May 11, 2020
Shares of AMC Entertainment, parent of fiscally challenged AMC Theatres, are up nearly 30% in pre-market trading May 11 following news Amazon has been kicking the tires about a possible acquisition.
Amazon’s acquisition interest, first reported by The Daily Mail citing sources, would give the e-commerce behemoth greater control of the global box office. Amazon, unlike Netflix, remains a believer in the theatrical window — a stance some observers contend helped its 2016 movie, Manchester by the Sea, win Oscars for Best Actor (Casey Affleck) and Best Screenplay (Kenneth Lonergan).
AMC, the world’s largest movie exhibitor, is owned by China’s Wanda Group and is reportedly facing bankruptcy since the chain (with 11,000 screens) was shuttered in March due to the coronavirus. With zero revenue and about $4.7 billion in debt, many analysts believe the chain won’t survive in the post-COVID-19 economy amid social distancing.
Amazon, which reported profit of $2.5 billion in its most-recent fiscal period, has shown interest in non-tech, old-school businesses such as acquiring Whole Foods and the Washington Post.
In 2018, Amazon (and Netflix) reportedly had interest in Mark Cuban’s Landmark Theatres chain, which ultimately was sold to Cohen Media Group.
Meanwhile, U.K. Prime Minister Boris Johnson just announced new coronavirus guidelines, which include easing lockdown restrictions by July on hospitality businesses such as Odeon Cinemas — which is owned by AMC.
AMC CEO Adam Aron, who remains furloughed along with 600 other executives, has publicly expressed a wish that the chain could be operational by July.
In Georgia, despite Gov. Brian Kemp allowing exhibitors to re-open April 27, most major chains remain shuttered due to new studio movie releases being pushed back and a lack of theater staffing.
Regardless, Michael Pachter, media analyst with Wedbush Securities in Los Angeles, contends the acquisition rumor is just that.
“The price is [would be] $10 billion, not a few hundred million,” Pachter said in an email. “I don’t see Amazon buying the biggest theater chain in the world when they can accomplish the same thing buying a much smaller chain. It just doesn’t make sense.”