UPDATED: AMC Theatres is probably relieved to see the final credits roll on its fiscal third quarter.
The world’s largest exhibitor suffered a brutal 90.9% drop in revenues during the most recent earnings period, with sales clocking in at $119.5 million. Losses hit $905.8 million or $8.41 cents a share. In the prior-year quarter, a time when cinemas were open around the globe and world-altering pandemics were largely the stuff of Hollywood thrillers, AMC logged revenues of $1.3 billion on a net loss of $54.8 million or 53 cents a share. Revenues for the third quarter were in line with Wall Street’s expectations. However, losses missed the consensus analysts’ projection of $4.66 per-share, according to Zacks.
AMC, which has had its locations closed for the bulk of the year, has slowly tried to reopen its venues with little success and amid chatter that it might be on the verge of bankruptcy. Earlier on Monday, the cinema chain announced it was raising $47.7 million in cash to stay open — its shares plunged on the news.
“The simple question becomes will we raise that needed capital or not?” Adam Aron, CEO and president of AMC, said rhetorically during a call with analysts on Monday. “All we have to do is raise a little money and we’ll be just fine,” he added at another point.
In its earnings report, AMC noted it had renegotiated its debt and theater leases, reduced its interest payments, and raised $900 million in capital from new debt offerings and equity sales. AMC said it had secured more than $1 billion of concessions from creditors and landlords, and raised more than $80 million by selling its Baltic theaters in Latvia, Lithuania and Estonia.
AMC isn’t alone in its struggles. The exhibition sector has been decimated by the coronavirus pandemic, with rival chains such as Cineworld announcing that they were shutting their locations back down. U.S. theaters have struggled to attract moviegoers during the public health crisis and the disappointing box office performance of Christopher Nolan’s “Tenet” has made studios skittish about releasing blockbusters until there’s a vaccine. Major releases such as “No Time to Die,” “Black Widow,” “Mulan” and “Soul” have been postponed until 2021, or moved to streaming services or on-demand debuts. There is skepticism that “Wonder Woman 1984,” the only blockbuster that hasn’t decamped from 2020, will stick to its Christmas release plans. Those doubts have only mounted given the rise in coronavirus cases in Europe and health officials’ warnings that the U.S. is in the middle of a third wave.
Aron suggested that AMC’s recent deal with Universal, which enables the studio to release movies on-demand within weeks of their theatrical debut, is helping keep the chain afloat. The studio will debut six films during the fourth quarter, including “The Croods: A New Age” and “News of the World,” a drama with Tom Hanks. AMC gets a cut of the digital sales in return for allowing the studio to have greater flexibility about when its movies are available to rent. Aron said he wants other studios to embrace the model and believes that theaters will make more money, as will film companies, if they rely on a hybrid of streaming and theatrical distribution.
“The conversations we’re having with every major studio is that AMC is not stuck back in 1965,” said Aron. “We understand that the world of streaming is upon us.”
As of the end of October 2020, AMC was operating approximately 539 of its 600 domestic locations, and approximately 261 of its 358 international locations. However, Aron acknowledged that people aren’t rushing back to cinemas until the virus is under control.
He tried to sound a hopeful note by evoking Winston Churchill’s famous “we shall fight on the beaches” speech, first delivered in the depths of World War II. The theater chain, Aron said, was in a similar position of “warlike resolve and determination.”
Churchillian calls to arms are not typical bills of fare during earnings calls, which rely more on discussions of EBITDA to stir the blood. But these are unusual times, and the consequences for the exhibition industry are indeed dire. If chains such as AMC can’t get more financing, if their landlords won’t defer rent payments and if studios remain wary of releasing major movies, there might not be much of a theater business on the other side of this pandemic.
Despite those storm clouds, the AMC chief closed his introductory remarks with an important history lesson — one that tied back to his earlier evocation of Churchill.
“May I remind you all not to forget that Great Britain was on the winning side of that war,” said Aron.