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Multiplex chains, which have invested crores of rupees in their cinemas, are in dire straits, like many or almost all other businesses. PVR is the chain with the maximum number of screens and properties in the country. Inox comes next. Carnival and Cinepolis are almost equal at number three and four. Although liquidity may not be the issue as far as PVR and Inox are concerned, their monthly bills (burn rate) are to the tune of Rs. 40-45 crore and Rs. 15-18 crore respectively. Not only are these figures huge but they appear even more intimidating when you realise that these chains (like the others in the business) have not had a turnover of a single rupee for the last two months.

While the Cinepolis chain of multiplexes has paid salaries in full to its staff for the months of March and April, 2020, it is being whispered in trade circles that another chain has paid 50% of the salaries for the two months. A third multiplex chain, which had even been defaulting in payments to distributors prior to the lockdown, has been very badly hit by the turn of events from mid-March. Know-alls say that this chain has paid its staffers only 25% of the salary for the two months. Another chain has paid salaries for March and April but after asking its senior staff to take voluntary pay cuts to the tune of 25-50%.

But that is only one part of the story. The multiplex chains are also pretty nervous about the way forward. The chains have already begun conversations with their landlords about not just forgoing the rents for the lockdown period due to the force majeure clause in the rental agreements but also about charging reduced rents for the balance months of the financial year. Multiplexes are open to doing revenue-share or making rental payments based on their earnings for the months till March 2021. But the question is: will the landlords agree? If they agree to forgo the rent for the lockdown months, fine. If not, what will happen? Next, if they do not agree to scale down the rents for the forthcoming months, how will the multiplex chains be able to afford such humongous rents in the face of declining revenues when the cinemas are allowed to reopen under strict social distancing norms? Will the multiplexes have to opt for shutting down some or many of their properties? Will the landlords let them shut shop? If they do, will the landlords get new tenants in the messy scenario which will unfold when the lockdown is lifted? Who will blink first?

It would not be wrong to say that multiplex chain holders will also need to renegotiate their sharing terms with producers and distributors when films start releasing. But will producers and distributors be in a mood to entertain the cinema owners? The lockdown has hit everyone in the business badly, really badly. So how can one person help another when they both are sailing in the same boat?

The coronavirus has taught mankind a lot of lessons. The lockdown lifting will come with its own set of financial and economic lessons for the film trade.


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