For movie theaters, the coronavirus stimulus bill is a tale of two industries

On that same day AMC was engaged in a very different action: restructuring how it elects board members so it can prevent a hostile takeover. The financially battered company, which with 11,000 screens is the country’s largest movie-theater chain, would receive no stimulus money; the bill prohibits large or publicly traded companies from partaking. Regal and Cinemark, the country’s other two theater chains, also would be left on the sidelines.

Though the 5,593-page stimulus bill passed with overwhelming margins in both houses of Congress, President Trump has been harshly critical of perceived excesses in the proposed legislation, and it remains unclear whether he’ll sign it. Many of those excesses, however, fell under the broader spending plan to which the relief bill was attached; he did not mention “Save Our Stages.” It’s also possible that lawmakers have the votes to override a veto.

If Trump does sign the bill, it would conjure a tale of two movie-theater fates. Independent entities, which make up half of the country’s 40,000 screens, would celebrate a cash infusion that could save many of their businesses. But large chains would be left staring into the abyss, inverting the 21st-century entertainment industry narrative that favors large corporate players.

“This bill causes mixed feelings,” said Patrick Corcoran, spokesman for the National Association of Theatre Owners. Through its lobbying efforts, the group, known as NATO, secured the funds for theaters, which were not originally part of the package. “This grant is going to really help this industry,” he said. “But it will not help publicly traded companies, and they employ a lot of people, too.”

He called the restriction “shortsighted.”

The money offers theater owners a bright spot in a year that has seen screens go dark, customers stay away and studios withhold new releases. The few theaters that have reopened have had to make do with minor movies — and audiences at 10 or 20 percent of their normal volume.

The pandemic stopped in its tracks a dominant form of in-person entertainment: In 2019, 268 million Americans and Canadians — 76 percent of the total population — visited a movie theater at least once, according to the annual report of the Motion Picture Association. Those moviegoers bought tickets to an average of nearly five films during the year. In comparison, just 150 million Americans went to at least one annual sporting event, according to a 2018 study of consumer behavior by the U.S. Travel Association.

Streamers rushed to fill the theatrical gap, increasing content as they bolstered subscriber numbers. One studio, Warner Bros., hasopted to move all its releases for the next 13 months, beginning with “Wonder Woman 1984” this week, to its streaming service simultaneously, potentially further undercutting the box office.

The stimulus bill would ease the sting of all of those losses. Under its terms eligible theaters would be given up to 45 percent of revenue lost between April and December 2020, capped at $10 million, in grants overseen by the Small Business Administration. Owners could then use that money to cover rent, payroll and other costs. Those theaters that lost at least 90 percent of their revenue in the 2020 period compared to 2019 will be able to apply as soon as the bill becomes law; those that lost at least 70 percent can do so two weeks later.

Meanwhile, another phase after the first quarter of 2021 could allow an additional grant at half the earlier total for companies continuing to struggle. NATO believes there is enough money in the appropriation to cover all eligible applicants.

For many theaters, these funds could mean the difference between reopening in 2021 — when vaccines will presumably be widely available and movies and customers may come screaming back — and never even getting that chance.

“The stark reality is without this package many of our theaters would not be able to turn their projectors on again,” said Todd Halstead, executive director of the Independent Cinema Alliance, which represents hundreds of independent theater companies around the country. “It’s not a panacea. But it is a huge help.”

The group estimates the survival of as many as 70 percent of independent theaters would be endangered without it.

One of those firms is Studio Movie Grill. The Dallas-based dine-in theater chain began 2020 with 34 locations in 10 states, and 6,800 employees. Founder and chief executive Brian Schultz says the company is now down to 300 employees and recently had to file for bankruptcy protection. But it is hoping to reemerge with many of its locations reopened and employees rehired.

“The pandemic put us into Chapter 11. This funding is going to allow us to come out,” he said.

The original package of $10 billion introduced last summer was focused on music venues. But NATO, working with the music-centric National Independent Venue Association, successfully lobbied lawmakers to add $5 billion.

Those lawmakers this week were eager to position themselves as friends of the movie business. Sen. Amy Klobuchar (D-Minn.), who along with Sen. John Cornyn (R-Tex.) was one of the key architects of “Save Our Stages,” conducted an interview with the Hollywood trade publication Variety touting the theater grants. “It is very rare to introduce something in July and it passes intact with more money six months later,” she said.

Eligibility for the funds requires that theaters be privately held as well as meet one of the following criteria: have fewer than 500 employees, function only domestically or operate in 10 or fewer states. AMC, Regal and Cinemark all fail the standard. That deepens the worries of those chains, particularly AMC. The country’s largest movie theater company is carrying billions of dollars in debt and could soon be forced into bankruptcy protection and a reorganization.

AMC chief executive Adam Aron, via a spokesman, declined to comment. A spokeswoman for Mooky Greidinger, who runs Regal parent Cineworld, said he was unavailable. A Cinemark spokeswoman did not return a call seeking comment.

The chains are not all similarly situated, however. Dallas-based Cinemark, with 4,500 screens in the United States, had large cash reserves before the pandemic and is considered in the best financial position. Regal, with 7,000 screens in the United States, is regarded as being in a somewhat weaker spot, though it could get a boost from Cineworld, which owns theaters in Europe and the Middle East. AMC, with more than a quarter of the country’s screens, is in the most dire position.

Based in the Kansas City suburb of Leawood, Kan. but majority-owned by China’s Dalian Wanda, AMC entered the pandemic with at least $5 billion in debt due to a recent ramp-up in theater investments. The company’s executives have repeatedly warned Wall Street its cash reserves are running low. Over the summer, the chain restructured its debt by more than half a billion dollars to free up cash. Further borrowing would be possible but unlikely given the high interest rates it would incur.

The firm’s move this week to stagger the years in which board members are elected — essentially preventing a wholesale replacement — potentially buys it more time.

But it remains unclear how much. Some analysts expect AMC to enter bankruptcy protection, which would allow it to reorganize with new leases and, probably, fewer theaters. It is possible outside buyers — studios or even independent theater owners — could step in and snap up venues that AMC is forced to sell at distressed prices. Even those bullish on the future of movie theaters acknowledge that AMC probably will look different when the business returns.

For all the travails theaters have faced, most studios would like them to come back; they remain the best way for these Hollywood firms to recoup investment on big-budget films. Disney, for instance, still intends to release its biggest movies in theaters despite the success of streaming service Disney Plus. Many of Hollywood’s creators, too, have expressed hope that the distribution channel continues to flourish.

Oscar winner Aaron Sorkin, whose most recent movie, “The Trial of the Chicago 7,” was released this fall on Netflix, said Tuesday he wished theaters would come back soon.

“Nothing is going to replace the experience of being part of an audience, of everybody laughing at the same time, gasping at the same time, crying at the same time, being silent at the same time,” Sorkin said on the iHeartRadio podcast “Hell & High Water With John Heilemann.” “People want that. The movies are what we do on Friday and Saturday nights, the movies are where we go on dates, what we do with our families, what we do over the holidays.”

Although independent theater owners believe that the chains are essential, they say the stimulus is far more essential for their own businesses, since big companies have options like issuing stock or opening new credit lines.

“I’d gladly trade any grant for the access to the capital they have,” said one theater owner who spoke on the condition of anonymity because he did not want to be perceived as criticizing a competitor.

NATO’s Corcoran said his group would continue to fight for new stimulus packages under the Biden administration as well as tax relief and other measures. He also said there would be additional efforts for independent theaters; while the stimulus puts many theaters on solid footing for now, it covers only losses in 2020 or early 2021. New hardships could emerge if vaccination rollouts are delayed and the virus continues to spread as the new year wears on, keeping movies on the shelf and theaters closed.

For some, it is already too late.

Eclipse Theaters, a luxury eight-screen theater in downtown Las Vegas, was waiting to reopen in the fall as studios appeared poised to release new films. But when the virus began to surge again and studios postponed their releases, the theater’s owner, Nic Steele, decided against reopening. Earlier this month, he said the venue would remain closed, possibly permanently.

In an interview Tuesday, Steele said he might look for other locations.

“It’s been difficult, but we’re going to find new ways,” he said. In the meantime, he has undertaken a very 2020 action: He has started a streaming platform.