Movie theater chain AMC released its quarterly earnings report Monday, and as expected, it was brutal: Revenue is down 90% from this time last year, with reported losses over $900 million.
But AMC Theatres has an unusual deal with Universal that might be pumping life into it.
“We shall fight on the seas and oceans, we shall fight in the air. We shall defend our island,” said Adam Aron, AMC CEO and president, channeling Winston Churchill on Monday’s earnings call.
Unusual, but it’s been a rough time for theaters.
A few weeks ago, AMC rival Cineworld shut down its U.S. Regal theater locations, and now, there are rumors that AMC might be on the verge of bankruptcy.
Neil Macker, an analyst at Morningstar, said with rising COVID-19 cases forcing blockbuster premieres into next year, there’s no clear solution for struggling theaters.
“They’re sort of in this weird middleman position where they don’t have a lot of control over when they can reopen and when they can generate revenue from those screens,” he said.
But a recent, historic deal with Universal may keep AMC afloat. The deal allows Universal to release films on demand as early as 17 days after they premiere on the big screen.
In pre-pandemic times, it was months before you could watch a blockbuster at home. In exchange for the quick transition from the silver screen to home screens, AMC gets an undisclosed cut.
“When this deal was announced a few months ago, it was considered bad news for theatrical,” said Shawn Robbins, an analyst with Box Office Pro. “But I think that lacks the context of the fact that this is an empty market. So in a way, what was perceived to be bad news is actually a little bit of a saving grace for theaters.”
Movies like the animated film “The Croods: A New Age” about a family of cavemen will be released under this hybrid scheme Nov. 25.
So the $900 million question is, will the AMC-Universal deal be enough to keep AMC alive? Industry watchers say it’s not clear, but one thing is sure: The relationship between studios and theaters has been forever changed.
COVID-19 Economy FAQs
What’s the outlook for vaccine supply?
Chief executives of America’s COVID-19 vaccine makers promised in congressional testimony to deliver the doses promised to the U.S. government by summer. The projections of confidence come after months of supply chain challenges and companies falling short of year-end projections for 2020. What changed? In part, drugmakers that normally compete are now actually helping one another. This has helped solve several supply chain issues, but not all of them.
How has the pandemic changed scientific research?
Over the past year, while some scientists turned their attention to COVID-19 and creating vaccines to fight it, most others had to pause their research — and re-imagine how to do it. Social distancing, limited lab capacity — “It’s less fun, I have to say. Like, for me the big part of the science is discussing the science with other people, getting excited about projects,” said Isabella Rauch, an immunologist at Oregon Health & Science University in Portland. Funding is also a big question for many.
What happened to all of the hazard pay essential workers were getting at the beginning of the pandemic?
Almost a year ago, when the pandemic began, essential workers were hailed as heroes. Back then, many companies gave hazard pay, an extra $2 or so per hour, for coming in to work. That quietly went away for most of them last summer. Without federal action, it’s mostly been up to local governments to create programs and mandates. They’ve helped compensate front-line workers, but they haven’t been perfect. “The solutions are small. They’re piecemeal,” said Molly Kinder at the Brookings Institution’s Metropolitan Policy Program. “You’re seeing these innovative pop-ups because we have failed overall to do something systematically.”
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