February 27, 2020
As a precaution against the spread of the coronavirus (COVID-19) in Italy, AMC Theatres had shuttered 22 theaters for a week in Northern Italy starting three days ago. The company, which operates 47 theaters in the country, said the fiscal impact on the week-long closings range from $500,000 to $1 million per theater.
The Italian government has confirmed that more than 600 nationals have been infected with COVID-19 thus far.
Speaking on the Feb. 27 fiscal call, CEO Adam Aron said world’s largest theatrical chain thus far has not been impacted significantly by the virus, which has killed about 2,600 people and infected more than 87,000 — largely in China.
“There is an increasing view in Milan that there may be an overreaction [about the virus spread] in and around [the city],” Aron said. “AMC Entertainment does not have movie theaters in China nor in South Korea nor anywhere in Asia. AMC does not have movie theaters in Iran.”
In addition to China being the epicenter for the virus, South Korea and Iran have a reported combined 2,200 cases. Japan has more 800 reported cases.
At the same time, Aron said he is fully aware that should the virus become an issue in the United States and Europe, the impact on AMC would be significant.
“It goes without saying that we are vigilantly monitoring reports and advice from governmental authorities in the United States and throughout Europe as well as from medical experts,” he said.
As an exhibitor, Aron said AMC has a responsibility to its workers and consumers to provide a safe environment to watch movies.
“We will be a responsible player here … looking broadly at our circuit of 1,000 theaters across 15 countries,” he said. “So far so good.”
Separately, Aron said the company’s Stubs A-List ticket subscription service has between 900,000 and 1 million paid members, representing from 15% and 20% of the chain’s total U.S. admissions. Overall A-List contributed more than $20 million of incremental operating income to AMC in 2019.
“It’s increased loyalty to AMC. It’s benefited our theaters, our studios and our premium format partners,” Aron said.
While dismissing burgeoning over-the-top video consumption by consumers, Aron said AMC is looking to work with studio-backed streaming services such as HBO Max, Disney+, Hulu and Peacock to use theatres as marketing vehicle for streaming.
Aron said the company had just hired a former 20th Century Fox executive as new SVP of strategy based in Los Angeles and tasked with forging partnerships with streaming services to create value for the benefit of all parties, “but especially to create value for us here at AMC.” The new executive will be announced on March 2.
Aron said that rather than looking at theaters as competitors, he contends SVOD players should utilize theatrical exhibition to create “tremendous value” for their content and for their shareholders.
“Studies have indicated a clear and strong positive correlation between those who stream movies and those who also like to go to theaters to enjoy movie watching in person on a big screen with powerful sound and the smell of buttered popcorn,” Aron said.