AMC CEO Adam Aron Says New Financing Deal Means Imminent Bankruptcy Is ‘Completely Off the Table’

AMC Theaters delivered a sobering message last December, warning that the world’s largest cinema chain could run out of cash by early 2021 due to mounting challenges posed by the coronavirus pandemic. On Monday, the company announced a reversal of fortune. It raised nearly $917 million in funding since then, allowing AMC to avert bankruptcy for several months.

It’s a promising development for a beleaguered company, yet AMC and the rest of the film exhibition industry are hardly out of the woods — even with the ongoing vaccine rollout. The news of AMC’s debt and equity financing comes shortly after MGM postponed the release of “No Time to Die” for a third time, the latest bump moving it from April to early October. Bond’s vacancy sparked a release date exodus from the first half of the year, with “Morbius,” “Ghostbusters: Afterlife,” “The King’s Man” and “A Quiet Place Part II” all relocating to fall or later. Many predict that Universal’s “F9” and Disney’s “Black Widow” may alter release plans as well, which would further impede plans for a grand return to moviegoing.

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In the wake of AMC’s new financing deal, Variety spoke to Aron about carrying his theater chain through “this dark coronavirus-impacted winter” and if moviegoing can return in force.

On AMC’s most recent earnings call, you quoted Churchill saying “We shall fight on the beaches…” to describe the hardships facing the movie theater business. What’s your outlook on the state of the exhibition industry today?

I have 917 million reasons to be a smiling man. It’s been 10 months since the pandemic forced theaters to close the world over. We still are in a situation where major movie titles have been delayed, where theaters are closed in many countries, and where they are open, guest visitation has been very light. Clearly, that put a financial strain on theater operators. But as we sit here today, vaccines have been developed, a vaccination effort is broadly underway. Here in the United States, the Biden administration has committed to 100 million injections in 100 days. What that means is that as we look ahead into summer and next fall, movies will get released again and consumers will go back to movie theaters again. So as I look ahead, I’m quite optimistic and encouraged.

How much runway does the new financing give AMC if the situation around the pandemic doesn’t improve?

It gets us deep into 2021. With any kind of partial recovery of the movie theater industry, this will get us all the way through 2021. As we said in our press release this morning, imminent bankruptcy is completely off the table. We believe we have the runway we need to get through this pandemic.

Does this help AMC hold on to leases it would’ve otherwise had to forgo?

We’re in discussions with theater landlords. They’ve been very helpful since last April deferring or abating rent obligations that we had in 2020 We’re in discussions with landlords again. I’m optimistic about our industry’s prospects for summer and fall. Clearly a lot of our theaters that are open are empty now. I’m appreciative that our landlords have been willing to work with AMC to get through all this.

After “No Time to Die,” “A Quiet Place” and several other movies were delayed again, do you think there will be a summer movie season?

We expected that April and May movies would move, as they are [being moved]. There will be a tremendous amount of vaccination that gets completed in United States in the winter and spring. So I think we will have a summer movie season. The second half of 2021 should be much brighter than the first half.

Most movies that were scheduled for 2020 have been delayed as many as three times at this point. Do you think this will be the last time major tentpoles are postponed?

On a day when we announced we raised $917 million, I’m less focused on trying to apply a crystal ball to the near-term future. This pandemic has been a wild ride. There have been a lot of tosses and turns. There will be more tosses and turns.

Does the population have to be largely vaccinated for moviegoing to return?

That depends on your definition of largely. I think we will find out that the heath statistics in the United States will be much improved if even a third of the population is vaccinated. I do think we’re going to need to see substantial vaccination in the U.S., but not as much vaccination as has been brandished about publicly to see improvements in the U.S. economy and consumer behavior overall.

Has AMC’s early VOD deal with Universal been financially successful for the theater?

The Universal-AMC agreement, so far, has been very successful for Universal and AMC. In fact, Universal has released more movies theatrically since September than any other major studio. They wouldn’t have done that absent the premium video-on-demand agreement that we jointly put in place. I think it’s been a tremendous success. We’re very glad we did it.

Have other studios reached out to you about similar deals?

We talk to all studios about all possibilities all the time. When we have something to announce, we will let you know.

You were critical about Warner Bros.’ decision to release all of their 2021 movies simultaneously in theaters and on HBO Max. Have you decided if you’re going to show their movies in theaters?

Our conversations with Warner Bros. are still fluid. We were the first major theater chain to sign on to “Wonder Woman 1984.” We were the first to respond in horror to their announcement about the entire 2021 film slate. We have to have more conversations with Warner Bros. about their 2021 movies. I’m not going to talk about Warner Bros. today, nor am I particularly worried about it today. Today is a day to celebrate that we raised $917 million to deal with this pandemic, not to worry about the state of play with Warner Bros.

Do you think there’s a public perception that going to the movies is less safe than other indoor activities like gyms or restaurants?

I think our industry has two problems. One is consumer hesitation to resuming normal daily life. It’s not just movie theaters. There are sporting events being played without bands in attendance. The whole U.S. economy is still affected by the pandemic. In the movie industry, the second issue is that we haven’t had new movie titles to play. We’re in the new car business, and there have been very few new cars in our salesroom since last March. For attendance to improve, the public is going to have to get more comfortable resuming normal life and we’re going to have to get new movie releases for them to see. Looking ahead, I do think that’s something we will see with much more success in the second half of 2021.

Would it have been better financially for AMC to keep theaters closed considering the low attendance?

It costs us a little money to be open rather than shut, but we thought it was a very important statement that the largest theater operation in the world is open for business. I would point out with our AMC safe-and-clean protocols, we’ve had millions and millions of guests coming to our theaters since August. We’re not aware of even one case of transmission of the virus at our theaters amongst our guests. We think it was a very good decision to stay open, and we’re glad we did. Admittedly, it did cost us some money to stay open, but that was an investment in our future.

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