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AMC Theatres lost $561 million in one quarter, with revenue down nearly 100%, because of COVID-19

AMC sign on a building.
AMC Theatres posted a massive loss for its most recent fiscal quarter.
(Jonathan Weiss/Dreamstime )

AMC Theatres, the world’s largest cinema operator, lost $561 million in its most recent quarter as revenue collapsed because of the COVID-19 pandemic.

The Leawood, Kan.-based exhibitor, owned by China’s Dalian Wanda Group, has been hammered by the coronavirus crisis, which has kept its 630 U.S. theaters closed since mid-March. Revenue was $18.9 million during the three months that ended in June, down 99% from the same period a year ago, the company said Thursday.

Second-quarter earnings were even worse than Wall Street anticipated. AMC lost $5.38 a share, compared with the average $4.34-per-share loss predicted by analysts polled by FactSet.

AMC’s stock was little changed in after-hours trading, after closing essentially flat at $4.14.

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“It should be no surprise to anyone that with our operations shut the world over, and almost no revenues coming in the door, this was the most challenging quarter in the 100-year history of AMC,” Chief Executive Adam Aron said.

The earnings release comes about a week after AMC and Universal Pictures made a historic deal to shorten the theatrical window for certain movies to as little as 17 days, compared with the average 90 days for big Hollywood films. After the window, Universal can offer its films for $20 rental on demand, with AMC will taking a cut of the digital video revenue.

The deal marks a long-awaited shortening of the traditional theatrical window for Hollywood movies.

Rivals, including Regal Cinemas’ parent company, Cineworld, have blasted the deal, which they say could undermine the theatrical business. “We do not see any business sense in this model,” said Cineworld Chief Executive Mooky Greidinger in a statement after the pact was announced.

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Aron spent much of Thursday’s conference call with analysts defending the deal. In April, he said AMC would refuse to play Universal movies in its theaters after NBCUniversal Chief Executive Jeff Shell declared that the company would pursue premium video on demand releases for films even after the pandemic. Shell made the comments after the much-publicized online debut of “Trolls World Tour.”

But on the call, Aron downplayed the dispute as “a little posturing” and said the new model would improve AMC’s business — ensuring that the company is paid and expanding the market for films by making it easier for Universal to earn profits from its nonblockbuster releases. Better studio profits will lead to the greenlighting of more theatrical films, Aron argued.

“We now will be cut in, included and paid when Universal movies go to the home early,” Aron said.

During the public health crisis, AMC moved to improve its balance sheet by restructuring $2.6 billion in debt last month. The company raised $300 million in additional cash to help it withstand the shutdowns.

It remains to be seen how quickly customers will return to the cinema once the major chains start to screen films again, with AMC targeting mid- to late August for its theaters to reopen. Analysts don’t expect attendance to return to normal until there’s a widely available vaccine for the coronavirus. Still, Aron said that even if attendance is 25% of what it would normally be, it would be better financially for theaters to be open than closed.

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“I think we’ve survived the corona crisis,” Aron said. “And now we just have to get back to running the company really well.”

Theater owners have been waiting for new Hollywood movies to show before they return to normal business operations. After shifting the release date for “Tenet” multiple times, Warner Bros. recently said it would release the Christopher Nolan film internationally late this month, followed by a staggered domestic release in certain U.S. cities starting just before Labor Day weekend.

While Aron called Warner Bros.’ “Tenet” decision “heroic” for exhibitors, he did not criticize Walt Disney Co. for announcing a very different plan for the release of “Mulan.”

In what was widely seen as a blow to cinemas, Disney on Tuesday stunned the industry by announcing that its live-action version of “Mulan” would largely skip theaters and be available on streaming service Disney+ for a $30 fee starting Sept. 4. The movie will play in theaters only in countries where Disney+ is not available and where cinemas are open, the Burbank-based company said.

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Although he admitted that “we would have preferred that they kept ‘Mulan’ as a theatrical movie,” Aron added that the Disney move “reaffirms our wise and smart decision” to make the risky bet with Universal on premium video on demand. Disney is an indispensable supplier of movies for AMC, with franchises such as Marvel, Pixar and “Star Wars.”

“You might think I’m disappointed that ‘Mulan’ is moving, but AMC has no bigger friend on the planet than Disney,” Aron said.

A third of AMC’s theaters in Europe and the Middle East are already open and the vast majority will be open in the next two weeks, Aron said. Including international theaters, AMC boasts more than 1,000 cinema locations worldwide.

Debuting in 1998 after two major Disney animated bombs, the original “Mulan” had a low-key premiere and bare-bones marketing. Now the live-action version is going straight to Disney+. Is this any way to treat one of the best Disney characters ever?

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