AMC Entertainment CEO and President Adam Aron gives an update on his company making a deal with NBCUniversal regarding theater vs. digital film releases and says this is a new revenue opportunity.
An explosion from the past could provide an opportunity for the future of the world’s largest theater chain, AMC Entertainment.
AMC stocks close more than 14% on Friday in just 24 hours after AMC CEO Adam Aron called the last three months “the most challenging quarter in AMC’s 100-year history.” Aaron’s remark was in relation to the company’s revenue in the second quarter which saw AMC’s revenue reach $ 18.9 million from $ 1.5 billion a year ago.
WALLSTRAAT ANALYSIS WEIGHTS ARE ON THE AMC UNIVERSAL FILE RELEASE DEAL
The burst in the forefront of AMC came on the same day that a court ruled that movie studios could have theaters again. The likes of Walt Disney Company, Universal Studios or Comcast-owned or Parcomount Pictures in ViacomCBS-owned have not been allowed to own local cinemas since a Supreme Court decision of 1948, the United States v. Paramount Pictures, which banned filmmakers from owning the outlets that actually present the films.
| Ticker | Security | Last | Change | Change% |
|---|---|---|---|---|
| AMC | AMC ENTERTAINMENT HOLDINGS INC | 4.75 | +0.61 | + 14.73% |
| NCMI | NATIONAL CINEMEDIA INC | 2.97 | +0.07 | + 2.41% |
| CNK | CINEMARK HOLDINGS | 11.06 | +0.56 | + 5.33% |
| IMAX | IMAX | 11.86 | +0.38 | + 3.31% |
| MCS | MARCUS | 13.47 | +0.83 | + 6.57% |
AMC was not the only cinema chain to see a stock pop on Friday. National CineMedia and Imax were up more than 2%; Cinemark Holdings led more than 5% and Marcus rose more than 6%.
All theatrical chains have been hit hard by the coronavirus pandemic. AMC’s share has fallen more than 34% for the year, but has made moves to offset a loss such as Thursday’s $ 561.2 million carnage. Last year at this time, AMC scored a profit of $ 49.4 million.
To weather the pandemic, AMC has reduced between 80% and 90% of its global cash expenditures, including renegotiating almost all of its theater rentals worldwide, and raising $ 500 million from the issuance of new publicly traded debt.
“The result of all these four-year actions combined with this successful debt restructuring expands our capacity, if necessary, a hypothetical suspension of all our theatrical operations worldwide by 2021,” Aron said.
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The game of “will they or will they not?” will likely start in Hollywood if the studios will buy theaters or not in the wake of the court ruling. Already Disney is owned by the El Capitan in the heart of Hollywood. It only plays Disney movies (the Burbank-based studio was not part of the original 1948 decision because it did not have theaters at the time).
Streaming giant Netflix in the past year has acquired the Paris Theater in New York and the Egyptian Theater in Hollywood. These deals were made in part to ensure that Netflix would have opportunities to expose its prestigious films and be eligible for the Academy Awards.
At this year’s Oscars, Netflix picked up 24 nominations and saw his films win two awards – Laura Dern for Best Actress in a Supporting Role in “Marriage Story” and “American Factory” won for Best Documentary Feature.
Ironically, Netflix has put the pressure on for more entertainment to move into the house. Purchasing that trend with COVID-19 concerns, studios that are already feeling the pinch may not be in the market for a company with 1,006 theaters – the number that AMC Entertainment owns around the world.
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