With the release calendar in tatters, and hopes vanishing for a nationwide reopening any time soon, the movie theater industry is increasingly looking to Congress for billions in aid.
The industry has put its energy in recent weeks into lobbying for the “RESTART Act,” which would extend hundreds of billions of dollars in loans for businesses that have been hit hard by the COVID-19 pandemic.
“It would be a lifeline for us,” said Bobbie Bagby, executive vice president of B&B Theatres, which has been encouraging employees and loyalty members to contact Congress in support of the bill. “We’ve been promoting it like crazy on our social channels. I personally have called 250 people.”
Congress has been deadlocked on what to include in the next phase of COVID relief. Last week, Sen. Marco Rubio and Sen. Susan Collins proposed a $190 billion extension of the Paycheck Protection Program, but only for businesses of 300 employees or fewer. They also offered $100 billion in “recovery sector” loans to “seasonal” businesses and those in low-income areas that were hardest hit.
The National Association of Theatre Owners argues that proposal is far too restrictive. Joined by several other industry groups — including the National Restaurant Association, the Live Events Coalition and the American Hotel and Lodging Association — NATO is pushing for the RESTART Act, which would provide forgivable loans for businesses up to 5,000 employees.
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“A lost job is a lost job, no matter what size company,” the trade group said in a statement. “If the loan programs are limited only to small businesses, many theater companies that have already been left out of existing programs will have no recourse, and could be forced into bankruptcy or permanent closure.”
The bill — authored by Sen. Michael Bennet of Colorado and Sen. Todd Young of Indiana — provides up to $12 million in loans to businesses that have seen revenue drop by 25% or more. The 5,000-employee threshold — up from 500 under the Paycheck Protection Program — would allow all but the three or four largest theater chains to qualify.
The bill does not have an official price tag, but supporters say it would cost at least $300 billion to $400 billion. On Monday, a long list of CEOs signed on to support the measure, including Disney CEO Bob Chapek and Quibi CEO Meg Whitman.
B&B Theatres is the eighth-largest chain in North America. It has 50 locations, of which 13 are open, and has lost more than 90% of its revenue since the pandemic started. B&B is too big for the Paycheck Protection Program, with 2,200 employees. Bagby said it falls into the “no-man’s land” of midsize businesses that are getting squeezed.
The company has also applied for a Main Street loan — the program for midsize businesses under the CARES Act — but those loans must be paid back. The RESTART Act offers loan forgiveness, even for fixed costs like lease payments and utilities — which represents a major expense for shuttered theaters. The portion that is not forgiven would be paid back over seven years.
But many Senate Republicans have been wary of opening up the coffers too much. In an interview with CNBC’s “Squawk Box” on Wednesday, Rubio said that the money is not available.
“I’m not against their idea. Right now we just don’t have $300 billion allocated to us to do it,” he said. “The concept is a positive concept. We just haven’t been allocated the money to do it.”
Stakeholders have been jockeying about how to define the “hardest hit” businesses, with some industries lobbying for a looser definition. Rubio’s proposal would target loans only to companies with at least a 50% decline in revenue. Industry groups representing hotels, travel companies, amusement parks, franchise businesses and shopping centers submitted a letter to Congressional leaders on Tuesday arguing that the 50% threshold should be lowered.
NATO did not join that letter. Its largest member — AMC — posted a 98% revenue drop on Thursday. Its other members are in similar distress, and would easily clear the 50% hurdle.
NATO did join a separate letter on Tuesday warning Congress that failing to pass the RESTART Act could force many companies to declare bankruptcy.
“When you hear resistance to additional relief based on cost concerns, we ask you to consider the alternative that millions of jobs are lost entirely due to widespread business closures,” the industry groups wrote. “This would be irreparable damage to the social, cultural, and economic life of our communities.”
Rep. Judy Chu, who co-signed a May 26 letter seeking further aid for movie theaters, said she fears that people will not return to theaters or concerts until there is a vaccine.
“I am so troubled by the number of businesses that could be shuttered permanently and all the jobs that would be lost,” Chu told Variety. “Every city across America has a movie theater. This affects people from all kinds of areas, whether urban or rural, low income or high income.”
Movie theaters do see eye to eye with Senate Republicans on one thing, though. NATO supports the Safe to Work Act, which would make it virtually impossible for customers or employees to sue a business for exposure to COVID-19.
“Businesses that comply in good faith with local, state, or federal guidelines for safe reopening should not be forced to defend themselves against predatory lawsuits,” the group said in a statement.