AMC Invokes Churchill on Earnings Call After Losing $900M in Q3

Chris Lindahl
·3 min read

With theater attendance down to just 10 to 20 percent of usual levels, a dearth of new movies, and a cash-burn in excess of $100 million a month, AMC Theatres’ bottom-line financial performance is so abysmal it’s “almost irrelevant,” CFO Sean Goodman said during the Q3 earnings call Monday for the nation’s largest theater chain. Instead, he and CEO Adam Aron have their sights set on continuing to raise cash to avert bankruptcy, with Aron invoking a Winston Churchill speech to explain how AMC is in an “almost warlike position of resolve and determination.”

“It really comes down to one thing: We believe that we will need to raise more capital to assure ourselves that we can lengthen our financial runway, at least into next summer,” Aron said. “The simple question becomes: Have we raised that needed capital or not?”

In other words, the AMC executives said that extant debt and lease renegotiations, reduced interest payments, and $900-million in debt and equity proceeds will be sufficient enough to keep the chain afloat until early 2021. Their goal now is to follow that up with more cash-raising or spending reduction that can sustain operations until mid-2021, when Aron is hopeful blockbusters will be released and a vaccine will be widely available. Discussions to achieve that are ongoing.

As of today, around 90 percent of the chain’s US theaters are open, up from 78 percent a month ago. Crucially, that does not include theaters in New York City or Los Angeles, which remain closed by the governments there.

Overall, domestic attendance was down 97 percent last quarter compared to the same period of time last year. That includes theaters that are completely closed; actual attendance levels at open theaters hovered between 10 and 20 percent of last year’s levels.

About half of AMC’s US theaters are open only on the weekends, but when screens are open they average about one or two showtimes daily instead of the normal four. Aron said this is a wise move, compared to Regal’s decision to close nearly all of its theaters, because it reduces operating costs, gives customers a sense that their theater is still open, and avoids the cost of stress incurred to closed buildings.

Looking ahead, Aron said Christmas movies like Warner Bros.’ “Wonder Woman 1984” will help increase attendance levels. While it’s not certain Warners will stick with that plan, Aron says Universal’s shortened-window deal with the chain is already bearing fruit.

In fact, he said it is “specifically because” of the theatrical-PVOD deal that Universal is opting to release theatrically six movies this quarter, including “The Croods: A New Age” for Thanksgiving.

That comes after Universal’s Focus label released the Miranda July Sundance pick “Kajillionaire” last month in theaters for 17 days before moving it to PVOD. It grossed just $1.06 million worldwide.

“We made more money with that theatrical-PVOD combo than we would have if it had just been exclusively in theaters with a 74-day window,” Aron said.

He said that AMC is having conversations with every studio and the company is “not stuck back in 1955.”

“We’re willing to consider alternate models. We understand that the world of streaming is upon us. We believe that it optimizes our profitability and the studios’ profitability if they can have a combination of theatrical releases and streaming. That combo is far more lucrative for them and certainly for us than if they pick streaming only and they ignore the $43 billion in revenues that movie theaters generated globally last year for the makers of film.”

Aron also said that the company has signed a deal to sell five locations in Baltic countries for $77 million. Additionally, they have quietly closed about 40 locations in the US and Europe that were not profitable.

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