In a regulatory filing today, AMC Theatres says that it has "substantial doubt" it will be able to continue operations this year even after sheltering restrictions are lifted and cinemas are allowed to reopen. Though rumor has it Amazon may be stepping in to buy the company.
"We are generating effectively no revenue," the company said in the filing, adding that beyond the financial hit it is taking from keeping its theaters closed for five or six months year, it faces the prospect of a latter half of 2020 in which theater capacities will be limited, and in which Hollywood will be withholding the release of its biggest blockbusters, and/or releasing some straight to on-demand streaming.
As CNN Business reports, the theater chain — the world's largest with over 900 locations and over 10,000 screens across the U.S., Middle East and Europe — is expecting to post first-quarter losses of between $2.1 billion and $2.4 billion, with revenue down 22 percent compared to the same quarter last year.
The theater chain nonetheless is planning to reopen, saying, "We believe we have the cash resources to reopen our theaters and resume our operations this summer or later. Our liquidity needs thereafter will depend, among other things, on the timing of a full resumption of operations, the timing of movie releases and our ability to generate revenues."
The company is discussing the possible need of capital investment, and hints at potential bankruptcy saying, "substantial doubt exists about our ability to continue as a going concern for a reasonable period of time." These are all things that signal an acquisition could be in the cards — and a few weeks ago Amazon was rumored to be a potential buyer, with Jeff Bezos possibly interested in having some more sway in the brick-and-mortar movie industry.
As the Hollywood Reporter explains, not only the did company furlough its roughly 26,000 theater workers in March, it also furloughed its 600 corporate staff as well, including CEO Adam Aron. Chinese conglomerate Dalian Wanda Group controls a majority stake in the company, and owned it outright from 2012 to 2018, but American private equity firm Silver Lake Partners invested $600 million in the company to ostensibly take a majority stake — Dalian Wanda Group still has a majority of board seats.
In the Bay Area, AMC runs two theaters in San Francisco — the Metreon and the Kabuki — along with Emeryville's Bay Street cinema, and multiple theaters in Santa Rosa, San Jose, and elsewhere. It remains to be seen when some or all of these will reopen.
AMC began offering on-demand streaming of new films at home through its Stubs loyalty program last October, but the company clearly sees a potential threat from streaming when it comes to first-run films. After a statement by NBCUniversal CEO Jeff Shell in late April regarding the success of its on-demand release of Trolls World Tour — which racked up $100 million in North American downloads for at-home viewing in three weeks, barely trailing the $116 million gross that the original Trolls film made in its initial theatrical release — and the potential for future straight-to-VOD releases, AMC Theatres declared it would be boycotting future releases by Universal in protest.
"It is disappointing to us, but Jeff’s comments as to Universal’s unilateral actions and intentions have left us with no choice," said CEO Adam Aron at the time. "Therefore, effectively immediately AMC will no longer play any Universal movies in any of our theaters in the United States, Europe or the Middle East."