AMC Theatres Gains on Record Weekend Box Office as Court Rules Against Stock Proposal

AMC Theatres, the world’s largest exhibitor, saw its common stock shares skyrocket nearly 25% in value in early morning trading following the blockbuster weekend box office driven by the debut success of Warner Bros. Pictures’ Barbie and Universal Pictures’ Oppenheimer.

More than 7.8 million moviegoers in the U.S. and internationally saw a movie at AMC from Thursday-Sunday last week, as the exhibitor recorded its busiest weekend since 2019 based on global attendance and global admissions revenue.

On the flipside, a Delaware court ruled against the exhibitor’s desire to convert its AMC Entertainment Holdings Preferred Equity Units (“APE”) to common stock. AMC last year issued the special APE shares as a dividend to shareholders rather than seek their approval to issue more common shares.

Shareholders rejected the move, with more than 3,000 stock holders reportedly sending their complaints to the court, alleging APE shares diluted the value of their common shares. AMC CEO Adam Aron argues that without the ability to raise cash, the exhibitor risks the ability to pay off debt and sustain operations.

AMC on July 22 sent a modified version of its APE/common stock conversion to the court, if approved, would enable the exhibitor to roll out a 10-1 reverse stock split.

“If we are unable to raise equity capital, the risk materially increases of AMC conceivably running out of cash in 2024 or 2025, or of AMC being unable to satisfactorily refinance and stretch out the maturity of some of our debt (which is required of us beginning as early as 2024),” Aron wrote in a July 23 social media post.

Michael Pachter, media analyst with Wedbush Securities in Los Angeles, expects continued volatility in shares of both AMC and APE while the judge considers the modification AMC submitted. In the meantime, he thinks AMC will wait as long as possible before issuing APE shares at such a significant discount to AMC shares, and Aron attempts to persuade his shareholders to act in the best interest of AMC.

“If the modification is approved, AMC would be able to proceed with its proposals, which were passed by nearly 90% at its special meeting of shareholders in March,” Pachter wrote in a note.

Legally Challenged Locast Streaming Service Shutters

Locast, the controversial online platform that attempted to stream third-party over-the-air TV network channels free to more than 3 million U.S. users across 13 cities, including Chicago, Los Angeles, New York, San Francisco and Washington, D.C., has ceased operations.

The decision came after a New York judge sided with major media companies Disney, Fox and NBCUniversal, ruling that unauthorized use of their broadcast channels was illegal. Locast argued that as a nonprofit it was immune to copyright laws and merely acting as a “signal booster.”

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The judge disagreed, contending that donation requests from Locast to expand into additional markets voided the company’s nonprofit status.

“Locast was designed from the very beginning to operate in accordance with the strict letter of the law, but in response to the court’s recent rulings, with which we respectfully disagree, we are hereby suspending operations, effective immediately,” the nonprofit said in a statement.

Unique to Locast was that it had received funding from major media companies such as AT&T ($500,000), which owns WarnerMedia, and Google’s YouTube. When AT&T’s DirecTV satellite distributor and U-verse pay-TV channel had a retransmissions fee dispute with ViacomCBS in 2019, it directed its 6.5 million subscribers blacked out from CBS content to use Locast.

Separately, Dish Network offered the Locast app to its satellite and Sling TV subs as an alternative on its AirTV devices.