As the future of theaters remains uncertain post-pandemic, cinema chain AMC said in a regulatory filing this week that “substantial doubt exists” about its “ability to continue as a going concern” and its chances of springing back even after its theaters are, eventually, permitted to reopen.
The largest theater chain in the U.S. revealed unease about its position in a filing with the Securities and Exchange Commission on Wednesday ahead of its earnings call next week, with the company stating that it’s “generating effectively no revenue” during the period AMC theaters must remain closed. As a result of the impact of covid-19 on the economy at large—particularly the theater and entertainment industries—the company said it “cannot guarantee that we will recover as rapidly as other industries, or that we will recover as rapidly as others within the industry due to our strong footprint in densely populated areas.”
This situation is made more complicated by the fact that theaters will not be able to return to business as usual when reopenings do begin. For one, social distancing measures that will need to continue for the foreseeable future mean that theaters will not be able to operate at full capacity. Theaters will also be impacted by production and release schedules determined by studios, many of whom have pushed back the release dates of bigger budget films into next year.
“We are unable to predict the availability of supplies or workforce necessary to operate when we reopen,” the company said. “Since the outbreak of the COVID-19 virus, movie studios have suspended production of movies and delayed the release date of movies. Some movie studios have also reduced or eliminated the theatrical exclusive release window as theatres are not operating. The longer and more severe the pandemic, including repeat or cyclical outbreaks beyond the one we are currently experiencing, the more severe the adverse effects will be on our business, results of operations, liquidity, cash flows, financial condition, access to credit markets and ability to service our existing and future indebtedness.”
All of this is compounded, the company said, by the public’s perception of its response to the pandemic, a willingness to return to theaters over health concerns, potential costs risks in negotiating rents, and a potential inability to meet its financial responsibilities in both the short- and long-term. And making matters worse, studios appear to be eyeing digital releases for even assured blockbusters.
Earlier this year, Trolls World Tour made an absolute killing with its digital release—an event that inadvertently triggered a very public, very ugly spat between AMC and Universal. And more recently, Apple reached an agreement with Sony Pictures for licensing rights to Greyhound, the WWII naval ship drama written by and starring Tom Hanks, a film that was originally intended for a theatrical release but will now premiere on Apple TV+.
It brings me absolutely no joy to say this, but if things looked pretty bad for theaters before, they’re looking considerably worse now.