The $2 trillion stimulus may have saved the movie theater business from financial ruin. After being forced to close because of the coronavirus pandemic, cinemas across the country were struggling to find a way to keep paying their rent and other bills without being able to sell any tickets. It was a scenario that could have led to widespread bankruptcies.
“This legislation dramatically improves the capability of theater owners to stay solvent,” said John Fithian, CEO of the National Association of Theatre Owners. “I don’t know if every single company we represent will be able to stay in business, but we were confronting massive liquidity problems and likely failures before this passed. This legislation changes that whole scenario. It will be tremendously helpful in the survival of the movie theater industry and the well-being of our workers.”
The legislation was approved unanimously by the Senate and is expected to be passed on Friday by the House, with President Donald Trump quickly signing it into law. Treasury Secretary Steven Mnuchin has said that various parts of the legislation could be implemented as early as next week. But, in the theaters’ case, the clock is ticking.
“It is moving very fast, but it has to move very fast,” said Fithian. “This morning, Cheesecake Factory, a huge restaurant chain, said it is not paying rent on April 1. That is something that all public-facing businesses are confronting — movie theaters, restaurants, bars, and gyms. How can you pay your rent and other fixed costs when you have no income coming in?”
Fithian, the head lobbyist for the exhibition sector, has been sounding the alarm since theaters were forced to turn off the marquee lights this month. He’s been pressing the federal government for loan guarantees to help theaters shoulder their overhead while they have to stay closed. NATO says that banks were unwilling to extend lines of credit because it is unclear when the pandemic will die down and people can once again safely congregate in large groups. At the same time, he rejects criticism that the federal government is bailing out corporations like Regal or AMC.
“It’s false,” said Fithian. “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.”
NATO also pressed for the Small Business Administration to expand financial assistance to smaller theater circuits, something the legislation will accomplish. The group praised lawmakers for expanding and enhancing unemployment benefits, which it says will help the roughly 150,000 industry workers who have been laid off or furloughed during the public health crisis.
“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 provisions are meant to last for four months, which Fithian said should be ample time for U.S. theaters to ride out the closures and re-open for business. He noted that China, where the virus first broke out in December, has started to slowly reopen theaters this month. So far however, business has been almost non-existent, with Chinese audiences skittish about going back into crowded spaces and many theaters still shuttered.
“By late April, business in China should be doing fine,” said Fithian.