In late May, Chinese conglom Dalian Wanda paid $2.6 billion to acquire AMC Theaters, the second-largest exhibitor in the U.S., marking the largest acquisition of a U.S. firm by a Chinese company. Andrew Stewart spoke with AMC CEO and prexy Gerry Lopez to discuss what the buyout means to AMC — and to U.S. moviegoers.
AS: What are AMC’s priorities now that the company has such a huge capital influx?
GL: My priority is to close the acquisition. It’s kind of like when you buy a house: First, you bid, and go back and forth, and then you finally agree. Many weeks later, you finally close the deal. For us, (the deal is going to close) sometime around Labor Day.
AS: OK, after that, what should we expect from AMC?
GL: The strategic priority is to give people a reason to leave their house, whether it’s driven by the conversion to digital or the installation of 3D or the installation of Imax screens.
Priority No. 2 is what we call enhanced food and beverage. For years, the technology of making a movie has been improving dramatically, (but) the food part of the experience hasn’t improved. It’s been popcorn and Coke for-freaking-ever. Why? Having spent the majority of my career in food and beverage(notably at Starbucks), I’ve been living, and in many cases, fueling some of the changes that this country has undergone in terms of food and beverage trends.
The third (priority) has been about guest engagement: Marketing, establishing a stronger brand name and creating a loyalty program, AMC Stubs, which rewards subscribers with concession upgrades and other perks. The final component has been about optimization of our fleet — management of (theater) leases, where to build new buildings, and which of the older buildings to remodel.
Those four have been our strategic direction for the last two-plus years. If anything, the support of our new parent company is going to allow us to accelerate some of the deployment. One of the things Wanda has committed to is an additional injection of capital into our balance sheet. We’re going to continue doing what we’ve been doing; we’re just going to do it quicker and (have) more of it.
AS: Is there a specific plan for spending the additional capital?
GL: We’re going to (invest) in initiatives that we know will give us the greatest opportunity of return. I don’t want to lock people into spending ratios, neither do I want to look at our guys in charge of our four strategic developments and say, “Here’s a blank check — have at it!”
AS: Is AMC looking to expand its footprint outside the U.S., particularly in markets like India or China?
GL: In fact, we’re looking to do quite the opposite. Three months ago, we sold our last theater in France. In March 2009, we sold the biggest chunk — 75 theaters in Mexico. After many years of building an international footprint, we have been shedding our international assets for the past three or four years. (For) Wanda Group (it’s a) different ballgame. Chairman Wang Jianlin’s vision is to have a global theatrical exhibition company.
AS: How will Wanda brand its existing and future locations?
GL: The theaters in China will continue to be Wanda, just as the theaters here will continue to be AMC. As global as the movies have become, the retail (exhibition) end of things will be very much a local business.
AS: What industry feedback have you received so far?
GL: I’ve talked to precious few folks because of (my) travel (commitments). However, I’ve received at least 400 emails from all different corners of the industry. I know there have been some concerns, but everyone who has reached out — Coke is very excited! — has been overwhelmingly positive. People get it. The business is being consolidated on both the production and exhibition sides (anyway). The only thing new here is (that the deal is between the U.S. and China). And to anybody who is paying attention to our attendance numbers, capacity or utilization, the reaction has been, “Yeah man, bring it on!”