AMC Theater Chain Draws 6.8 Million Q1 Moviegoers, Narrows Loss

AMC Entertainment, parent of the world’s largest theatrical chain, AMC Theatres, May 6 reported that 6.8 million moviegoers worldwide frequented its screens in the first quarter (ended March 31). While that’s a 89% drop from 60+ million moviegoers in the same quarter a year ago, it’s a positive re-start for a company that has had scant new movie releases, and many observers left for dead during the height of the pandemic.

Adam Aron

Operating at 15% to 60% seating capacity across 585 domestic theaters, AMC operated an additional 97 international leased and partnership theaters, with limited seating capacities, representing approximately 27% of international theaters.

Revenue plummeted 84% to $148.3 million, from $941 million in the previous-year period. Net loss narrowed to $567.2 million from more than $2.1 billion a year ago.

“We finally can now say that we are looking at an increasingly favorable environment for moviegoing and for AMC as a company over the coming few months,” CEO Adam Aron said in a statement. “This is the result of a successful and steadily growing vaccination program in the U.S., Europe and the Middle East — especially so across the United States.”

Over the past five months, AMC has raised around $2 billion in fresh equity and debt capital, including the conversion of $600 million of convertible notes into equity at a price of $13.51 per share. Over the past 13 months, AMC raised approximately $2.9 billion of cash proceeds from new debt and
equity capital, secured $1.2 billion of concessions from lenders and landlords, obtained more than $150 million of assistance from European governments, and generated more than $80 million from asset sales.

“Taken together, we have made well more than $4 billion of progress from our implementing a myriad of capital actions to help us make it through this global storm,” Aron said.

AMC CEO Aron: ‘Godzilla vs. Kong’ Quintupled 2021 Revenue in Five Days; Says Studios Moving Back to Shorter Theatrical Window

Warner Bros./Legendary Entertainment’s Godzilla vs. Kong opening box office in the U.S. continues to resonate throughout the industry. The actioner generated $48.5 million across five days, sending its global haul near $300 million. For AMC Theatres, the world’s largest exhibitor, the clash of cinematic monsters has been a godsend.

“If you look at our opening performance from Wednesday to Sunday, our business at AMC was five times, quintuple, what we have done in all the weekends before that in 2021,” AMC CEO Adam Aron told Fox Business Network’s “The Claman Countdown.”

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With daily vaccinations in the U.S. rising exponentially, Aron was told that Dr. Anthony Fauci, the federal government’s infectious diseases expert, had told a separate podcast that at current vaccination levels, movie theaters could be operating at full capacity by the end of the year.

“Well, obviously, we’re so excited when we can lift capacity caps, when we can take masks off,” Aron said. “We’re keeping our 50% capacity caps in place. We’re keeping mask-wearing for now. And we are going to run our theaters this summer with the tightest safety standards we can.”

Aron said more than 10 million moviegoers have frequented AMC Theatres in the past several months, and he hasn’t heard of one documented case of the coronavirus being transmitted in AMC theaters.

“That’s very good news that our safety protocols are working,” he said.

With Disney slated to launch Cruella and Black Widow in theaters and on Disney+ (for a $29.99 add-on price) concurrently on May 28 and July 9, respectively, Aron was asked if the exhibitor has come to a distribution agreement with the Magical Kingdom.

Aron said Hollywood studios are re-thinking their simultaneous theatrical/streaming movie debuts, with Warner set to return to a shortened window (45 days, according to Aron) in 2022. The studio is releasing all 2021 theatrical titles concurrently on the HBO Max SVOD service. Universal Pictures has a revenue-sharing deal with AMC that enables it distribute movies into consumer homes 17 days after their box office debut depending on ticket sales.

“Universal, who’s a big advocate for this simultaneous release on the same day at home that movies hit theaters — they abandoned that concept,” Aron said. “I have every expectation that we will find a happy middle ground with Disney that’s good for Disney shareholders and good for AMC shareholders too.”

AMC Theatres CEO Open to Concurrent Streaming Windows — Depending on Fiscal Terms

It’s not often the CEO of a company that lost $946 million in its most-recent fiscal quarter, and $4.6 billion for the fiscal year, is giddy with excitement. Nor is it common to hear the same executive say he’s not opposed to concurrent streaming/theatrical distribution.

But it was all there in virtual color on AMC Entertainment’s March 10 fiscal call spearheaded by CEO Adam Aron.

When asked about Disney, Warner Bros. and Universal Pictures’ efforts to shorten the theatrical window for specific titles and slates of movies, Aron said change and thinking outside the box has been part of AMC’s DNA for years. He recalled signing onto the 2016 concept, dubbed “Screening Room,” from Napster founder Sean Parker that would have made new-release movies available in consumer homes concurrently with their theatrical launches.

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“That never took off … but over the past several years, [we have] indicated in private conversations with every major studio that we were willing to be the most experimental movie circuit around with respect to windows strategies that were different than the traditional norm,” Aron said.

But with change and experimentation, the executive stressed there always had to be a positive for AMC and its shareholders; not just the studios.

“When we couldn’t strike deals with studios on shorter windows, we resisted them with all of our might,” Aron said. “This is an area I feel very good about.”

He recalled the exhibitor’s very public 90-day letter writing campaign with Universal Pictures that resulted in a landmark agreement enabling the studio to distribute theatrical titles directly into homes within 17 days of their box office debut, depending on ticket sales.

“It suggested there were alternate ways of distribution,” Aron said.

Fast-forward to Warner’s HBO Max announcement that the studio would release its entire 2021 theatrical slate simultaneously on WarnerMedia’s upstart subscription streaming video platform.

“We put out a very clear statement: That we were not willing to let Warner advantage its streaming service at AMC shareholder’s expense,” Aron said.

Yet, it doesn’t take a sleuth to notice that AMC is screening Warner Bros. movies such as Judas and the Black Messiah and Tom & Jerry — both of which are also streaming on Max.

“You should probably assume that if we’re playing Warner Bros. movies, we came to an agreement with the studio that benefits our shareholders,” Aron said without elaborating.

The executive said AMC is willing to engage with every major studio on the same topic, arguing that since the exhibitor has been business partners with all the major studios for decades, it can adjust business relationships.

“They can support their streaming services and theatrical leases, and do so not at our expense,” Aron said, adding that discussions with studios where the window policy has changed, “we think we have come out ahead and not behind.”

Separately, as of March 5, about 90% of AMC Theatres domestic screens were open. The exhibitor is slated to re-open screens in Alameda, Calif., which includes Oakland and East Bay on March 12, with a possible reboot in SoCal possibly by March 19.

To put the magnitude of a Los Angeles market re-opening into perspective, the “designated market area” is about double the size of the NY City market. Indeed, almost 33% of all AMC domestic movie viewing dollars is generated in just four states: California, New York, New Jersey and Connecticut. AMC permanently closed 60 underperforming theaters, including 48 domestically and 12 internationally in 2020.

“The New York re-opening is a harbinger of things to come,” Aron said. “We are like La Guardia Airport closed by a thunderstorm with tons of planes circling above, all waiting to land and all needing to land.”

The executive said the week will mark the 100th million vaccination in arm nationwide, with another 60 million to 90 million injections scheduled monthly.

“The real salvation of our company will be because of vaccinations,” Aron said, adding that in his eyes, the most important person in the entire movie business is Albert Bourla, CEO of Pfizer.

“He and his talented colleagues, and those of Moderna and Johnson & Johnson, are who have given us our new fortitude,” Aron said, adding he had the privilege of thanking Albert firsthand for saving AMC.

“And those sentiments of thanks were never more deserved,” he said.

 

AMC Theatres Posts $4.58 Billion Fiscal Loss in 2020

There was only one fiscal winner at AMC Theatres in 2020: CEO Adam Aron. As expected, the world’s largest movie exhibitor March 10 reported a $4.58 billion loss for the fiscal year ended Dec. 31, 2020. The chain, which has been operating about 67% of its domestic screens with government-mandated limited seating capacity limited to 20% to 40% due to the pandemic, lost $946.1 million in the fourth quarter, despite reporting attendance of more 8 million moviegoers worldwide in the quarter.

Revenue for the quarter dropped 89% to $162.5 million from $1.45 billion in the previous-year period. For the year, revenue tumbled 77% to $1.24 billion, from $5.5 billion.

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AMC Theatres CEO Adam Aron

“This past year has presented AMC with the most challenging
market conditions in the 100-year history of the company,” Aron said in a statement. “As unprecedented as these times have been, so too is the unprecedented drive and commitment of the AMC team to take swift and decisive actions to ensure our survival and our success.”

Indeed, despite partial re-openings, attendance in the quarter plummeted 91% to 8 million, from 92.5 million in the previous-year period. For the fiscal year, attendance fell 79% to 75.1 million, from 356.4 million in 2019.

Aron, who saw his total 2020 compensation double to $20.9 million, which included $5 million in bonuses, said better days are just around the corner for exhibitors.

“As we sit here today, we see that vaccinations are occurring in the U.S. at a brisk clip, our theaters in New York City have finally opened, with theaters in Los Angeles likely opening shortly as well, blockbuster movie titles are currently scheduled to be released in significant quantity in the coming few months, and we have more than $1 billion of cash on hand,” Aron said. “Taking these facts together, we have reason to be optimistic about AMC’s ability to get to the other side of this pandemic.”

CEO Adam Aron: A Lot of AMC Theatres Were ‘Sold Out’ Last Weekend

The past week marked a return of sorts to the milk and honey days AMC Theatres CEO Adam Aron used to take for granted. Thirteen theaters re-opened in New York City, a major barometer in the exhibition business, for the first time in 12 months, resulting in the biggest domestic weekend box office since the pandemic begun.

“A lot of our theaters were sold out [at 25% capacity],” Aron told Fox Business Network’s “The Claman Countdown.” “Saturday night across the United States was the single busiest day for AMC since March 2020. And the New York [designated market area] was the biggest for AMC. That’s an example of pent-up demand.”

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Aron, who last week was awarded $20.9 million in total compensation for 2020 by the AMC board, including $5 million in bonuses, said he expects seating capacity in theaters to begin escalating as vaccinations level rise.

AMC Theatres CEO Adam Aron

“This week we should cross 100 million injections in arms, and it looks like we’re doing, I don’t know, 75 million to 90 million injections a month now in the U.S.,” he said. “President Biden said every American adult can get vaccinated by the end of May. Clearly that means the capacity limits in movie theaters will rise.”

When asked if New York Gov. Andrew Cuomo had given any indication when 50% theater capacity could be reached, Aron said he was just happy to be open again in the Big Apple. 

“It’s been 50 and a half weeks that we were closed in New York,” he said.

In pre-pandemic 2019, AMC sold more movie tickets than any other business in the world — and only sold 17% of its available seats.

Remember that movie theaters are not sports stadiums or Broadway theaters that routinely sell out,” he said. “We’re more like churches built for Easter Sunday.”

Despite the new release of Disney’s Raya and the Last Dragon, box office grosses were a bit anemic nationwide. While more than half of all movie theatres in the country remain closed, 90% AMC screens are open.

“We have about twice as many theaters open as the rest of the industry combined,” Aron said. “Some people say we’re in the new car business, and to sell new cars you need new cars in the showrooms. There have only been half a dozen major movies released in the last year.”

Aron said he’s upbeat for the movie business from Memorial Day weekend through the Fourth of July when Paramount Pictures releases A Quiet Place Part II and Universal Pictures bows F9: The Fast Saga, among other titles.

“When Top Gun: Maverick comes with Tom Cruise, I — everything I hear is that movie is spectacular, and it’s going to be like that like, every week for the rest of 2021,” Aron said. “We’re going to see one major title after another come out. Plus, by the end of May, June, July period, the number of Americans going to be vaccinated will be huge. Right now, we don’t even have 20% of the U.S. public that’s been vaccinated.”

 

 

AMC Theatres CEO Adam Aron Doubles Compensation in Pandemic Year

NEWS ANALYSIS — 2020 was a terrible year for AMC Theatres. It was a great year financially for CEO Adam Aron and other executives. Corporate parent AMC Entertainment March 5 disclosed in a regulatory filing that it paid Aron $20.9 million in salary, bonuses and stock options. That’s more than double the $9.7 million in total compensation Aron received in 2019, and $9.5 million paid in 2018 — both years when there was no pandemic shuttering most of the world’s largest exhibitor’s screens.

CFO Sean Goodman earned $4.2 million in compensation, and John McDonald, executive president of U.S. operations, made $3.4 million.

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Aron’s compensation included $1.1 million in base salary, bonuses totaling $5 million and $14.8 million in stock options. The bonuses, which included a $3.75 million check just last week, were cited by the board of directors “to recognize the extraordinary efforts of employees to maintain the company’s business and preserve stockholder value during the COVID-19 pandemic … and incentivize management and employees during the continuing and unprecedented difficult business conditions.”

While Aron and senior management did their jobs shoring up AMC finances and reworking theater leases, apparently, fiscal incentivization only flows uphill.

Goodman, McDonald and three other executives split another $1 million in bonuses. Meanwhile, most of the company’s 26,000 employees, including theater workers hailed by the board, were furloughed through much of last year without pay when AMC was forced to shutdown due to COVID-19. While the chain has re-opened about 25% of its theaters, it’s unclear how many of the idled staff have been rehired.

Notably, AMC’s non-employee board — which authorized the executive compensation — didn’t work for free either in 2020. The eight members walked off with fees and stock options ranging from $182,000 to $251,000 each. Significant fiscal largesse despite the fact AMC teetered on the edge of bankruptcy throughout much of the year.

AMC Entertainment Stock Gets Boost With New York Theater Re-Openings

AMC Entertainment, corporate parent to the world’s largest movie exhibitor, AMC Theatres, saw its stock value rise in early Feb. 23 trading following news from New York Gov. Andrew Cuomo that theaters can reopen in New York City in the first week of March.

Hollywood studios, home entertainment and the domestic box office have been under prolonged economic siege since the pandemic started — the latter following the closure of screens in major markets California, New York and New Jersey in mid-March 2020.

AMC chief executive Adam Aron said the re-openings mark another “important” step toward restoring the health of the movie theatre industry and New York City’s largest movie exhibitor.

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“We will reopen all 13 of our theaters in the city beginning March 5,” Aron said, adding that all theaters would be subjected to the company’s extensive health and safety protocols for moviegoers and employees developed in consultation with Clorox and current and former faculty at the Harvard University School of Public Health.

AMC Safe & Clean includes social distancing and automatic seat blocking in each auditorium, mandatory mask wearing, and upgraded air filtration with MERV-13 air filters, as well as many other important health, sanitization and cleanliness efforts.

“Since reopening our first theaters in August, AMC has welcomed back nearly 10 million moviegoers nationwide without a single reported case of COVID-19 transmission among moviegoers at our theaters,” Aron said. “We look forward to welcoming back our New York City guests to the big seats, big sounds and big screens that are only possible at a movie theater.”

Wedbush Securities media analyst Michael Pachter lauded AMC and Cinemark’s safety measures, but contends most moviegoers won’t return until vaccinated and virus deaths decrease. The country just passed 500,000 COVID-related deaths on Feb. 22 — the most in any country since the pandemic began.

“We think that AMC and Cinemark have taken all the right in-theater precautions, allowing some attendance over the last several months,” Pachter wrote in a note before the re-opening news. “However, major markets have remained closed and we do not expect attendance levels to begin to normalize until July at the earliest.”

The next day, Pachter contends pent-up demand by moviegoers could potentially add meaningfully to AMC’s Q1 and Q2 results given that AMC’s NYC theaters are some of its highest performing screens in its domestic circuit.

“Should this entice other densely populated areas to re-open, this could in turn entice studios to maintain Q2 and Q3 release slate plans,” Pachter wrote Feb. 23.

The 2020 North American box office ended down 81.6% compared to 2019 at $2.09 billion, while 2021 is trending down 93.6% year-to-date, according to Pachter.

AMC has not yet announced its Q4 2020 results or the timing of its release, but Pachter expects the company to report fiscal results in the first week of March.

 

AMC Theatres Thwarts Bankruptcy Talk, Raises $917 Million of Fresh Investment Capital

AMC Entertainment, corporate parent to AMC Theatres, the largest exhibitor globally, Jan. 25 announced that since Dec. 14, 2020, it has successfully raised or signed commitment letters to receive $917 million of new equity and debt capital. This increased liquidity should allow the company to make it through the coronavirus-impacted winter well into 2021 — and hold off talks of bankruptcy.

The funding, which helped boost AMC’s stock 35% in pre-market trading, comes as studios continue to delay releasing major movies due to the ongoing pandemic that has reduced moviegoers to diehard fans.

Of the $917 million, $506 million is from the issuance of 164.7 million new common shares, along with the previously announced securing of $100 million of additional first-lien debt and the concurrent issuance of 22 million new common shares to convert $100 million of second-lien debt into equity.

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In addition, AMC has executed commitment letters for $411 million of incremental debt capital in place through mid-2023, unless repaid before then, through the upsizing and refinancing of its European revolving credit facility.

Based on a variety of assumptions, including future attendance levels, AMC estimates that its financial runway has been extended deep into 2021. AMC also is presuming that it will continue to make progress in its ongoing dialog with theater landlords about the amounts and timing of owed theater lease payments.

“Today, the sun is shining on AMC,” CEO Adam Aron said in a statement. “Any talk of an imminent bankruptcy for AMC is completely off the table.”

Aron contends that with the renewed government push to vaccinate the general population, an increase in cinema attendance seems likely, although the executive notes that no one knows for sure the future course of this and other strains of the coronavirus, and therefore thoughts as to future cash needs of AMC are uncertain.

“To that end, we are grateful to the world’s medical communities for their heroic efforts to thwart the COVID virus,” he said. “Similarly, we welcome the commitment by the new Biden administration and of other governments domestically and internationally to a broad-based vaccination program.”

Regal Cinemas Owner Eyes New Warner Release Window; AMC Entertainment CEO Livid

Reaction from Warner Bros.’ landmark decision to effectively scuttle the theatrical window on all new movie releases in 2021 has run the gamut of emotions among exhibitors.

Adam Aron, CEO of AMC Theatres parent AMC Entertainment, blasted the decision, contending WarnerMedia is sacrificing “a considerable portion of the profitability of its movie studio division” to help jumpstart SVOD platform HBO Max. Aron said the decision also negatively affects filmmakers and production partners.

AMC Entertainment CEO Adam Aron

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“We have already commenced an immediate and urgent dialog with the leadership of Warner on this subject,” Aron said in a statement.

The CEO over the summer hammered out a reduced theatrical window agreement with Universal Pictures, which affords the studio PVOD distribution into homes 17 days (at least three weekends) after theatrical release on titles with less than $50 million box office. AMC also shares in the PVOD revenue.

Aron had been understanding of Warner’s decision to release DC superhero sequel Wonder Woman 1984 in theaters and HBO Max on Christmas Day. But an entire year’s film slate is another issue.

“As this issue gets sorted out, we are nonetheless encouraged that vaccines protecting society at large against the coronavirus are very much at hand,” Aron said. “So, it is our expectation that moviegoers soon will be able once again to delight in coming to our theaters without any worry — viewing the world’s best movies safely in our big seats, with our big sound and on our big screens.”

Read Also: Warner Bros. Releasing All Movie Releases Same Day on HBO Max, Theaters in 2021

Meanwhile, Cineworld, owner of No. 2 (and temporarily shuttered due to the pandemic) exhibitor Regal Cinemas, with more than 7,000 screens in the U.S., said it expects to iron out a new distribution agreement with Warner going forward.

In a statement, Cineworld said it understood Warner’s decision to bow Wonder Woman 1984 directly to Max due to the theater closings. It also remains “very encouraged by the giant steps achieved” with regards to the coronavirus vaccination process, which it expects will be put in place earlier than previously anticipated.

“This will generate significant relief for our industry and enable our cinemas to make a great comeback,” Cineworld said.

The exhibitor said that when a vaccine is available, it would look to reach an agreement with Warner about release windows and financial terms that will work for both sides.

“Big movies are made for the big screen and we cannot wait to reopen our cinemas in [the first quarter] in order to offer our customers, as always, the best place to watch a movie,” Cineworld said.

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.”