The bill would set up a $454 billion loan guarantee fund that would allow distressed businesses to pay their fixed costs at a time when no revenue is coming in.
Theater owners applauded a massive $2 trillion relief package passed by the U.S. Senate on Wednesday night, saying the sweeping legislation gives them a fighting chance of surviving unprecedented closures brought about the coronavirus pandemic.
“With this agreement, movie theaters can look forward with confidence to re-opening and once again serving their communities,” the National Association of Theatre Owners said in a statement as the package awaited passage.
As of late last week, virtually all the 5,500-plus movie theaters across the U.S. were shuttered because of the virus.
While there might be some changes before the package is signed into law, the broad strokes of the bill have the support of the White House and House of Representatives. Senate Republicans and Democrats, along with the White House, hammered out an agreement late Tuesday night. On Wednesday night, however, several amendments were offered that slowed down an actual vote.
The $2 trillion relief package would set up a $454 billion loan guarantee fund that would allow distressed businesses to pay their fixed costs at a time when no revenue is coming in.
There will also be expanded Small Business Administration programs that will allow smaller businesses — defined as having 500 employees or less — to do the same and, in some cases, be eligible for loan forgiveness. A majority of the country’s cinemas would fall under the definition of a small business, according to NATO.
Other key provisions: deferral of payroll taxes, expanded opportunity for loss carrybacks for businesses and technical corrections regarding qualified improvement property. There are also employee retention tax credits for businesses that keep people on the payroll despite closures or that see large-sales losses.
In a welcome sign for the entire entertainment industry, another chief component of the historic relief package is increased unemployment benefits, including expanded unemployment insurance by four months, as well as increasing weekly payments by $600 and loosening eligibility requirements for part-time workers.
In the wake of last week’s cinema closures, more than 150,000 theaters workers have been furloughed or let go.
“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,” NATO said. “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.”
Wall Street analyst Eric Handler of MKM partners says it’s too early to know how much the relief package will help. He also notes that companies carrying a lot of debt are in a more vulnerable position, such as AMC Theatres, the largest circuit in the U.S. and the world. Handler said Cinemark, the country’s third-largest chain after AMC and Regal, is in a better position.
Never before in the history of Hollywood have cinemas shut down on a wholesale basis. AMC has seen its stock fall 41 percent in the last month and 52 percent year to date. Earlier on Wednesday, the company took the drastic step of furloughing all 600 of its corporate employees, including CEO Adam Aron. That’s in addition to more than 26,000 AMC employees being furloughed or let go by the end of last week.