AMC theaters are warning investors that the company could run out of cash by 2020, without a steady flow of films to open the remaining theaters near the public.
It is no surprise that the theater industry is suffering. Nearly every major blockbuster (movies that people could possibly get to visit a theater mid-epidemic) has been pushed back to 2021, and there are still open theaters operating at low capacity. The results are not great; Warner Bros. and Christopher Nolan theory – a notable blockbuster a studio tried to release – failed to perform in the United States, where theaters remained closed in major markets such as New York City and Los Angeles. The next big movie is Wonder Woman 1984, And there’s always a chance that could extend beyond its current December 25 release date.
According to public documents recorded today, to avoid the potentially devastating financial effects the ongoing epidemic would have on its business, AMC is figuring out some possible ways to raise cash. This includes continued negotiations with landlords on lease payments at theater venues, starting joint ventures with other trading partners and potentially selling property. However, at the current cash-burning rate, however, it still stands, [AMC] It is estimated that existing cash resources will be depleted by the end of 2020 or early 2021. “
AMC Chief Financial Officer Sean Goodman is also warning investors via public documents that there is “a significant risk” that the aforementioned potential sources of excess liquidity may not actually occur – or, he continued, even though AMC theaters May have increased some form of liquidity. Through those possible paths, it will not be sufficient to compensate for AMC’s losses. Effectively, Goodman is telling investors that it is extremely difficult to predict anything right now, and “there can be no assurance” that any of the plans listed above can solve the problem correctly.
“Our predictive ability is uncertain due to unknown magnitude and duration of the COVID-19 pandemic,” the document reads.
AMC Theaters is not the only company that is increasingly concerned about the future. Regal, which is owned by Cineworld, announced last week that it would close its theaters for now. Doing so would reduce costs, which CEO Mickey Greeninger told CNBC Theaters were growing by keeping them open. AMC theaters are currently the only operating locations open at a capacity of approximately 2040 percent. It represents about 83 percent of theaters in the US according to the company. Since resuming business, attendance at theaters has been down 85 percent year-over-year.
One of the biggest uncertainties theater chains like AMC face is unable to predict consumer behavior. Even if theaters open next year, if people stay at home, studios can delay films. Studios such as Disney, Warner Bros., and Universal can transfer their titles to streaming services. AMC Theaters is working with Universal, which will shorten the theatrical window for just 17 days, allowing Universal to sell it directly to consumers at a faster rate and give AMC theaters a share of revenue.