BY NATO STAFF
The below column was originally published in the August 2020 issue of Boxoffice Pro.
It is great to be back in the pages of Boxoffice Pro after a brief hiatus. We thought it would be best to use this space to summarize the work we’ve been doing to help our industry rebound from the worst crisis it has ever faced.
Since the start of the global pandemic, NATO has been working tirelessly to assist theater owners in staying solvent. As Congress began to contemplate relief legislation in mid-March, we immediately moved to retain robust representation on Capitol Hill and worked assiduously to ensure that theaters would be eligible for assistance programs. Congress passed the CARES Act at the end of March, which included mandates for several loan programs: the Paycheck Protection Program (PPP) and Emergency Injury Disaster Loans (EIDL) and grants through the Small Business Administration (SBA), and $454 billion for the Treasury Department to set up loans and loan guarantee programs. The legislation also included a significant expansion of unemployment insurance eligibility criteria and a $600 weekly supplement for individuals on unemployment.
The PPP loan program is a forgivable loan that, as enacted, would allow borrowers to borrow up to 2.5 months of their average 2019 payroll amount to spend on a number of eligible expenses, with up to 100 percent forgiveness depending on salary and head-count maintenance requirements. However, in subsequent regulation, the SBA and Treasury made significant modifications to the program, including a requirement that 75 percent of any forgivable amount be spent on payroll, regardless of whether a borrower met the “safe harbor” provisions of the PPP as described in the CARES Act. NATO worked to communicate these changes to members, while also pushing Congress to revise the terms to reflect the original intent and flexibility. Due to aggressive lobbying by NATO, the PPP was modified by subsequent legislation to allow for greater flexibility in spending the loan (reducing the payroll spend to 60 percent); allowing for a significant increase in the forgiveness period (from 8 weeks to 24 weeks); and extending the maturity period to five years for new loans, among other fixes. NATO will continue to lobby for PPP modifications including higher loan caps and/or the ability for borrowers to take on multiple loans.
The CARES Act also allocated $454 billion for large and midsize companies via loans and loan guarantees administered by the Treasury Department and the Federal Reserve. However, currently the only program that has been implemented is the Main Street Lending Facility (MSLF), which uses a small portion of the allocated funds toward loans for small and midsize businesses. As of early July, the MSLF was still not fully operational, and many lenders have expressed concerns about the program. Exhibitors specifically have also shared concerns about EBITDA caps that are prohibitively low. We will continue to share information as it becomes available and to lobby for more flexible uses of the Treasury funds, particularly for shuttered industries such as movie theaters.
Given the duration of the pandemic, Congress recognized that more assistance is needed. In June, the House passed further Covid relief legislation called the HEROES Act, and the Senate is expected to respond with a different bill at the end of July or beginning of August. Potential proposals in the forthcoming legislation include: additional loan options for businesses that have not received adequate relief; a limited liability shield for businesses that reopen; tax credits for personal protective equipment; either an extension of the pandemic unemployment assistance or a rehiring bonus; and direct assistance for families and individuals. NATO will continue to lobby aggressively for the needs of all exhibitors to help our members stay solvent and survive this period.
Cinema Reopening Operations
Earlier this year, even before movie theaters were shut down by government mandate, NATO members were taking steps to mitigate the risk of exposure to the coronavirus. As awareness of the pandemic spread, theater owners were making sure that recommended health and hygiene practices (frequent hand washing, staying home if ill, etc.) were being followed by staff; that cleaning and sanitization practices were stepped up; that physical distancing was implemented; and that showtimes were adjusted to accommodate enhanced cleaning between screenings.
When theater closures were mandated, theater owners and their teams explored additional health and safety measures and made plans to reopen their cinemas with robust precautions in place to protect employees and guests from exposure to Covid-19. To help members with this effort, NATO invited operations leaders, representing 11 NATO-member companies, to come together as NATO’s Cinema Reopening Operations Task Force.
Recognizing that health and safety issues are always company-by-company, location-by-location decisions, the working group did not attempt to make industry-wide recommendations or suggest one specific model. Rather, the group guided the development of resources that identify issues for individual companies to contemplate as they make their reopening plans. With the input and support of the working group, NATO held two webinars that focused on the operational considerations of reopening cinemas and published a Covid-19 cinema reopening considerations document and an accompanying preopening planning-stage checklist, which were shared with all NATO members. These resources address cleaning and sanitizing, employee health and personal hygiene, and physical distancing, as well as food and beverage operations, and were well received by NATO members.
NATO members have used these resources, in combination with guidance from the Centers for Disease Control and Prevention, Johns Hopkins University, and other sources, to develop operational plans and protocols that have, in many cases, helped local governments have confidence to authorize reopenings in their jurisdictions. Additionally, NATO member companies have been nimble and responsive to new information and evolving guidance from federal, state, and local authorities. Some plans have been revised as more is learned about the efficacy of specific protocols and as moviegoers’ expectations and comfort with various protocols evolve.
Communications and Marketing
NATO’s communications team began preparing for the pandemic in January. As reports of a growing coronavirus epidemic in China began to circulate, we began research into updating NATO’s “Preparing for a Flu Pandemic,” first developed in 2009 in response to the N1H1 outbreak. The document, along with NATO’s “Crisis Management Handbook” was distributed to members at the end of January. As the pandemic intensified and spread, NATO was heavily engaged with the press on managing perceptions of the imminent threat to the industry, particularly leading up to CinemaCon.
With the WHO declaring a global pandemic in mid-March, NATO canceled CinemaCon, and most movie theater companies began closing their doors. NATO released a statement noting the responsible actions of theater owners and expressing optimism for the future of the industry. NATO’s communication strategy shifted to support of lobbying for federal aid to movie theaters and other industries and employees affected by the nationwide shutdown. We commissioned and placed a powerful opinion piece by Christopher Nolan in The Washington Post on the importance of movie theaters to our economy and culture.
Throughout the shutdown, we have continued to press the importance of aid for the industry, its underlying strength when things return to normal, and its responsible and rational approach to reopening safely in thousands of media outlets around the world. To support this messaging, we have encouraged and facilitated the participation of theater owners of all sizes to tell their stories directly. These efforts are ongoing.
NATO has also established a Media Relations/Research Task Force to share and aid in communications by members to their local press and patrons. In coordination with the Reopening Operations Task Force, it has encouraged the development of direct and clear communication of safety and sanitation protocols that consumer research has shown will be most effective in reassuring the public that theaters are reopening responsibly and safely.
NATO has also been engaged in a cross-industry effort with the major studios and other partners to create a reopening marketing campaign that celebrates the magic of moviegoing. That effort is ongoing and contingent on the broad opening of the industry nationwide—indeed worldwide—and the return of wide-release films.
Since the cancellation of CinemaCon 2020 and the onset of the Covid-19 pandemic, NATO’s membership services have shifted toward several key topics. The first involved tracking studio activity and their possible programming timetables. Another important issue is U.S. legislation and policy movement regarding how businesses and their employees stay solvent until they can open back up. This included funding and advocating programs within the industry to assist cinema employees. Next, NATO observed support for moviegoing and analyzed how to get people back into cinemas when the time comes through a strategic public relations campaign. Finally, NATO needed to examine reopening operation procedures, as cinemas would prepare to welcome patrons again.
NATO’s weekly State of the Industry webinar broadcasts every Thursday afternoon (Washington, D.C. time) to more than 400 member-company personnel around the world. As circumstances change rapidly in this current environment, the need to relay information on a timely basis remains a high priority. In addition to the SOTI webinars, NATO offers webinars on many of the topics mentioned above, including specific federal loan programs, P.R. advice, and shared reopening experiences from an operations standpoint. The webinar and tele-video platform has become a staple for businesses during the pandemic, and NATO intends to continue to provide much valuable information to its members throughout this ordeal.
NATO staff have been working diligently on behalf of all cinemas to ensure that they have an industry to return to once cinemas fully reopen. We understand that cinema owners have anxiety, frustration, and concern about the future of the exhibition industry. The past few months have been full of stressful situations and difficult decisions. Our members have found value in NATO’s website posts, daily article updates, weekly webinars, and regular reports on developments within the industry. Thank you for your constant support, and we look forward to working with you this year.
The month of July marks the beginning of NATO’s fiscal year. For the 2020–21 fiscal year, the NATO Executive Board authorized a one-time dues-free year of membership through June 30, 2021. Any cinema that has yet to join NATO, please contact David Binet (email@example.com) to take advantage of the current offer. During this period of uncertainty and great challenge, NATO proudly represents our members and all cinemas in the fight for the return of the exhibition industry.
Employee Relief Programs
Several hundred thousand movie theater employees all across the world were furloughed when theaters were forced to close. In the U.S., the Will Rogers Motion Picture Pioneers Foundation (WRMPPF) stepped up immediately to provide financial aid to those most in need. With $1.2 million in funding from Will Rogers’ reserves, and a $1 million contribution from NATO, phase 1 of the Will Rogers Covid-19 Emergency Grant Program provided an immediate $300 grant to 7,300 furloughed employees in the U.S.
A comparable grant program was launched by the Canadian Picture Pioneers (CPP) to provide financial relief to furloughed employees in Canada, and NATO supported that effort with a contribution of $100,000 CAD.
Our hats are off to our friends at WRMPPF and CPP for undertaking and managing these important programs that gave a much-needed financial lift to industry employees negatively affected by the closures.
WRMPPF has now moved to phase 2 of its Covid-19 relief program, which offers assistance on a more individualized basis, similar to its ongoing assistance program. The fundraising for phase 2 was given a nice boost by Lionsgate, as the company donated the proceeds of its Lionsgate Live! movie screenings to Will Rogers.
The cancellation of CinemaCon 2020 was another disappointment earlier this year. As we look ahead to better times, we are looking forward to gathering, virtually or in person, at the Beverly Hilton this October, for NATO’s Fall Meetings. Stay tuned for more details. At the same time, we are already working hard on new plans to celebrate to 10th edition of CinemaCon, scheduled for April 26–29, 2021 at Caesars Palace.
Global Cinema Federation
In April, the Global Cinema Federation released a statement on its commitment to ensuring the survival of cinemas through the Covid-19 crisis. Over these last few months, the GCF executive committee has held several virtual meetings to continue to share updates on industry developments, including reopenings and back-to-the-cinema campaign ideas. The GCF has communicated with studios about the commitment to reopening safely in time for wide releases of upcoming films. The GCF has also worked on collecting information from theater owners operating in territories around the world about the impact of Covid-19 on our industry. Chairman Alejandro Ramírez Magaña addressed the virtual CineEurope crowd on June 17 with an industry message from the Global Cinema Federation. In his address he said, “We must demonstrate our resilience, which is what has always made us a solid, united, and successful industry. Our coordinated efforts to get the public back into movie theaters will make the difference in our industry, which I am certain will return stronger than ever.”