Canadian cinema exhibitor Cineplex on Monday said it is temporarily laying off its part-time workforce, and cutting the salaries of its full-timers and executives, as it looks to safeguard the long-term stability of its business.
While the exhibition giant did not confirm the exact number of part-timers affected, a spokesperson said the temporary layoffs “impacted thousands of roles.” As the majority of its part-time team does not qualify for Employment Insurance (EI), Cineplex paid them a lump sum roughly equivalent to two-and-a-half-weeks EI.
The company noted that its “current intention is to rehire all of them when our operations resume,” adding that it is working with other prominent retailers to find opportunities for those affected by its temporary layoffs.
Meanwhile, its full-time employees will see their salaries cut for a limited period of time. The reductions to salary correspond with an employee’s level of title, with its senior executive team taking an 80% reduction, according to Cineplex.
News of the layoffs comes less than a week after Cineplex closed all 165 of its theatres across the country in response to the COVID-19 pandemic. At the time, it said it would reassess the situation on April 2; however, government-mandated closures of entertainment venues across the country could mean it will be significantly longer until cinemas have the option of reopening.
“With the temporary closure of our network of entertainment venues and the majority of our full-time employees working from home, our focus was able to shift to safeguarding the long-term stability of our business and our readiness to return once the crisis has passed,” said Cineplex.
“At the appropriate time, we will canvass our elected representatives about what specific policy options may be available to assist the retail sector, including cinemas. As the COVID-19 situation continues to evolve, we will continue to take their lead – and that of the health authorities – and we will reopen our theatres and entertainment venues when they tell us it is safe to do so,” continued the statement.
Cinema owners across the world have faced closures and layoffs as the pandemic has brought the box office in North America and Europe to a near standstill.
Just today, the International Union of Cinemas, a group that represents European cinema owners, called on various European governments to ensure cinemas are able to overcome the threat posed by the pandemic. “Our shared ambition is for European cinemas to emerge from the current challenges to once again be the vibrant home of culture and community that they always have been,” read a statement from the industry group, which counts Cineworld Group among its members.
Yesterday, some 800 former staffers of Cineworld laid off last Tuesday (March 17) wrote to chief executive and top shareholder Mooky Greidinger requesting their jobs back. Many were let go, while staff with over three years’ service will be retained at 40% of their average pay or salary.
Cineworld earlier reached an agreement to acquire Cineplex in a debt-financed deal valued at around $2.8 billion. The deal has already been approved by both sets of shareholders and the Ontario Superior Court of Justice, while no rival bidders emerged for Cineplex during a seven-week “go shop” period. The transaction is still subject to approval from the Competition Bureau and Investment Canada Act.
Within the past two weeks, both exhibitors have said the transaction will close as planned before June 30; however, temporary layoffs at both companies have raised questions about the viability of the transaction. Among the conditions of the deal is that Cineplex keeps its debt under $725 million.
Last week, the company said that, in response to declining attendance and government-directed shutdowns, it was managing its business to reduce expenses so that it is in a position to satisfy the debt condition. “The possibility of prolonged closures could impact the ability of Cineplex to mitigate the related revenue decline and satisfy the debt condition or other of the remaining conditions,” Cineplex said on March 16.
Cineplex shares climbed to around $34 per share in December after news of the Cineworld takeover was announced to the market. As the COVID-19 situation has worsened, the Canadian company’s shares have dropped significantly. Within the past two weeks, Cineplex’s share price has fallen to $10.57 as of press time, from $31 on March 10.
From Playback Daily