World's biggest cinema chain AMC warns it may not survive the pandemic

Brenda Watkins
June 4, 2020

Entertainment, the country's largest exhibition chain, acknowledged in public filings on Wednesday that the coronavirus pandemic could push it into bankruptcy.

However, the company raised fears that even after theatres reopen it may not have enough films to show and attendance will be further impacted as people may switch over to other forms of entertainment or be wary of health risks.

The box office has become home mostly to blockbuster films: Sequels, remakes, and superhero movies dominate.

"Due to these factors, substantial doubt exists about our ability to continue as a going concern for a reasonable period of time", AMC wrote in a regulatory filing.

"There is no denying that production delays, social distancing protocols and a general feeling of caution by movie patrons is going to pose challenges", said Comscore media analyst Paul Dergarabedian in an email. Meanwhile, the rise of streaming services (Netflix and a growing number of rivals) is providing new competition.

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Universal released its Trolls World Tour on demand, causing a rift between Universal and AMC. The animated film had a record-setting digital debut upon release in April.

The largest theater chain in both the US and the world, AMC Theatres, gave a grave-sounding warning to investors on Wednesday, revealing its first-quarter financials, which show the impact of the COVID-19-related closures that began in March and have largely continued until today. "Some movie studios have also reduced or eliminated the theatrical exclusive release window as theatres are not operating", AMC adds, a reference to how studios are already releasing select films directly online, effectively bypassing cinemas.

The company, which operated about 996 theaters and 10,973 screens globally as of end-March, also warned that it may not have sufficient liquidity to tide over until its cash-generating operations are back to normal. In case you're wondering that's mainly physical locations which may close down, things like its estimated brand value, and customer brand loyalty - among many others. The Leawood, Kansas-based chain-the No. 1 circuit in U.S and Europe-is reopening three Odeon Cinemas in Norway effective today.

In April, AMC said it could issue new debt that would allow it to survive the crisis until theaters could be reopened at least partially, but in this filing it said it financing may not be available at favorable terms, if at all.

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