Anna Daniels
The Senate passed a massive $2 trillion stimulus package late Wednesday night that is intended to help American workers and businesses that have taken a hit by the coronavirus (COVID-19) pandemic. Among those badly affected businesses are movie theaters, which for the first time in the history of Hollywood, have shut down en masse across the country. Theater owners joined the praise for the relief package, which still has to go through the House, saying in a statement that the legislation could help the country’s struggling cineplexes as the pandemic wears on. But how much of that $2 trillion package will actually go to movie theaters?
In a press release following the passage of the $2 trillion federal aid package, the National Association of Theater Owners applauded the bill, which would set up a $454 billion loan guarantee fund for businesses struggling from the economic blowback of the pandemic. This would allow movie theaters to pay the fixed costs while they are unable to generate new revenue.
“With this agreement, movie theaters can look forward with confidence to re-opening and once again serving their communities,” NATO said in the statement, continuing:
“With this aid, movie theaters can get through this crisis confident in being able to re-open, knowing their vital, trained workforce is able to weather this pandemic and have jobs waiting for them when it is safe to reopen. We are grateful for the work of Congress and the Administration and those in and out of the entertainment industry who have supported our efforts on behalf of this industry that is so central to our culture and civic life. We look forward to its quick passage in the House and signature by the President.”
Another key provision that would apply to the movie theater industry includes an expansion to Small Business Administration programs, which allow smaller businesses (those that have 500 employees or less) to also pay their fixed costs with no revenue coming in, and in some cases, be eligible for loan forgiveness. A majority of the country’s theaters fall under the definition of a small business, according to NATO.
Here are the other provisions of the federal aid package that NATO lists could help struggling movie theater chains and independent cinemas:
- Provisions allowing deferral of payroll taxes, expanded opportunity for loss carrybacks for businesses, and technical corrections regarding qualified improvement property.
- Employee retention tax credit for businesses that keep people on the payroll despite closures or that see large sales losses.
- Up to four months of direct aid to workers through extended and expanded unemployment insurance, including increases in the weekly dollar amount and eligibility for part-time employees.
- Advanced tax deductions to workers payable now.
The expanded unemployment relief is the most reassuring component of the legislation, as the entertainment industry has been hit hard by job losses, with about 120,000 below-the-line jobs getting cut and many movie theater workers out of a job for the foreseeable future with the shuttering of 5,500-plus movie theaters across the country. AMC Theatres, the largest theater chain in the country, shut down all its locations this month and furloughed 600-plus corporate employees. A record 3.3 million people filed for unemployment in the last month. The bill’s provision would expand unemployment insurance by four months, as well as increase weekly payments by $600 and loosen eligibility requirements for part-time workers.
But it’s still a question as to whether big theater chains like AMC Theatres and Regal Cinemas can recover from the coronavirus crisis. AMC was already in financial trouble even before the pandemic reached U.S. shores, with the debt-laden exhibitor’s stock dropping 83% last year. Wall Street analyst Eric Handler told The Hollywood Reporter that “companies carrying a lot of debt” like AMC and Regal are “in a more vulnerable position.”
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