National Cinemedia, a Centennial-based movie advertising giant that is mostly owned by the theater chains Regal and Cinemark, is carrying more than $1 billion in debt.
The business filed for Chapter 11 bankruptcy in Texas on Tuesday as cinema companies continue their post-pandemic slump. Regal’s parent company filed for Chapter 11 in September and has closed its Denver West Village Stadium 12 theater in Lakewood.
National Cinemedia is the country’s largest movie theater advertising company, best known for its “Noovie” pre-film show. It employs 297 people in Centennial and elsewhere.
The publicly traded company that was founded in 2005 has $500 million to $1 billion in assets, according to its bankruptcy paperwork, and $1 billion to $10 billion in debt. Its largest creditor by far is Computershare, an Australian company that is owed $238 million.
“After facing years of headwinds from reduced attendance at movie theaters due to the COVID-19 pandemic and the availability of video streaming services, the (company) recognized the need to right-size its balance sheet so that it could continue to be the market leader in cinema advertising,” chief financial officer Ronnie Ng wrote in an affidavit Wednesday.
In a press release, National Cinemedia said that converting its debt into equity will allow it to quickly emerge from Chapter 11 without disrupting operations. The company’s overall annual revenue spiked from $115 million in 2021 to $249 million in 2022, with fourth-quarter revenue jumping from $63.5 million in 2021 to $91.7 million in 2022.
“Our fourth quarter marked a strong finish to the year as a diverse film release schedule, including ‘Black Panther: Wakanda Forever’ and ‘Avatar: The Way of Water,’ brought massive audiences back to theaters,” CEO Tom Lesinski said in the press release.
National Cinemedia shrunk its staff by 39 percent during the pandemic, cut salaries and suspended its 401k match. In a U.S. Securities and Exchange Commission filing Thursday, the company said it “may experience increased levels of employee attrition” due to the bankruptcy “and our employees likely will face considerable distraction and uncertainty.”
National Cinemedia is being sued in Denver District Court by Matthew Berry, a former ESPN analyst and Denver native who said that he is owed at least $15 million in bonuses for movie-related video games that he invented for National Cinemedia.
Last year, National Cinemedia asked that the lawsuit be dismissed because it lacks evidence. On March 24, Judge Stephanie Scoville threw out Berry’s allegations of wage violations and bad faith dealing but let him sue National Cinemedia for theft and breach of contract.
“We appreciate Judge Scoville’s thoughtful decision allowing the case to move forward,” Berry’s attorney, David Olsky with Fortis Law Partners in Denver, said Thursday. “We are continuing to review the Chapter 11 filings and evaluating the impact on the case.”