Will Hollywood find a special place in a government coronavirus bailout?
I don't think so. While the crisis is evolving on a day-by-day and hour-by-hour basis, I think that any financial relief to Hollywood will be more generic. Every industry that has been hard hit by the virus has its hands out to Congress. Congress, at the moment, is focused on the workers.
It seems to me that we need to look at the various components of the movie industry:
Theatres have been particularly hit hard, but is it any harder than other retail establishments that have been closed? Seems to me that they are going to have to look to traditional forms of relief such as workouts with their lenders or restructurings.
“Over the top” (OTT) distributors are benefactors since 4-wall releases are not realistic for the foreseeable future. However, independent distributors, which were already having a tough time finding their footing, will likely be hammered more. The “majors” will likely survive in the present environment although, to be sure, they too will have to retrench operations and reduce operating costs. Undoubtedly we will also see more theatrical releases online. This last point was an already developing trend. The current environment will just accelerate this model.
Producers who can’t perform and deliver their product should in the first instance be in contact with their counterparty to discuss deferments and extensions. Completion guarantors will also be called on to complete the project. Producers should also review the force majeure language in their agreements which might excuse performance based on these extraordinary events.
The fact is that every aspect of the entertainment industry, like all other businesses, are going to have to draw on all resources available, including curtailing expenses, suspending performance under agreements, bankruptcies and restructurings, and possible insurance recoveries. Undoubtedly the federal government will be providing financial relief of some sort, but the question is whether there is enough cash flow to keep the wolves at bay until then.