An explosion from the past could provide an opportunity for the future of the world’s largest theater chain, AMC Entertainment.
AMC shares closed up more than 14% on Friday, just 24 hours after AMC CEO Adam Aron called the last three months “the most challenging quarter in AMC̵
WALL GRAG ANALYSIS ROADS ON AMC UNIVERSAL FILM RELEASE ACTIONS
The explosion in AMC’s warehouse came on the same day that a court ruled that film studios could once again own theaters. Like the Walt Disney Company, Comcast-owned Universal Studios or ViacomCBS-owned Paramount Pictures, local cinemas have not been allowed to own since a 1948 Supreme Court decision against Paramount Pictures, which banned filmmakers from owning stores that actually produced the films.
|AMC||AMC ENTERTAINMENT HOLDINGS INC||4.75||0.61||+ 14.73%|
|NCMI||NATIONAL CINEMEDIA INC||2.97||0.07||+ 2.41%|
|CNK||CINEMARK HOLDING||11.06||0.56||+ 5.33%|
AMC was not the only film chain to see stock pop on Friday. National CineMedia and Imax increased more than 2%; Cinemark Holdings advanced more than 5% and Marcus rose by more than 6%.
All theater chains have been hit hard by the coronavirus pandemic. AMC’s share has fallen more than 34% for the year but has taken steps to offset a loss such as Thursday’s 561.2 million carnage. Last year at this point, AMC made a profit of $ 49.4. To weather the pandemic,
AMC has reduced between 80% and 90% of its global cash costs, including renegotiating almost all of its theater rentals globally and raising $ 500 million from the issuance of new listed debt.
“The result of all these measures during the quarter, combined with the successful debt restructuring, expands our ability, if necessary, to breathe a hypothetical shutdown of all our global theater operations by 2021,” said Aron.
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The game “will they come or will they not?” will likely start in Hollywood on whether or not studios would buy theaters after the court ruling. Disney already owns El Capitan in the heart of Hollywood. It only plays Disney movies (Burbank-based studio was not part of the original decision from 1948 because it did not own theaters then).
Streaming giant Netflix in the past year has bought the Paris Theater in New York and the Egyptian Theater in Hollywood. These offers were made in part to ensure that Netflix would have the opportunity to exhibit its prestigious films and qualify for the Oscars.
At this year’s Oscars, Netflix received 24 nominations and saw its films win two awards – Laura Dern for Best Actress in a Supporting Role in “Gift Story” and “American Factory” won for Best Documentary Feature.
Ironically, Netflix has led the press for more entertainment to move home. Pair that trend with COVID-19 concerns, studios that already feel the financial pinch may not be on the market for a company with 1,006 theaters – the number of AMC Entertainment owns around the world.
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