AMC Theatres CEO: ‘We Came Out Ahead’ on ‘Come Play’ PVOD Release

AMC Theatres’ landmark PVOD agreement with Universal Pictures has generated positive revenue for the fiscally-challenged exhibitor — 18 days before its first direct-to-consumer release. Speaking Nov. 2 on the third-quarter call, CEO Adam Aron said the studio’s PVOD release of horror movie Come Play, slated for Nov. 20, has already proven fiscally accretive to AMC.

“On the only one of [six planned] PVOD movies that has been released as of yet, our analysis is that AMC came out ahead financially as we had modeled, but much better than some [analysts] had postulated or feared,” Aron said.

In return for allowing Universal to sell PVOD access to its theatrical releases in the home 17 days after a movie’s box office debut, AMC gets an undisclosed cut of the PVOD revenue. Come Play from Focus Features won the domestic weekend box office with$3.1 million in ticket sales.

On the heels of a $905 million quarterly fiscal loss, scant domestic moviegoers and new government mandates to re-close screens across the United Kingdom, Ireland, Germany, Italy, and in parts of Spain due to coronavirus infection upticks, Aron’s back remains against the wall.

The CEO borrowed from former British Prime Minister Winston Churchill’s famous wartime rally speech in the House of Commons during the early days of World War II.

“We shall not flag or fail,” Aron said. “We shall fight on the seas and oceans. We shall fight in the air. We shall defend our islands. We shall fight on the beaches. We shall fight on the landing grounds. We shall fight in the fields and in the streets. We shall fight in the hills. That is exactly where we are now at AMC. We are fighting this virus with all of our smarts, and all of our minds.”

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AMC’s enemy is multifaceted: A resurgent virus, ongoing public concern, government regulation and dwindling cash to fund operations. To counter the challenges, which include restructuring debt, selling shares and offloading movie screens in the Baltics, AMC is marketing transactional VOD titles on its website, and offering free 30-day passes to SVOD services AMC Networks’ Shudder and Sundance Plus.

Aron remains upbeat that a vaccine will be found and that backlogged tentpole studio releases portend a record 2021 box office.

“At AMC, it is our considered opinion that there is good news down the road,” Aron said. “Once the movies start flowing next year, there will be a new big title almost every single week.”

 

AMC Theatres Posts $905 Million Q3 Fiscal Loss

Fiscally challenged AMC Theatres Nov. 2 revealed the ongoing hardships imposed upon the theatrical industry by the coronavirus pandemic led to the world’s largest exhibitor reporting a $905.8 million third-quarter (ended Sept. 30) loss, compared with a loss of $54.8 million during the previous-year period. Revenue plummeted 91% to $119.5 million, from $1.31 billion a year ago as theaters either remain shuttered in key markets or have limited seating capacity due to social distancing guidelines.

Through nine months of the fiscal year, AMC has lost $3.64 billion, compared with $135 million in 2019. Moviegoer attendance is down nearly 97% to 1.96 million, from 61.1 million a year ago. For the fiscal year-to-date, attendance is down 78% to 41.6 million, from 188 million.

“The magnitude of the impact of the global pandemic on the theatrical exhibition industry was again evident in our third quarter results, as theater operations in the U.S. were suspended for nearly two-thirds of the quarter,” CEO Adam Aron said in a statement.

While not high on the list of protected industries during the pandemic, AMC has proactively sought third-party financial lifelines. In March, the chain raised $900 million from new debt and equity capital, secured more than $1 billion of concessions from creditors and landlords, and raised more than $80 million from asset sales in the Baltic region.

Earlier today, AMC announced it would sell 20 million Class A common shares for $47.7 million.

“The liquidity enhancing and leverage reducing actions that we already have taken and will further need to take, combined with our relentless focus on efficiency and cash management, are all crucial to navigating through this storm,” Aron said.

 

AMC Theatres Re-Opening in Key New York State Locations

Fiscally challenged AMC Theatres Oct. 19 announced that several of its locations throughout New York state will resume operations beginning Oct. 23. The re-openings are a result of the recent announcement by New York Governor Andrew Cuomo, allowing movie theaters throughout much of the state to reopen following lengthy closures due to the coronavirus pandemic.

New York, along with California and New Jersey, are seen as vital markets to the movie theater industry.

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About 12 AMC locations are expected to resume operations primarily in portions of Upstate New York and on Long Island. As a result of these openings, AMC expects to have approximately 530 of its 600-theater circuit open by the end of October. Beginning Oct. 23, AMC will be operating theaters in 44 of the 45 states where it has business operations.

News of the re-openings sent AMC Entertainment shares up 22% in early morning trading.

“The reopening of movie theaters around the country is essential to the theatrical industry and the entire entertainment ecosystem,” CEO Adam Aron said in a statement, adding that studios are pushing back new releases without major market re-openings.

“Therefore, it is a monumental step in the right direction for our entire industry that theaters are starting to open across the state of New York,” Aron said.

The CEO said AMC continues to work closely with state and local authorities about re-openings, which Aron believes will increase confidence among moviegoers to return to cinemas.

“We continue to see state and local governments all across the United States recognize the strong steps we have taken through [our sanitation and safety protocols],” Aron said.

AMC’s clean protocols feature social distancing, mandatory mask wearing, availability of disinfecting wipes and hand sanitizer, along with high-tech solutions like electrostatic sprayers, HEPA vacuums and enhanced air filtration through MERV 13 filters.

In areas where theaters are not yet able to open, Aron said AMC continues to have discussions with local authorities about resuming operations.

The re-openings are key to AMC staying in business. Parent company AMC Entertainment Oct. 13 disclosed it has only enough cash to maintain operations through the end of the year.

AMC Theatres Warns It Will Be Out of Cash by the End of the Year

With a delayed release slate and moviegoers wary of COVID-19, AMC Entertainment, parent to the world’s largest theatrical chain, said it will be out of cash by the end of the year or early 2021 without a renewed external infusion of funds.

Cash burn, or monthly use of cash to fund operations, is impacted by, among other things, the timing of resumption of theater operations, the timing of movie releases and the slate of future releases, theater attendance levels, landlord negotiations and minimum lease payments, costs associated with the enhanced safety and sanitation protocols, and food and beverage receipts.

“To meet its obligations as they become due, the company will require additional sources of liquidity or increases in attendance levels,” CFO Sean Goodman wrote in the Oct. 13 filing. “The required amounts of additional liquidity are expected to be material.”

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AMC said it has generated about $40 million to date selling new shares of stock, in addition to lopping off hundreds of millions of dollars owed on long-term debt.

The filing revealed what most observers already knew: The exhibition business is facing extinction if pandemic conditions remain the same and liquidity issues aren’t further addressed. And even if they are, the business realities facing theaters is dire.

“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,” Goodman wrote.

The filing stands in contrast to the confidence CEO Adam Aron has been projecting in recent weeks, including boasts that AMC, unlike rival Regal Cinemas, could remain open in the current business climate due in part to its groundbreaking distribution agreement with Universal Pictures. That deal allows Universal to significantly shrink the theatrical window in exchange for sharing revenue from early transactional VOD and premium VOD releases in the home.

As of Oct. 9, AMC had resumed operations at 494 of its 598 U.S. theaters, with limited seating capacities of between 20% and 40%, representing approximately 83% of the U.S. theaters and 77% of 2019 U.S. same-theater revenue.

Since the resumption of operations in its U.S. markets, AMC said it has seen more than 2.2 million moviegoers frequent theaters, representing a same-theater attendance decline of approximately 85% compared to the same period a year ago.

The remaining 17% of the U.S. theaters left to reopen are primarily located in California, Maryland, New York, North Carolina and the state of Washington, and include some of the chain’s most productive locations, representing approximately 23% of 2019 U.S. revenue.

Twenty-five theaters in North Carolina and Washington State are scheduled to reopen Oct. 16. AMC says it has an “active dialogue” with local and state government officials in the remaining states, however, there is “limited visibility” around the timing for resumption of theatre operations in these locales.

Meanwhile, AMC’s fiscal situation not only affects employees and shareholders, but landlords as well. The company said it had resumed operations at 308 leased and partnership international theaters. This represents about 86% of its international screens and approximately 90% of 2019 international same-theater revenue. Since the resumption of operations in its International markets June 3, AMC has seen more than 5.2 million consumers return, representing a same-theater attendance decline of approximately 74% compared with the same period a year ago.

“It is very difficult to estimate our liquidity requirements and future cash burn rates, and depending on the assumptions used regarding the timing and ability to achieve more normalized levels of operating revenue, the estimates of amounts of required liquidity vary significantly,” Goodman wrote.

Micheal Pachter, media analyst with Wedbush Securities in Los Angeles, doesn’t expect attendance levels to begin to normalize until mid-2021. He said that with 30% of moviegoers in the 50+ age group and another 30% between 30 and 50 (according to MPAA, 2018), a significant portion of moviegoers are not going to be bold enough to return to theaters without a virus vaccine. Losing a substantial portion of this demographic, and especially their children, is driving studios to delay theatrical releases.

“We think the relatively lackluster domestic box office for Tenet, juxtaposed with the seemingly tepid response to Mulan as a PVOD release, have made film releases seem like a risky business in the current environment,” Pachter wrote in a note.

AMC Theatres to Open 87% of Domestic Screens by Oct. 16

With its fiscal future on the line, AMC Entertainment, the largest theatrical exhibitor in the world, Oct. 8 announced that 14 AMC Theatres in the state of Washington will resume operations on Oct. 16. Washington is among 45 U.S. states in which AMC Theatres will have screens open for moviegoers.

Following re-openings in California, Michigan and North Carolina, AMC expects to have more than 520 of its approximately 600 theaters operating within eight days.

In areas where theaters are not yet able to open, AMC said it would continue to have discussions with local authorities about resuming operations. AMC will reopen its remaining theatrical footprint once authorized to do so by state and local officials.

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CEO Adam Aron, in a statement, reiterated the sanitation safety protocols AMC has embraced to assure moviegoers are safe as possible during the coronavirus pandemic.

“The feedback we’ve received from our guests indicate that our policies and protocols are working exactly as intended,” Aron said. “We’re seeing record-high guest scores for the cleanliness of our theaters, far exceeding the marks we’ve received in the decades we’ve been tracking guest feedback.”

With studios pushing releases of most major titles until 2021 or beyond, how long exhibitors can ride out the COVID-19 storm remains to be seen. Regal Cinemas, the No. 2 chain in the country, is set to re-shutter all U.S. and U.K. screens for the foreseeable future, beginning today.

Director Patty Jenkins, whose $200 million production Wonder Woman 1984 is still set to release on Christmas Day — following three previous delays — contends the exhibition business model is facing extinction.

“This will not be a reversible process. We could lose movie theater-going forever,” Jenkins told Reuters.

Meanwhile, returning AMC moviegoers can expect to see new releases such as The War With Grandpa, starring Robert De Niro, and Yellow Rose, which open Oct. 9 in the United States. Other pending titles include Honest Thief and 2 Hearts on Oct. 16, The Empty Man on Oct. 23, Come Play on Oct. 30, Let Him Go on Nov. 6, Freaky and The Comeback Trail on Nov. 13, Soul on Nov. 20, and The Croods: A New Age and Happiest Season on Nov. 25, as well as local-language films in certain countries outside the United States.

CEO: AMC Theatres Keeping the Lights On; Cites Economic Benefits of Shortened Window With Universal

AMC Theatres, the nation’s largest movie exhibitor, will keep its current 80% of domestic screens open despite studios further delaying tentpole movie releases until 2021 and beyond. Warner Bros., which earlier disclosed it was postponing the December release of Dune to October 2021, revealed it would push back release of The Batman until 2022.

Those delays prompted Regal Cinemas, the nation’s second-largest chain, to announce it would temporarily shutter all domestic screens and U.K. operations on Oct. 9. The news sent exhibitor stocks tumbling.

In a media statement, AMC CEO Adam Aron put a happy face on the setbacks, saying the chain looked forward to Oct. 9 release The War With Grandpa from 101 Studios, in addition to pending 2020 releases of Disney’s Soul, Universal Pictures’ The Croods: A New Age, and Warner’s Wonder Woman 1984, among other titles, through the end of the year.

Aron said AMC’s heightened sanitation efforts in its theaters, done in consultation with Clorox and faculty of the Harvard University School of Public Health, had safeguarded the moviegoing experience.

“We take great comfort in knowing that literally millions of moviegoers have already visited our theaters,” he said

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In a twist, Aron said the chain’s groundbreaking distribution deal with Universal, enabling the studio to release titles on premium VOD in the home just three weekends after their theatrical bow, put AMC in an economic position to remain open.

“We are fully comfortable showing Universal films in our theaters, even as they implement [PVOD] as we have mutually agreed,” Aron said. “This is because AMC will share in premium revenues coming from their early availability in the home.”

Aron made no mention of analysts reports suggesting AMC has just six months of liquidity left if it doesn’t see some sense of normal returning to the box office — or new infusion of funds.

AMC Entertainment Selling Baltic Theaters

Cash-strapped AMC Entertainment Aug. 31 announced that it has signed a definitive agreement to sell nine theatre locations (67 screens) in the Baltic region (Latvia, Lithuania, and Estonia) for €65 million ($77 million).

The agreement calls for AMC to receive approximately half of the sale proceeds on signing and the balance upon closing in each country after antitrust resolution in the coming months.

The world’s largest exhibitor with about 1,000 screens is slowly trying to return to normal operations after shuttering all theaters in mid-March due to the coronavirus pandemic.

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“This transaction marks yet [more] decisive action taken, on the heels of our capital raising in April and debt restructuring and capital raising in July, to bolster our liquidity and strengthen our balance sheet…that underscores the inherent value of our theatre portfolio and resilience of our business,” CEO Adam Aron said in a statement.

Aron said he remains “encouraged” by attendance levels at re-opened screens in Europe and in the U.S., where almost 300 theaters are currently open for business.

Indeed, Warner Bros.’ much-hyped Christopher Nolan movie Tenet generated $53 million in ticket sales Aug. 26-30 across 41 theatrical markets outside the U.S. and China. The film opens in the world’s largest two markets next weekend.

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“Growing consumer confidence in our cleaning and safety protocols continues to generate increased attendance and food and beverage spend, and we look forward to offering a full slate of new and entertaining film product to further drive attendance over the remainder of 2020,” Aron said.

Media analyst Michael Pachter with Wedbush Securities in Los Angeles, said the sale could help AMC reduce its long-term debt load to $4.8 billion, compared with $5.1 billion in the most-recent fiscal quarter.

With its recent debt restructuring, AMC has significantly improved its debt position, while also reducing its cash outlay by [upwards of] $180 million in the next six to eight quarters,” Pachter wrote in a note. “Collectively, these moves have effectively positioned the company to survive through extended closures in its domestic markets.”

AMC Reopening Additional 170 Screens on Aug. 27

After reopening more than 100 locations nationwide, AMC Theatres is preparing to reopen its second wave of theaters, with 170 additional locations set to open Aug. 27, ahead of the release of 20th Century’s The New Mutants. After the second wave of theaters re-openings, AMC will have nearly 300 locations operational nationwide. Kansas-based AMC is the world’s largest exhibitor, with about 1,000 screens, which have been effectively shuttered since mid-March due to the coronavirus pandemic.

This second wave of reopenings is part of a phased plan to reopen AMC in the United States. AMC currently expects to open approximately two-thirds of its more than 600 U.S. theaters in time for the Sept. 3 release of Warner Brothers’ Tenet. The remainder of AMC’s U.S. theaters will open only after authorized to do so by state and local officials.

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In addition to New Mutants, moviegoers can screen Unhinged (Solstice Studios), Words on Bathroom Walls (Lionsgate/Roadside Attractions), and The Personal History of David Copperfield (Disney). Pending new releases include The Broken Hearts Gallery (Sony Pictures/TriStar) and Infidel (American Cinema International) on Sept. 11, and The War with Grandpa (101 Studios) on Sept. 18.

AMC CEO Adam Aron said consumer feedback to theater reopenings has been positive, with the theater imposing seating restrictions and mandating moviegoers wear masks while inside.

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“Our comprehensive commitment to operating our theaters safely now includes social distancing through limiting ticket sales and automatic seat blocking, seamless contactless ticketing, greatly enhanced cleaning procedures, the availability of hand sanitizer and disinfecting wipes throughout our theaters,” Aron said in a statement.

Whether that will be enough to lure consumers remains to be seen. Wedbush Securities media analyst Michael Pachter contends consumers won’t feel safe returning to the cinema until there is a coronavirus vaccine — a requirement that likely won’t materialize until 2021.

AMC Theatres locations are also screening catalog titles such as Warner Bros.’ Inception; Universal Pictures’ Jurassic Park; Raiders of the Lost Ark; The “Rocky” franchise; Spider-Man: Homecoming; Spider-Man: Far From Home; Shrek; and Sonic: The Hedgehog. Tickets are just $5 each.

AMC is also offering an array of $5 food and beverage treats, including regular popcorn, regular Coca-Cola Freestyle drinks and KidsPacks, through the end of October. All AMC Stubs members will earn double points on all ticket and food and drink purchases through the end of October.

“We have invested millions for high tech solutions to sanitization and disinfection, including electrostatic sprayers, HEPA vacuums and MERV 13 air filters,” Aron said. “Guests returning to AMC can do so knowing that we’ve been in constant dialog with top scientists and experts in public health and cleaning about how best to reopen our theaters in ways that will be responsible and welcoming.”

CEO: AMC Theatres in PVOD Discussions With Other Studios; Q2 Revenue Plummets 98.8%, Net Loss Skyrockets to $561 Million

On the heels of its landmark premium VOD agreement with Universal Pictures, AMC Theatres is reaching out to other studios in hopes of securing similar revenue-sharing deals, CEO Adam Aron disclosed Aug. 6 on the second-quarter (ended June 30) financial disclosure. AMC will share with Universal in all PVOD movie rental revenue 17 days after a title’s theatrical debut.

“AMC is an innovator and we are embracing change that we are confident will be financially beneficial for AMC shareholders,” Aron said in a statement. The CEO did not disclose the names of other studios AMC is in discussions with.

On the fiscal call, Aron said he had no issues with Disney removing Mulan from theatrical distribution to PVOD on Disney+. Calling Disney “no bigger friend” to AMC, Aron said the exhibitor and media giant had to do what’s in the best interest of their fiscal position during the pandemic.

“[Disney] provided us with more content last year than any other studio in the world.” Aron said. “As both companies do businesses, we will thrive.”

As expected, the world’s largest movie exhibitor saw its financial quarter decimated by the ongoing coronavirus pandemic that has seen the majority of its 11,000 screen shuttered since mid-March.

With the chain generating just $18.9 million in revenue, which was down 98.8% from revenue of more than $1.5 billion in the previous-year period, AMC reported a net loss of $561.2 million — the worst in the company’s 100-year history.

“A once in a century event has transformed 2020 into a brutal year,” Aron said in a statement.

Indeed, the company spent the bulk of the quarter restructuring more than $2.6 billion in long-term debt. Aron said more than 130 theaters are operating in Europe and the Middle East — more than one-third AMC’s international theaters. Aron expects all screens to resume operations in the next two to three weeks.

“Theatrical exhibition has always been resilient, and we are confident that at AMC we are taking the right steps to emerge from this crisis and to thrive once again as the leader in our industry,” he said.

AMC Theatres Reduces Debt Load by $553 Million

With $2.6 billion in long-term debt and enduring a shuttered business during the coronavirus pandemic, AMC Theatres has been a sitting duck in bankruptcy crosshairs.

The nation’s largest exhibitor Aug. 3 announced it has successfully restructured its debt load with 87% of its senior subordinated note holders — in a deal that gives the exhibitor upwards of $415 million in cash and “liquidity improvements” in the next 18 months.

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“Now we can focus solely on the all-important task of opening our theaters in the U.S., Europe and Middle East safely and responsibly,” CEO Adam Aron said in a statement.

AMC repeatedly delayed re-opening screens in the U.S. due to spikes in COVID-19 infections. The latest restart is slated for sometime this month.

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