Fitch moves Cinemark outlook to negative

Fitch Ratings said it revised the outlooks for Cinemark Holdings, Inc. and Cinemark USA, Inc. to negative from stable. The agency also affirmed both entities' long-term issuer default ratings at B+ and Cinemark USA's senior secured issue ratings at BB+/RR1 and senior unsecured issue ratings at B/RR5.

“The negative outlook reflects Fitch's concerns that near-term attendance growth may not reach expected levels, negatively affecting Cinemark's expected leverage improvement. While studios have publicly committed to theatrical release windows, there is no guarantee those films will drive attendance improvement. Additionally, although film creation cycles are expected to return to historical levels over the rating horizon, the current release schedule could experience further delays which could affect the timing of future film releases,” the agency said in a press release.

Additionally, Fitch noted Cinemark faces competition from direct-to-consumer streaming platforms, such as HBO Max, Peacock and Paramount.

“In an attempt to grow their DTC subscribers, these studios began funneling certain films directly to their DTC platforms during the pandemic and into 2022, bypassing theatrical exhibition. However, this strategy has not been as profitable as expected, and the studios have now publicly reaffirmed a return to a more normal theatrical release schedule,” Fitch said.

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