AMC Entertainment to Close 80 Theaters

AMC Entertainment Inc. said Thursday that it will close as many as 548 screens, or about 80 of its 186 theaters, becoming the second big movie exhibitor this week to announce massive shutdowns in the wake of the industry’s overbuilding spree.

The No. 4 U.S. theater operator, based in Kansas City, Mo., said in an investor conference call that it has targeted 307 mostly under-performing screens for disposal by early 2004 and is putting an additional 241 on watch for possible closure.

The 548 screens represent 20% of AMC’s total of 2,802. The 80 theaters make up 43% of its theaters.

“A large obsolete theater portfolio can be a rock that turns into a boulder that crushes you,” said AMC Chief Executive Peter Brown in the conference call.

Spokesman Rick King said some of AMC’s 13,000 employees, mostly part-timers, will lose their jobs because of the theater dispositions, mostly through attrition as leases expire.

AMC shares closed unchanged on the American Stock Exchange at $4.31 but off 60% from their 52-week high of $10.81.

The company will shut 40 of the 307 targeted screens by the end of February and perhaps 70 to 75 in each of the next three years, Chief Financial Officer Craig Ramsey said. AMC said it will take charges of about $4 million to $4.5 million in each of the next three fiscal years as a result.

It said it got rid of 23 screens in four theaters in its third fiscal quarter ended Dec. 28 and 184 screens in 29 theaters for the first nine months of its fiscal year.

AMC has 176 theaters with 2,626 screens in the United States and Canada and 10 theaters with 176 screens in five other countries. Most of its screens are in the southern and western United States, with large concentrations in California and Florida.

Theater operators cannibalized one another’s sales and took on too much debt by building too many modern mega-plexes with stadium seating and other amenities while failing to shut enough under-performing older screens.

Several competitors, including No. 3 Carmike Cinemas Inc., filed for bankruptcy protection in the last year, while No. 1 and No. 2 rivals Regal Cinemas Inc. and Loews Cineplex Entertainment Corp. teeter on the brink, analysts said. Bankruptcy can allow operators to escape unprofitable leases.

There are about 37,000 screens in the United States, about 10,000 too many, analysts said. AMC expects a screen shakeout to take place largely in the next 12 to 18 months when, as Brown put it, operators focus, for a change, on “quality, quality, quality, not quantity, quantity, quantity.”