Entertainment giants brace for outsize hit from theme park closures, cinema shutdowns

"China alone is a third of the world’s movie screens. I can’t think of anything comparable," said one entertainment expert about the financial impact of cinemas across China remaining shuttered.
Image: CHINA-HEALTH-VIRUS
A security guard wearing a protective facemask is seen at the temporarily closed Shanghai Disney resort in Shanghai on Feb. 23, 2020.Noel Celis / AFP - Getty Images file

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By Claire Atkinson

Major entertainment and media conglomerates have been grappling with the unstoppable coronavirus contagion in Asia and Europe, and now it’s arrived on American shores.

COVID-19, the disease caused by the virus, has already claimed six lives in the United States, with almost 100 confirmed cases nationwide, making some Americans cautious about spending time in public spaces.

"This virus has so many unknowns and is clearly highly contagious. Why take the risk, being in huge public places like theme parks or contained on a cruise ship?” Stacey Bendet, chief executive of Alice+Olivia fashion company, told NBC News.

Shares of some entertainment stocks fell on Monday, with Live Nation, SeaWorld Entertainment and Six Flags showing declines for the day. Disney and Netflix stocks rose — along with fitness company Peloton — as interest in "at-home" entertainment gathers strength.

“If [the virus] is a major issue in the U.S. into the May/June time frame, all bets are off," said James Hardiman, a managing director at Wedbush Securities. "I wouldn’t think we are there yet,” he said, noting that the big regional parks aren’t yet open for the season.

China has not been so lucky. Shanghai's $5.5 billion Disney Resort and Hong Kong Disneyland both closed indefinitely on Jan. 26, which Disney said would ding its bottom line by $175 million. In Japan, the two Disney-branded theme parks in Tokyo are closed until March 16 as a precaution against the spread of the coronavirus.

"The precise magnitude of the financial impact is highly dependent on the duration of the closures," Disney's Chief Financial Officer Christine McCarthy said last month.

Universal's Osaka theme park has also closed down for two weeks as part of the government mandate. Universal Beijing Resort, a giant theme park under construction and penciled for a spring opening, has emergency staff back on the job. They are being monitored with thermal equipment and some have been encouraged to work at home, according to a spokesperson for the company. Universal is owned by Comcast, the parent company of NBC News.

Television show production has also been hurt. CBS said on Friday it would postpone filming on its global adventure TV series, “The Amazing Race,” citing "increased concerns and uncertainty regarding the coronavirus around the world."

Film producers have been left in limbo. “This has thrown a wrench into filming schedules,” said Rob Cain, a partner in Pacific Bridge Picture, which works closely with Chinese companies. Cain said it was unclear how insurance policies would deal with the problem, given all the lost revenue.

China began closing some 70,000 movie theaters on Jan. 23, with no word on when they might open again.

"China alone is a third of the world’s movie screens,” Cain said. “I can’t think of anything comparable, and I’ve been in the business 30 years."

Global box office revenue clocked in at $42.5 billion in 2019, with China representing $9.2 billion.

“It is an enormous impact,” said Stanley Rosen, an expert in U.S.-China relations and a professor of political science at the University of Southern California. He pointed to the potentially delayed release of Disney’s $200 million Chinese warrior movie “Mulan” in the China market, which is slated to open in late March globally.

In Europe, AMC Theatres closed its cinemas in Northern Italy to help local governments contain the spread of the disease. Half of all Italian cinemas are now closed, according to the Hollywood Reporter. The Cannes Film Festival said it was monitoring the epidemic, but would move ahead with its May event, even though a Cannes resident tested positive for the virus.