Theater chain AMC says it could run out of cash by year-end
Attendance is down about 85% on a same-theater basis from last year since reopening began
AMC Entertainment Holdings Inc. AMC -8.46% said it may be out of cash by the end of the year if it doesn’t raise additional funds or bring more moviegoers back to theaters following shutdowns caused by the coronavirus pandemic.
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The movie-theater operator has reopened 494 of its 598 U.S. theaters, but attendance is down about 85% on a same-theater basis from the equivalent period last year since reopening began, AMC said Tuesday. At the company’s current cash-burn rate, reserves would be depleted by the end of this year or early next year, Kansas-based AMC said.
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Shares of AMC fell 8% on Tuesday morning and are down nearly 48% so far this year.
As governments enforced limits on indoor businesses and people avoided large gatherings, the coronavirus pandemic wrought havoc on movie theaters when it arrived in the U.S. AMC temporarily closed its U.S. theaters in mid-March.
Long term, movie-theater chains also have to contend with consumers’ increasing reliance on streaming services, which allow producers such as Walt Disney Co. and Netflix Inc. to bring films directly to audiences at home. Disney on Monday announced a major realignment that will make its streaming services, including Hulu and Disney+, more central to its operations.
AMC is exploring raising funds through debt or equity financing, asset sales and joint-venture arrangements with business partners. The company said it has already raised approximately $37.8 million through an at-the-market offering of nine million shares. In September, AMC launched efforts to raise $180 million in equity capital. It sold its nine locations in Europe’s Baltic region for roughly $77 million in August.
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Since reopening began in August, seating at AMC theaters in the U.S. has been limited to between 20% and 40% of capacity due to public-health measures. The U.S. theaters that AMC hasn’t yet reopened, including locations in New York and California, were among its highest-performing and were responsible for 23% of the company’s 2019 U.S. revenue.
In August, Chief Executive Adam M. Aron spoke optimistically about the company’s reopening plans on a call with analysts.
“This is a time that AMC has been waiting for since mid-March of this horrid, horrible year,” Mr. Aron said. “Both for financial and psychological reasons, we are so eager to delight moviegoers.”
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But the continued closures at approximately 17% of AMC’s U.S. theaters have impeded the chain’s hopes for the fall. Studios have also thrown a wrench into movie theaters’ reopening plans by delaying several blockbuster releases as the pandemic continues. Last month, AT&T Inc.’s Warner Bros. studio pushed back the release of “Wonder Woman 1984” until Christmas. MGM Holdings Inc. has delayed the release of “No Time to Die,” a James Bond film, until April 2021.
Films that have hit cinema screens have met a tepid reception from moviegoers who remain concerned about indoor gatherings despite limits on seating capacities. Warner Bros.’ “Tenet,” a big-budget sci-fi film by director Christopher Nolan, grossed $20.2 million in the U.S. and Canada over the Labor Day holiday weekend when it opened. Mr. Nolan’s previous movie, “Dunkirk,” grossed $50.5 million during its opening weekend in 2017.
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The pandemic has also brought shifts in how people watch new movies. Disney bypassed theaters in September to release “Mulan” for home viewing on its Disney+ platform, one of the largest-ever digital releases. Earlier this year, AMC found itself in a public spat with Universal Pictures over how long movies should play in theaters before they are available for home viewing. In July, the companies agreed to shorten the theatrical window to 17 days, from the previous 75. Exhibitors such as AMC had long argued that without exclusive distribution windows, moviegoers would have less incentive to buy big-screen tickets.
The pandemic has led to challenges for some of AMC’s biggest competitors as well. Last week, Cineworld Group PLC’s Regal Entertainment Group suspended operations at U.S. theaters again after an initial reopening in August, citing an absence of film releases.