%1

Sinclair Broadcast Group Inc.’s regional sports business and its creditors are preparing for a possible restructuring of its roughly $8 billion debt load, a sign of the pressure on the sports industry from COVID-19, WSJ Pro Bankruptcy reported. Diamond Sports Group LLC’s bondholders have hired legal and financial advisers as the Sinclair subsidiary deals with the dearth of live sports during the coronavirus pandemic and the loss of some carriage deals with pay-TV distributors. The unit’s debt stems from a big bet on regional sports that Sinclair made last year when it bought 21 networks from Walt Disney Co., an acquisition valued at $10.6 billion and financed through one of the largest U.S. junk-bond sales in years. Senior bondholders have tapped law firm Gibson, Dunn & Crutcher LLP to assist with potential restructuring talks, while junior bondholders have engaged law firm Stroock & Stroock & Lavan LLP and investment bank PJT Partners Inc., the people said. The company is working with investment bankers at Moelis & Co., they said. When professional sports leagues paused their seasons as the coronavirus began spreading in the U.S., regional sports networks, or RSNs, were left without live games, the linchpin of their business.

Movie-theater companies of all sizes are confronting unprecedented financial strain during the pandemic as capacity restrictions, moviegoers’ reluctance to return to cinemas and a dearth of high-profile movies from big studios limit their chances of mounting a comeback. Although national cinema chains have been hit, too, for small family-owned operators, the problems are particularly acute and personal, WSJ Pro Bankruptcy reported. They don’t have large financial cushions, making them especially vulnerable to downturns that can wipe out family livelihoods. All U.S. states have now allowed theaters to reopen at limited capacity, though restrictions on key areas such as New York City and Los Angeles County remain a major problem for movie-theater owners nationwide. Not just the nation’s most lucrative movie-theater market, New York also is home to many prominent film critics whom studios rely on to generate media buzz. Partly because of these closures, studios have been postponing the release of high-profile films, leaving theaters without fresh material to woo patrons. Some expect many theaters to close for good if the logjam continues. John Fithian, president of the National Association of Theatre Owners, the cinema industry’s main lobbying group, said that only about 5 percent of member theaters have shut permanently. But without either a federal stimulus package or a reopening of New York City theaters, he said, more than a quarter of small to midsize theaters expect to go out of business by the end of October and 69 percent by year-end, according to a survey of the group’s members.

Hudson Mercantile, the tony event space in Manhattan’s Hudson Yards neighborhood, filed for bankruptcy Monday after the Covid-19 pandemic curtailed revenues to almost nothing, Bloomberg News reported. Founded in 2008, the company is located in a former industrial building and is “one of the premier event venues in New York,” owner and operator Bentley Meeker said in a court declaration. The space has hosted fashion shows, product launches and cultural conventions, including parts of New York Comic Con. Hudson Mercantile posted revenues in excess of $1.6 million in each of the past three years, but event restrictions this year brought the company’s business to a halt, Meeker said. The space went from having “scores of events per week, often simultaneously” to completely shutting down in March, Meeker said in court papers. It’s recently started hosting outdoor events on its rooftop again. To deal with the temporary closures, the space’s staff of four shrank to one, and it stopped contracting with the “dozens” of freelancers it did before, he said. The venue includes a 5,200-square-foot ground floor, a 6,000-square-foot sixth floor studio and 5,000-square-foot rooftop, court papers show. Though Hudson Mercantile can host outdoor events again, that revenue stream is now under threat because the developer of an adjacent building is suing Hudson Mercantile’s landlord for access to the rooftop for construction. Damage to the rooftop business would be a “death blow,” Meeker said. Hudson Mercantile expects to be able to reorganize in chapter 11 bankruptcy, which allows companies to continue operating while working out a plan to repay debts, by executing a “strategic pivot” to rooftop events and eventually resuming limited indoor functions.

AMC Entertainment Holdings Inc., the world's largest theater chain, said yesterday that it plans to open more cinemas in the United States this week, offering some hope to an industry hammered by pandemic restrictions and sending its shares up 24 percent, Reuters reported. The company said that it will reopen about a dozen locations in New York state starting Oct. 23, following guidance from Governor Andrew Cuomo over the weekend, and plans to have more than 530 theaters open in the country by the end of the month. While big theater chains such as AMC Entertainment, Cineworld Group and others have reopened many locations, audiences have been thin due to virus fears and delays in major releases by studios. Small and mid-sized theater companies have said they may not survive the impact of the pandemic.

The world’s largest movie-theater company may run out of cash by year’s end if it doesn’t raise additional funds or get more people back to theaters following pandemic shutdowns that have disrupted businesses dependent on consumers gathering in public spaces, the Wall Street Journal reported. AMC Entertainment Holdings Inc. said yesterday that it has reopened 83 percent of its U.S. theaters, but that attendance is down about 85 percent at those theaters from the year before. At the company’s current cash-burn rate, its reserves would be depleted by the end of this year or early next year, Kansas-based AMC said. Read more. (Subscription required.) 

In related news, AMC Entertainment Holdings Inc. Chief Executive Adam Aron talked with WSJ Pro Bankruptcy about the impact of the coronavirus pandemic on the movie-theater industry and on his company, the sector’s largest. One of the main issues, he said, is that New York state and certain major metropolitan areas in California such as Los Angeles haven’t allowed cinemas to reopen, prompting studios to delay major releases. A spokeswoman for New York Gov. Andrew Cuomo, a Democrat, said yesterday that the state is concerned about movie theaters because they involve large groups spending extended time together indoors, as well as lobby congestion when customers arrive and leave. "Movie studios cannot afford to open movies in the U.S. if they cannot also open them in New York," Aron said. "As a result of that, the entire movie industry is waiting for New York to bless the reopening of theaters, and understandably so." AMC yesterday warned that it could run out of cash by year’s end if it doesn’t raise additional funds or get more people back to theaters. "We’ve been going through $100 million a month, waiting for the movie industry to recover, which can only happen when New York reopens," Aron said. Read more.

International arrivals to New York are down as much as 93 percent, and the people and businesses of the city’s tourism industry are on the brink of collapse, the New York Times reported. The pandemic and the global travel restrictions introduced in March to slow the spread of the coronavirus have decimated the American tourism industry, taking with it the livelihoods of millions of people. The U.S. Travel Association, a trade group that promotes travel to and within the country, projects that the U.S. will see the number of international visitors plummet nearly 80 percent this year, to only 18.6 million, compared to 79 million arrivals last year. While that slump has been devastating for popular tourist destinations like Orlando and Los Angeles, nowhere in the U.S. is the impact more visible than in New York City, which drew more than 13.5 million international visitors last year. New York City has been for years the most popular big-city destination in the U.S. Now citizens from countries across the world — including Britain, China and Brazil, the three most important markets for tourists visiting New York — are banned from entering the country.

Cinema chain Cineworld announced today that it will close all of its movie theaters in the United States this week after the postponement of the new James Bond film left a big hole in schedules, USA Today reported. The closures, which affect all 536 U.S.-based Regal Cinemas and 127 Cineworld and Picturehouse venues in the U.K., will go into effect on Thursday, according to a Regal news release. Some 45,000 employees are affected. Cineworld did not share any plans for a reopening date, though the company stressed it would "continue to monitor the situation closely." Many U.S. theaters have reopened after being shuttered by the coronavirus in March, but so far audiences have been slow to return as the country has continued to struggle with spikes and hot zones. Christopher Nolan's thriller "Tenet," which had been expected to be a hit before COVID-19 hit, has only made $45 million domestically compared to $262 million overseas. Last week, A-list Hollywood filmmakers including Spielberg, Nolan, Martin Scorsese, Clint Eastwood, Patty Jenkins, Jordan Peele, Barry Jenkins, Sofia Coppola and James Cameron, along with the National Association of Owners, the Motion Picture Association and the Directors Guild of America, urged Congress to bail out struggling cinemas, noting that movie theaters "may not survive the impact of the pandemic."

After two failed launches and a bankruptcy, the XFL is getting set for a third try that even the league’s new owner, Dwayne “The Rock” Johnson, acknowledges will be a challenge, Bloomberg News reported. “It’s an uphill battle -- but we’re hungry, humble and no one will outwork us,” the entertainer said Thursday on Twitter. The group is working on the next steps for its relaunch and plans to provide more details soon. The potential rival to the National Football League was sold while in bankruptcy in August to a group of investors for $15 million. Johnson, who leads the group, said in his post that play would resume in 2022. His group includes Gerry Cardinale’s RedBird Capital Partners. Last season, the league found a market for viewers even while hemorrhaging cash. TV deals with ESPN and Fox Corp. helped bolster its presence, but when Covid-19 hit, the parent company ran out of time and money.

A group of high-profile directors — including Clint Eastwood, Sofia Coppola, Martin Scorsese, Christopher Nolan and Lee Daniels — is calling on Congress to help movie theaters hit by the coronavirus pandemic, saying that without some financial relief, the cinemas "may not survive," The Hill reported. More than 70 directors, producers and writers signed a letter sent on Wednesday to Senate Majority Leader Mitch McConnell (R-Ky.), Minority Leader Charles Schumer (D-N.Y.), House Speaker Nancy Pelosi (D-Calif.) and House Minority Leader Kevin McCarthy (R-Calif.), along with the National Association of Theater Owners, the Directors Guild of America and the Motion Picture Association. Movie theaters, the letter states, are in "dire straits" due to COVID-19. Cinemas closed their doors earlier this year as the pandemic spread across the country, with movie studios pushing back release dates for many films. Several chains have since reopened with limited capacity. The letter says 93 percent of movie theater companies suffered from more than 75 percent in losses in the second quarter.