Theater chain AMC might be totally broke by the end of 2020 and require “additional sources of liquidity or increases in attendance levels” to survive, the company disclosed in financial filings on Tuesday.
AMC wrote that it expects its cash reserves to be “largely depleted” by the end of 2020 or early 2021, given low attendance and a delayed movie release schedule during the coronavirus pandemic. If those don’t change—and AMC doesn’t appear to be holding its breath—the company says it may pursue options such as additional debt and equity financing (it’s raised $37.8 million to date), renegotiations with landlords, asset sales, or joint ventures. However, it added that there is “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” required to keep the company alive until moviegoers return to theaters.
AMC reported it had opened some 494 of its 598 theaters in the U.S. as of last Friday, though they are operating at 20 to 40 percent capacity, and overall attendance stood at just 15 percent of a year prior. The remaining 17 percent of theaters that remain closed are in states like California and New York, homes to “some of the Company’s most productive” venues.
The last big theater release was Christopher Nolan’s Tenet, which made over $300 million globally, but its domestic box office pull was dismal, a strong indicator that U.S. audiences remain very wary of returning to theaters until their safety can be assured. According to CNBC, there are only four big movies scheduled from release in theaters by the end of 2020: The Croods: A New Age, Free Guy, Coming 2 America, and Wonder Woman 1984. None of those films is coming to theaters earlier than late November, and it’s entirely possible they could be delayed again. Many movies are still coming out, but releases have shifted to on-demand or subscription streaming models rather than theater-first. Theater chains have been further weakened by the demise of the Paramount Consent Decrees, antitrust rules designed to prevent production studios from exerting excess control over how their films are distributed.
Scientists anticipate that the coming winter will result in ideal conditions for transmission of the coronavirus, which thrives in crowded and poorly ventilated indoor spaces. That means it will likely be a devastating season for the pandemic, with the University of Washington Institute for Health Metrics and Evaluation projecting the current U.S. death toll could surge from around 215,000 as of Oct. 13 to around 395,000 by Feb. 21.
California has allowed some theaters to reopen, but at a slow pace, CNBC separately reported. Theater operators have pressed New York state to loosen restrictions that have kept all but two of its 300 theaters there closed. Movie studios are very likely to delay release schedules indefinitely until that changes; Boxoffice.com chief analyst Shawn Robbins told the network that New York City and Los Angeles not only contribute 10 to 15 percent of box office revenues, but also drive the film industry “advertising blitz.”
Per CNN, competitor Regal Cinemas has also disclosed it will need fresh funds by early 2021 if the winter results in “prolonged” shutdowns. Last week it said it will suspend operations nationwide in the U.S. and UK for the foreseeable future.
“We are like a grocery shop that doesn’t have vegetables, fruit, meat,” Mooky Greidinger, CEO of Regal owner Cineworld told the Wall Street Journal. “We cannot operate for a long time without a product.”
Cinemark, the third-largest theater chain, has said it plans to remain open with strict safety precautions in place (about 80 percent of its theaters remain operating). It also said its cash balance of $525 million as of July 31, with a burn rate of around $50 million a month, gives it room to coast well into 2021 without hitting a wall.