Cinema chain AMC warns it may not survive the pandemic
'Substantial doubt exists about our ability to continue as a going concern,' company says in filing
Movie theatre chain AMC warned Wednesday that it may not survive the coronavirus pandemic, which has shuttered its cinemas and led film studios to explore releasing more movies directly to viewers over the internet.
All of AMC's theatres are shut down through June, which means the company isn't generating any revenue. AMC said it had enough cash to reopen its theatres this summer, as it plans to do. But if it's not allowed to reopen, it will need more money, which it may not be able to borrow.
The company said that even when local governments allow theatres to reopen, AMC may still have problems if entertainment companies delay releasing new films.
"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.
And people may not want to go sit in crowded spaces because they fear the virus. AMC believes that desire for social distancing is temporary and that people will want to go to the movies again.
Apart from the pandemic and its economic aftershocks, the movie business in the U.S. and Canada has benefited from rising ticket prices, but admissions have been gradually declining since 2005. Sequels, remakes and superhero movies dominate the box office. Meanwhile, the rise of streaming services — Netflix and a growing stable of rivals — is providing new competition.
Theatre chains are also concerned that film studios could push more movies straight to the streaming services that they own. Since the pandemic shut down theatres, entertainment companies have delayed most movies. But Comcast's NBCUniversal released Trolls World Tour on video on demand in April, triggering an angry response from theatre owners, and Disney will release Artemis Fowl to its streaming service, Disney Plus, in June, rather than in cinemas.
AMC, a publicly traded company controlled by Chinese conglomerate Dalian Wanda, has 1,000 theatres in the U.S. and Europe. It's the largest U.S. movie theatre chain. Though it previously had some Canada locations, they have since closed or were sold to other exhibitors, including Cineplex Entertainment.
Cinemark, another major movie chain, plans to begin reopening U.S. movie theatres on June 19. It said in a Wednesday filing that it believes it has enough cash to last it the rest of the year, even if its theatres remain shut.