CGV Directly Operated Stores Up to 40 Locations Abandoned "Focusing on Rent Reduction"

Rent Reduction, Screening Room Reduction, Flexible Operation System, and Reassessment of Inefficient Projects Implemented
Weekday Screenings Significantly Reduced, "Some Theaters Operate Only on Weekends"

On the 8th, when social distancing level 2.5 was in effect due to the spread of the novel coronavirus disease (COVID-19), Seoul CGV Yongsan I'Park Mall was quiet. Photo by Moon Honam munonam@

CJ CGV will give up 35 to 40 out of its 119 directly managed theaters nationwide. This is to resolve operational difficulties caused by the spread of the novel coronavirus disease (COVID-19).

CGV announced on the 19th that it plans to reduce about 30% of its directly managed theaters over the next three years. The extreme self-help measure is due to the damage caused by COVID-19. This year's sales (as of last month) have dropped about 70% compared to last year. A company official said, "The film industry has been pushed to the brink of collapse," adding, "We plan to implement changes across operations, including rent reductions, screening room cuts, flexible operation systems, and reviewing inefficient businesses to break away from the high fixed cost structure."

CGV will negotiate rent reductions with landlords starting from locations facing the greatest operational difficulties. The theaters with significant losses will either suspend operations or close down. A company official said, "We are even considering legal action." Newly opened theaters under lease contracts are no exception. The official added, "Unless there are special reasons, we plan to postpone openings as much as possible or reconsider the openings from scratch," and "Many scheduled theater openings planned for early next year will be delayed."

On the 8th, when social distancing level 2.5 was in effect due to the spread of the novel coronavirus disease (COVID-19), Seoul CGV Yongsan I'Park Mall was quiet. Photo by Mun Ho-nam munonam@

Existing theaters will be operated flexibly according to the released films and expected audience size. In particular, the number of screenings during weekdays, when audiences are fewer, will be drastically reduced. A company official said, "For some theaters, we are considering closing on weekdays and operating only on weekends."

The focus on reducing theaters, halting new openings, and flexible operations is due to the sharp decline in audiences and the burden of rent. In the first half of the year, CGV negotiated rent reductions while deferring rent payments by location, but made little progress. A company official said, "The recovery trend was broken by the resurgence of COVID-19, and third-quarter results are expected to be below expectations," adding, "We plan to use all legal means to achieve rent reductions."

CGV has already implemented various self-help measures to reduce the damage caused by the spread of COVID-19. These include temporary suspension of operations at 35 locations, executives' salary returns, employee leave and furloughs, and voluntary retirement. The company has also focused on securing liquidity through capital increases, selling shares of overseas subsidiaries, and selling non-profitable domestic and overseas assets. A company official said, "There is a forecast that the vicious cycle may continue until the second half of next year due to the prolonged COVID-19," adding, "We will further focus on securing liquidity by selling additional assets and reducing costs."

This content was produced with the assistance of AI translation services.