customers will feel safe and secure in returning to them given that there is presently no vaccine against the virus,” CMX said in a statement. “We cannot forecast when — if ever — customer numbers will return to pre-crisis levels.”
Cinemex Holdings USA is a subsidiary of Mexican theater chain Cinemex, which did not file for bankruptcy. CMX, which has 40 locations, was on the verge of acquiring the Houston-based, 11-location premium chain Star Cinema Grill, which would have made it the seventh-largest chain in the U.S.. The acquisition was terminated at the last minute by CMX after the pandemic forced the closure of theaters nationwide, prompting Star Cinema Grill to file a lawsuit.
CMX says that it attempted to negotiate with creditors to reduce its fixed costs while theaters were closed, but the creditors refused. In its statement, the chain warned that the movie theater industry will not be able to survive without an “economic rebalancing” that would involve studios taking 40% of ticket revenue — compared to 50-65% that it takes now — while landlords will have to give more favorable terms.
“The studios will continue to need the revenues and publicity generated by theater companies notwithstanding digital distribution, and mall landlords will become even more reliant on movie theaters as retailers continue to migrate to the internet,” they said. “A viable rebalancing would result in (1) studios getting a maximum of 40 percent of theater companies’ revenues; and (2) mall landlords providing the same terms to movie theaters that they currently provide to anchor tenants such as department stores. Movie theaters are increasingly the anchor tenants and landlords should treat them as such.”