×

Street clubs Loews

Stock plunges 32% on heels of bad report

It was Loews Cineplex’s day in the box Monday. Investors pummeled the stock from the opening of trading because of bad news delivered just before the weekend — the movie circuit revealed that it expects lower second-quarter revenue and that it is seeking a waiver from certain loan covenants.

Shares closed down 94¢, or 32%, at $2. The stock has dropped 45% since June 7, when it closed at a 52-week high of $3.63.

Loews’ stock plunge is just the latest tale of woe in the ailing exhibition business, which has delivered almost daily doses of bad news to Wall Street over the past few weeks.

Columbus, Ga.-based Carmike Cinemas Inc. and privately held Edwards Theatre Circuit Inc. of Newport Beach both filed for Chapter 11 bankruptcy protection earlier this month. Trading in shares of Carmike was halted for several sessions after the filing, but the stock already had slid so much in the past that its 12¢ uptick to a closing share price of 81¢ on Monday represented an 18% improvement.

Privately held United Artists Theatre Co., headquartered in Denver, is expected to file for Chapter 11 protection after Labor Day. In an anticipated deal, Denver billionaire Phillip Anschutz would take control of the chain as part of a bankruptcy reorganization of UA.

PaineWebber analyst Christopher Dixon, in a report to investors following Loews’ downbeat pronouncements, suggests that the entire exhibition industry is in for tough times until at least one circuit turns things around — probably by paring scores of movie screens.

Scaring investors

“We see no reason at this time to invest in the sector, pending at least one successful restructuring,” Dixon wrote. “With an estimated 37,000 screens in North America, we still believe the industry must trim down to a more reasonable 25,000 to 28,000 screens before individual operators can generate attractive equity returns.”

The filing for bankruptcy reorganization proceedings is considered a step in that direction, as the affected circuits could be freed from some current lease constraints in the process.

“You can’t get rid of these money-losers because of leases,” Morgan Stanley Dean Witter analyst David Allen noted. “(So) a lot of companies in the industry find the best way to get out of a lease is by declaring bankruptcy.”

Nonetheless, Allen predicted 2% to 4% net screen growth in 2000, but agreed there would be no turnaround in the industry until screen growth diminished.

(Dow Jones contributed to this report.)

Popular on Variety

More Biz

  • AtmosphereThe Current State of Play in

    New York’s PlayStation Theater to Close (EXCLUSIVE)

    New York’s PlayStation Theater, a 2,100-capacity venue located in Times Square and operated by Bowery Presents, will close at the end of 2019, a source close to the situation tells Variety. The venue will close with a New Year’s series of shows from the Disco Biscuits. The theater, which is located two stories beneath the [...]

  • Courtesy of Earwolf

    How Lauren Lapkus Tossed the Script and Created a Podcasting Hit

    Lauren Lapkus has tossed the script on what makes most podcasts a hit. At a time when many of the most downloaded shows are true crime investigations or celebrity interviews, she’s doing something entirely different on each episode of “With Special Guest Lauren Lapkus.” Each hour-long installment is a free-wheeling, completely improvised ride. One show [...]

  • WWE NXT

    WWE's 'NXT' Moves to USA Network as Wrestling Competition Heats Up

    WWE has struck a deal to move its “NXT” franchise focusing on rising stars to USA Network starting next month. “NXT” will shift to USA from the WWE Network subscription streaming service as of Sept. 18. The deal comes as USA is about to lose WWE’s “SmackDown” showcase to Fox starting in October. USA is [...]

  • Shazam

    Apple Music Launches 'Shazam Discovery' Chart, Focused on New Artists

    Apple Music today launched the “Shazam Discovery Top 50,” a weekly, global ranking of 50 artists that it describes as “on the move and trending” — in other words, new and emerging artists. While the company wouldn’t say much specifically about how the chart is tabulated, it uses “Shazam’s proprietary algorithms [to offer] a unique predictive view [...]

  • The Chainsmokers Production Company

    Chainsmokers’ Catalog Acquired by Fast-Growing Hipgnosis Songs

    The Chainsmokers’ writer and publishing rights have been acquired by the fast-growing Hipgnosis Songs and its investment adviser, The Family (Music) Limited, for an undisclosed amount, the company announced today. The company has acquired 100% of the Chainsmokers’ interest in 32 of the duo’s songs, including ASCAP (American Society of Composers, Authors and Publishers) income in [...]

  • Hollywood Recession Business Placeholder

    How an Economic Downturn Could Ravage Hollywood

    Trade-war fears, stock market volatility and, most recently, bond market signals that point to a pending recession are rattling investors, igniting concerns that another devastating downturn may be just around the corner. As those worries reverberate all the way from Wall Street to Hollywood, the entertainment industry is in for an unsettling reminder of the [...]

More From Our Brands

Access exclusive content