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
Are states ready to roll out COVID-19 vaccines?
Claire Hannan, executive director of the nonprofit Association of Immunization Managers, which represents state health officials, said states have been making good progress in their preparations. And we could have several vaccines pretty soon. But states still need more funding, she said. Hannan doesn’t think a lack of additional funding would hold up distribution initially, but it could cause problems down the road. “It’s really worrisome that Congress may not pass funding or that there’s information circulating saying that states don’t need additional funding,” she said.
How is the service industry dealing with the return of coronavirus restrictions?
Without another round of something like the Paycheck Protection Program, which kept a lot of businesses afloat during the pandemic’s early stages, the outlook is bleak for places like restaurants. Some in the San Francisco Bay Area, for example, only got one week of indoor dining back before cases rose and restrictions went back into effect. Restaurant owners are revamping their business models in an effort to survive while waiting to see if they’ll be able to get more aid.
How are hospitals handling the nationwide surge in COVID-19 cases?
As the pandemic surges and more medical professionals themselves are coming down with COVID, nearly 1 in 5 hospitals in the country report having a critical shortage of staff, according to data from the Department of Health and Human Services. One of the knock-on effects of staff shortages is that people who have other medical needs are being asked to wait.
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