The movie theater landscape has been ravaged by the coronavirus pandemic, and the nation’s largest theatrical exhibition chain is feeling the burn. After months of closures and an attempt at reopening, it seems like the pandemic is hitting close to home for AMC Theaters. Now it seems their time may be up.
Originally AMC said they’d make it six months, but just a week later they’ve already changed their mind. Now they say they will be out of cash by the end of 2020 and as a result are already looking to liquidate their assets.
Actually more specifically AMC says they are looking for, well, just about any way to save themselves including joint ventures and minority investments. But because that seems pretty unlikely in an environment where Disney just announced they are going to focus on making streaming content now, they’re also looking to create liquidity by selling off their assets. Everything must go. If you’re in the market for some old theater chairs, your local AMC may be selling theirs soon.
In early October, S&P Global Ratings lowered its issuer credit rating on AMC and said that the company could be out of liquidity in six months.
In response to this news along with Regal announcing another total closure of their operations, shares in AMC Theaters have been in freefall. There is no positive way to spin this. The movie theater company is in serious trouble and could be looking at bankruptcy in 2021. And with box office estimates only looking worse and worse for the fourth quarter, there is almost no chance that a surge of audience attendance is going to save the business.
There have been calls for the movie theater industry to receive a government bailout, but no official recognition of this option has reared its head. AMC Theaters has been restructuring its debt in order to avoid bankruptcy, but the writing is very nearly on the wall. Unless attendance picks up and remains stable, AMC Theaters will have no option but to shutter its doors.
With all of the prominent reschedulings happening in the world of tentpole releases, there simply is not any product for the movie theater business to make a reliable weekly income on. Movie studios continue to pull big releases off the 2020 calendar and are pushing things even further into 2021. Unfortunately, even then might be too late as box office analyst Alan Gould said, “We also question if the weakness will bleed into 2021.” If audiences are still feeling anxious about the coronavirus pandemic well into the new year, it is certain that movie theaters will continue to feel this effect.
AMC Theaters was founded in 1920 and it is looking like the storied movie theater company is possibly going to see itself crumble to pieces after a century in operation. As of now, there does not look to be a light at the end of the tunnel. If things continue down this path, the nation’s largest movie theater chain will not be in business when 2021 rolls around. What kind of larger ramifications that could have for the theatrical exhibition market as a whole remains to be seen.
The response to this news is going to be vital in regard to seeing what the future of the movie theater business is going to look like. Eventually, the pandemic will end and families will begin to feel comfortable going to the movies once again. How long will that take? And what changes will be in place once things are operating as they were before? Only time will tell at this point. Regardless, it is a powerful reminder that no empire lasts forever. AMC Theaters has had a long run as the nation’s most dominant movie theater chain, but it is looking like that reign is coming to a bitter end.
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