If you look at the current situation in the United States regarding the COVID-19 pandemic, it’s incredibly scary. The “flatten the curve” initiative seemed to work, but that only led to people starting to forget all the social distancing rules and PPE suggestions, resulting in record-breaking infection numbers all across the country. So, while it appeared that a month ago the country was on the right path, the US has quickly found itself spreading the pandemic at greater rates than when this all first started. And a new financial analysis seems to think that this trend is going to cripple Disney and the rest of the film industry, as everyone wonders when cinemas will reopen.
According to a new report from financial analyst Doug Creutz (via THR), the outlook is pretty grim when it comes to Disney and the film industry, in general. The analyst downgraded his current stock rating for Disney from “outperform” to “market perform.” And this is in large part due to the spikes in COVID-19 cases around the US and how they will likely affect the company’s film releases and theme parks.
“With the spread of COVID-19 having accelerated in the U.S., we expect a prolonged impact,” the analyst wrote. “We had previously assumed that the spread of COVID-19 would be relatively halted, with social distancing requirements significantly lessened by late 2020. We have now extended that timeline out to at least mid-2021; the situation remains very fluid, and we do not rule out the possibility that the impact could last even longer.”
How this might affect Disney is pretty massive, according to the report. Creutz believes that the COVID-19 spread is largely going to limit the film side of the Mouse House, with no new films being released before the end of the fiscal year in September (that means he agrees with most analysts that “Mulan” will be delayed yet again) and “a modest slate” is the 2021 fiscal year.
“We now expect domestic theaters to be largely closed until mid-2021, in part because we don’t think studios will be interested in releasing their largest movies into a capacity-constrained footprint,” Cruetz wrote.
Obviously, if theaters stay closed until mid-2021, this could be incredibly devastating for cinema chains such as AMC, which is already going into massive debt to stay afloat while the locations remain closed since March. If the mid-2021 forecast pans out, that would be a full year with most of the cinemas in the US closed. At some point, studios are going to seriously need to consider a way to make money without relying on box office earnings. Then we might actually see streaming and PVOD become really viable options for films that previously seemed unlikely.
Of course, it’s important to note that the words of one financial expert are hardly enough to cause panic in the industry, but Cruetz’s analysis seems to jive with other experts that are beginning to wonder if cinemas will remain closed in the fall and into the end of 2020. We’ll just have to wait and see.
