AMC Entertainment risks bankruptcy – Quartz


The cinemas of the world are – for real this time – facing an existential crisis. Every few years we hear of the impending “death” of theaters due to a variety of factors, including rising ticket prices and the proliferation of other forms of entertainment such as streaming. But it is different. The pandemic took an industry that was already pushing threats from all sides and pushed it into oblivion.

No company illustrates this better than AMC Entertainment, the 100-year-old owner of the world’s largest movie theater chain, AMC Theaters. With no new movies to hit theaters and future moviegoers reluctant to go and see the few films shown, AMC is literally strapped for cash. Happy centenary! Your present is bankruptcy.

AMC admitted in a file (pdf) to the United States Securities and Exchange Commission that “there is substantial doubt as to the ability of the company to continue in business for a reasonable period of time”. If it doesn’t find new sources of cash (and quickly), it will file for bankruptcy. AMC generated $ 1 billion in revenue in the first quarter of this year.

If AMC goes bankrupt, we will all lose. This would mean that some or all of its more than 1,000 theaters, in 15 countries, could simply disappear, leaving less room for movies to see, less options for consumers and less influence for TV channels. cinema that survive to negotiate with Hollywood studios. on the methods of distribution. It would be a blow to the theater industry and anyone who has ever enjoyed a trip to the movies.

It’s possible that AMC will survive the next few months, that a vaccine will be found and widely distributed in 2021, that studios will start releasing many great movies again, and the theater industry will live to fight another day (although this does not solve the current streaming problem). But the prospect of a world without theater has never been more real than it is now. Videos like the one below might seem like an ancient relic to future generations, no less incomprehensible to them than dinosaur fossils are to us.

By the numbers

  • $ 1.1 billion: AMC’s market capitalization at this time last year
  • $ 325 million: AMC market capitalization as of October 23
  • 85%: Decrease in attendance at AMC cinemas since the start of the year compared to 2019
  • $ 11.3 billion: Total U.S. box office revenue last year
  • $ 1.9 billion: Total U.S. box office revenue so far this year, including January through March
  • 15 million : Number of shares AMC agreed to sell to Goldman Sachs and Citigroup
  • 0: Number of AMC theaters opened in New York and Los Angeles, its two largest markets

Check under the hood

AMC’s outlook is no more bullish when you take a close look at its key financials. The company lost nearly $ 2 billion in the last quarter (before the pandemic it had at least reached breakeven point). And it was already $ 5 billion in debt before this crisis, mainly due to efforts to renovate its theaters and provide customers with a more luxurious experience.

As of October 16, AMC has resumed operations in 519 of its 598 US theaters, with capacity limited between 20 and 40 percent, depending on location. Many of the still-closed theaters are in New York City and California, which together accounted for nearly 20% of the company’s revenue in 2019, so it lacks its two top-grossing regions and the areas that are operational are not making money. money. (The world’s second-largest chain, Regal Cinemas, just closed all of its theaters around the world, although its financial situation is not as precarious as AMC’s.)

AMC’s one and only priority right now is liquidity, and it has done virtually everything in its power to keep enough cash on hand just to operate. AMC has renegotiated almost all of its leases around the world. It suspended shareholder cash returns, its share buyback program and future dividend payments. He raised hundreds of millions of dollars in private debt, put employees on leave, cut wages across the board and canceled annual merit salary increases (pdf).

That alone won’t be enough, which is why the company is now seeking additional capital to weather the rest of the pandemic. Perhaps the US government will provide some bailout funds, although that may depend on the results of the next election. Dozens of famous filmmakers, from Judd Apatow to Greta Gerwig to Taika Waititi, recently signed a letter urging the US government to bail out cinemas before the industry is wiped out. Surely that’s what will spur Mitch McConnell and Nancy Pelosi to act – a passionate letter from the guy who made The 40-Year-Old Virgin.

Save a theater by renting yours

AMC is so desperate for the extra revenue as its theaters wither that it will now allow you to rent an entire theater for $ 99 and invite up to 20 of your friends to watch a classic movie like Jurassic Park. It costs a lot more to screen a new movie, like Tenet, the latest action thriller from director Christopher Nolan. But split between 10 or 20 people, that still equates to about a normal trip to the theater (remember that?) Per person.

It’s not a bad idea. While health experts aren’t exactly encouraging consumers to go back to the movies, they say the movies might not be as dangerous as you think, especially compared to other indoor activities, like restaurants and bars. This is due to two main factors: everyone is facing the same direction in a theater, and no one is speaking. Both help prevent the spread of droplets that carry the virus from person to person.

Other chains like Cinemark and Alamo Drafthouse offer similar rental packages. So if you are a movie fan, have a lot of friends, and are open to spending two hours indoors with other people (even if the seats are spaced out), consider ” help your local theater in need. Their existence may depend on it.

Further reading:

• If AMC survives, it will do so in a new era of cinema. The company has entered into an agreement with Universal Pictures for dramatically shorten the time between the time a film is released in theaters and the time it is authorized to access digital rental services.
• AMC investors have long hoped that a media conglomerate with deep pockets could buy the ailing movie channel. Its stock skyrocketed earlier this year because of reports Amazon may have been interested. (This was not the case.)
• While the US box office is languishing (in part due to the closure of AMC stores in New York and California), Japan is doing quite well. In fact, its box office is beat Records.
• Part of the American theater industry that is really flourishing? Drive-ins, which have experienced a increase in attendance this year, for obvious reasons. Difficult to catch Covid-19 from inside your car!


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