Just last week, after the surprise shutdown of Cineworld (and thus, Regal Cinemas locations) in the US and UK, AMC Theatres came out and told everyone that things should be just fine and the world’s largest cinema chain had no plans to shut down its theaters. Well, it appears that the CEO might have been speaking a bit too optimistically, as new statements from AMC point to a company on the verge of collapse.
According to new statements from AMC regarding its financial outlook moving ahead (via THR), in no uncertain terms, things look grim. In fact, the company says that if the current theatrical business trends don’t improve (i.e. people start actually buying tickets) “existing cash resources would be largely depleted by the end of 2020 or early 2021.” Ummm, that’s not good.
Of course, this isn’t really anything new. AMC previously said that it had plenty of money to make it through the end of the year, but when those comments were made, “Tenet” hadn’t opened and the outlook for Fall 2020 seemed great. Big movies were coming, including “Black Widow,” “No Time to Die,” “Soul,” “Dune,” and “Wonder Woman 1984.” Now, weeks later, the only one of those films that hasn’t moved to 2021 is “Wonder Woman 1984” and most expect that delay to be imminent.
That means AMC is burning through cash, as expected, but the company just isn’t bringing enough in to offset those costs. AMC blames the “reduced slate” of films as a primary cause for concern looking ahead to the rest of 2020. And the company isn’t happy that Cineworld has given up, closing its locations.
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“Certain competitors have decided to temporarily reclose their theatres in light of the ongoing pandemic and the reduced slate of movie releases, which may further exacerbate the trend,” said AMC.
While Cineworld blamed New York Governor Andrew Cuomo as the primary reason for the new shutdown, citing the fact that NY theaters remain closed, it appears that AMC is more realistic, pointing to an overall decline in sales and lack of exciting new features as the devastating factors that could result in drastic steps being taken by the end of the year.
And due to “the current low attendance levels,” AMC has revealed that theaters will begin reducing hours and days to help lower operating costs, while also trying to remain open during this troubling time.
Again, the company wanted to make it clear that burning through cash was expected. “However, given the reduced movie slate for the fourth quarter, in the absence of significant increases in attendance from current levels or incremental sources of liquidity, at the existing cash burn rate,” AMC’s existing cash will run out.
What does this mean? Obviously, this is terrible news for AMC and the larger theatrical business, in general. Basically, AMC is struggling and on the verge of collapse. The company is not mincing words and is making clear the fact that without a huge increase in attendance and studios sticking to existing release dates, the company could just run out of money. Now, that doesn’t mean the clock is ticking and the bomb is about to go off. There could be a lot of financial maneuvering that could keep AMC afloat, but as of now, things are dire. And if the world’s largest theater chain dies, what’s left of the big screen experience? Back in March, who thought we’d say that sort of thing only 7 months later?