AMC Could Exhaust Funds By Year’s End, Prompting Concern for the Crippled Industry
By Cooper Dowd, Staff Writer
AMC, the largest exhibitor in the U.S., said that they could run out of funds as early as the end of this year.
According to the AMC theater chain, attendance at over 400 theaters in the U.S. is down 85%, because both LA and New York cinemas remain closed.
Another contributing factor to the lack of ticket sales is so few blockbuster movies being released. The struggling box offices expected to receive a jumpstart after Warner Bros. released TENET in theaters. However, studios set to release tentpole movies pulled them from theaters after TENET’s mediocre performance in the crippled U.S. market.
“Given the reduced movie slate for the fourth quarter, in the absence of significant increases in attendance from current levels or incremental sources of liquidity, at the existing cash burn rate, the Company anticipates that existing cash resources would be largely depleted by the end of 2020 or early 2021,” AMC reports. “Thereafter, to meet its obligations as they become due, the Company will require additional sources of liquidity or increases in attendance levels. The required amounts of additional liquidity are expected to be material.”
AMC announced several ways they are trying to stem the financial disparities caused by open theaters. These include exploring equity financing, renegotiating lease payments with landlords; selling theaters or other assets; and exploring joint-venture opportunities.
Despite AMC’s plans, they note that the future is uncertain.
“There can be no assurance that the assumptions used to estimate our liquidity requirements and future cash burn will be correct, or that we will be able to achieve more normalized levels of attendance described above, which are materially higher than our current attendance levels, and our ability to be predictive is uncertain due to the unknown magnitude and duration of the COVID-19 pandemic,” AMC reports.
In July, AMC revealed a deal with Universal that enabled the studio to release movies on demand weeks before their theatrical debut.
At first, other exhibitors feared that the partnership could hurt their business, now some see it as a possible lifeline.
“New product helps bring in repeat business. Smaller titles are going to put up small numbers, but they get people thinking about coming back to theaters,” Eric Handler, an exhibition industry analyst with MKM Partners, said. “At this point, theater operators are trying to break even. They’re willing to take just about any movie that can help bring in an audience.”
Major studios like Disney and Warner Bros. delayed theatrical releases making WONDER WOMAN: 1984 the final blockbuster slotted to release in 2020 in December.
Movieguide previously reported: “Disney’s recalibration during the pandemic is concerning for box office revenue. According to Variety, analysts predict that Disney’s docket changes guarantee a box office plunge. Overall, revenue could decline by up to 70-80% due to months of closure.”
However, AMC’s partnership with Universal provides a safety net that is missing from other studios. In response, many are looking to pursue similar strategies.
Universal’s upcoming projects, such as THE CROODS 2, FREAKY, and NEWS OF THE WORLD will not save the box office as a true blockbuster could. However, Universal risks less than other studios who do not have the option to fall back to an On-Demand release.
“Studios are in a very difficult position themselves of figuring out when the right time will be to release their new movies,” Robert Fishman, an analyst at research film MoffettNathanson, said. “Having additional flexibility to move their product to other windows could help to reduce some of the extra risk involved to commit to a specific release date.”
Without the blockbuster movies and major U.S. markets remaining closed, AMC and other theaters face potential collapse.
“The lifeblood of theaters is blockbuster films, and there aren’t any,” said Jeff Bock, a box office analyst with Exhibitor Relations. “Theaters are losing money because they can’t show top-tier blockbusters.”
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