The world’s largest movie-theater company may run out of cash by year’s end if it doesn’t raise additional funds or get more people back to theaters following pandemic shutdowns that have disrupted businesses dependent on consumers gathering in public spaces.
The company said it has two ways out of its cash crisis: Either more customers need to buy tickets, or it will have to find new ways to borrow money.
Getting customers has proven a major challenge. As of October 9, AMC reopened 494 of its nearly 600 US theaters at a seating capacity between 20% and 40%. But AMC isn’t filling the limited seats it’s offering: Since the US theatrical market reopened in the late summer, it has served more than 2.2 million guests. That represents an attendance decline of 85% compared to last year.
“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,” AMC stated.
Rival Regal recently opted to temporarily close its theaters again, citing the lack of new product out of Hollywood and poor attendance amid the ongoing COVID-19 pandemic.
With more than 900 cinema complexes in the U.S. and Europe, AMC is the world’s largest film exhibitor.
AMC entered the pandemic with $4.9 billion in debt the company had amassed after a string of acquisitions that made it the world’s largest theater chain. In 2016, AMC paid $1.1 billion to acquire Carmike Cinemas Inc. Chains such as AMC have also paid to upgrade their facilities to make the moviegoing experience more attractive.
“There is a significant risk that these potential sources of liquidity will not be realized or that they will be insufficient to generate the material amounts of additional liquidity that would be required until the company is able to achieve more normalized levels of operating revenues,” AMC said.
Theater executives have said it makes little sense to roll out new releases with theaters closed in New York City and Los Angeles, which have some of the country’s top-performing locations.
“The whole movie industry is waiting for New York to reopen,” AMC Chief Executive Adam M. Aron said on Friday. “When New York reopens, that’s when studios will release movies again,” he said, adding, “The future of this entire industry is now in the hands of the governor.”
A spokeswoman for New York Gov. Andrew Cuomo, a Democrat, said that the state is concerned about theaters because they involve large groups spending extended time together indoors, as well as lobby congestion when customers arrive and leave.
“We will continue to make decisions on reopening based on the data, science and when global health experts determine it is safe to reopen without jeopardizing public health,” said the spokeswoman, Caitlin Girouard.
Cineworld Group, the owner of Regal Cinemas, said last week it would suspend operations at all of its theaters in the United States and the United Kingdom as cases continue to spread. Moreover, the US box office has seen anemic returns, which led to studios deciding to delay major films.
Films like Marvel’s “Black Widow” and the new James Bond title “No Time to Die” have been pushed to next year while Pixar’s “Soul” has been pulled from theaters entirely to debut on Disney’s streaming service, Disney+.