Movie Chain AMC Says It Could Go Broke By Year’s End
The parent of AMC Theatres says it’s on track to run out of cash by early 2021 at the latest.
AMC Entertainment Holdings Inc. wrote in a “current report” filed on Tuesday (Oct. 13) with the federal Securities and Exchange Commission (SEC): “…given the reduced movie slate for the fourth quarter, in the absence of significant increases in attendance from current levels or incremental sources of liquidity, at the existing cash burn rate, the company anticipates that existing cash resources would be largely depleted by the end of 2020 or early 2021.”
AMC stated that it has been hurt not just by some movie studios’ postponement of distribution of films, but also by decisions by some studios to stream films to viewers at home rather than show them in theaters. The power struggle between the companies that make films and the companies that profit from selling tickets to see those films in theaters has become contentious during recent months, but as summer wound down, AMC itself backed down from a tussle with a major production house.
As of Oct. 9, AMC had reopened 494 of its 598 U.S. theaters, but limited to between 20 percent and 40 percent of full capacity, the filing states. About 2.2 million theater-goers had attended movies at AMC venues from the time of the theater reopenings, a decline of about 85 percent compared to a year prior.
The August reopening of one of those theaters – the location in Kansas City — included some extra flair. Celebrating the chain’s 100th anniversary, AMC charged 15 cents for tickets. But on a more serious note, the event highlighted the pressure on theater chains to win back ticket-buyers at a time when the public is showing broad disdain for crowds.
Some of AMC’s most productive U.S. theaters, which generate about 23 percent of its U.S. revenue, are in states where reopening them has not yet been deemed wise, the filing states.
Business at non-U.S. theaters is off about 74 percent year over year.
AMC said its options for addressing the cash crunch include taking on additional debt or equity financing and renovating lease terms with landlords. The company also said it could consider “potential asset sales” or entering into a joint venture.
But the filing cautions: “There is a significant risk that these potential sources of liquidity will not be realized or that they will be insufficient to generate the material amounts of additional liquidity that would be required until the company is able to achieve more normalized levels of operating revenues.”