AMC Theatres lost $900 million in the third quarter even as cinemas reopened
AMC Entertainment, owner of the world’s largest movie theater circuit, lost more than $900 million in the third quarter, even with the vast majority of its locations open for business.
Since the COVID-19 pandemic shuttered the film business in March, AMC has reopened 539 locations, or 90% of its 600 U.S. movie houses.
But the Leawood, Kan.-based exhibitor’s Monday earnings report is the latest sign that, lacking new Hollywood movies and a coronavirus vaccine, patrons will be slow to return to their local multiplexes.
AMC, owned by Chinese conglomerate Dalian Wanda Group, reported a loss of $905.8 million during the three months that ended Sept. 30, compared with the company’s $54.8-million loss during the same period of time a year ago. The firm’s revenue was $119.5 million, down 91% from the prior-year quarter.
The global health crisis has proved to be an existential threat to the movie theater industry, and especially to AMC, which went into the situation with a heavy debt load. AMC has spent much of the pandemic warding off the threat of bankruptcy by restructuring its debt and taking other measures to improve its balance sheet.
The company in October warned investors that it could run out of cash by the end of this year or early 2021 if it couldn’t find new financing or generate significantly improved attendance. The company in a Monday filing said it would sell up to 20 million of its shares to raise nearly $50 million in new capital.
“The magnitude of the impact of the global pandemic on the theatrical exhibition industry was again evident in our third quarter results, as theatre operations in the U.S. were suspended for nearly two-thirds of the quarter,” AMC Chief Executive Adam Aron said in a statement. “And yet ... the AMC team continued to make significant progress in pursuit of our three key priorities: to strengthen our liquidity position; to dramatically reduce operating and capital expenditures, and to continue to safely and successfully restore our operations.”
Shares fell 9% in regular trading on Monday, before the earnings report was released.
AMC has been reopening its theaters since August with seating capacity restricted to between 20% and 40%. However, with indoor multiplexes still closed in the key markets of Los Angeles and New York, studios have been reluctant to release major new movies, especially after the lackluster results of Warner Bros.’ “Tenet” this summer.
Movies such as MGM’s 007 picture “No Time to Die” and Walt Disney Co.'s “Black Widow” have moved into next year, and the remaining films on the schedule for 2020 could be iffy as countries in Europe close cinemas again in response to spikes in COVID-19 cases. Some films originally slated for theatrical distribution have gone directly to streaming, including Paramount Pictures’ “Coming 2 America,” which sold to Amazon for a reported $125 million. Warner Bros. still plans to release “Wonder Woman 1984" on Christmas.
The dearth of new movies caused Regal Cinemas, which had begun reopening theaters in August, to close up shop again at the vast majority of its U.S. locations in early October.
AMC will face a major test in late November with the release of Universal Pictures’ “The Croods: A New Age,” a DreamWorks Animation sequel. The theater chain earlier this year signed an innovative pact with Universal to allow the Comcast Corp.-owned studio to put its movies on digital home video rental platforms for $20 as soon as 17 days after they hit theaters.
Aron credited the potentially groundbreaking deal as the primary reason Universal and specialty label Focus Features have kept some of their movies on the schedule for this year despite the risk of the pandemic. Studios normally wait 74 days before releasing their movies for video on-demand. AMC will receive an undisclosed share of the home video revenue generated under the Universal agreement.
On a conference call, Aron told analysts that the Focus Features film “Kajillionaire,” written and directed by Miranda July, made more money for AMC under the flexible release strategy than it would have under the normal theatrical window. The movie, which premiered at the Sundance Film Festival in January, hit theaters Sept. 25, followed by a video on-demand debut Oct. 16.
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