Not surprisingly, the movie business has been a major casualty of the COVID`19 pandemic, with social-distancing restrictions effectively shuttering most of the nation’s nearly 6000 movie theaters during 2020 and into 2021, darkening about 40,000 screens. (Are we in for a resurgence of the drive-in?) In March, the AMC chain reported it had lost $4.58 billion in 2020, with a loss of $946.1 million in the fourth quarter alone, resulting in a per-share loss of $6.21 compared to a thirteen-cent loss a year ago.
AMC has been slowly reopening some of its venues as restrictions on public gatherings are being relaxed in some areas. By the first week of March, the screens were still dark at only 72 of its 589 U.S. theaters and about a quarter of its 356 locations abroad. Many of them, though. are operating at only 20 to 40 percent of capacity. The impact on popcorn sales was not specified.
On February 22, AMC’s president and CEO Adam Aron hailed the March 5 reopening of its movie theaters in New York City, where his company is the single largest exhibitor. In his statement, he emphasized that the chain’s commitment to a sanitary environment would go a long way toward restoring AMC’s financial health, promising AMC would reopen its venues “with the highest devotion to the health and safety of our guests and associates through our AMC Safe & Clean policies and protocols, which were developed in consultation with Clorox and with current and former faculty at the prestigious Harvard University School of Public Health. AMC Safe & Clean includes social distancing & automatic seat blocking in each auditorium, mandatory mask wearing, and upgraded air filtration with MERV-13 air filters, as well as many other important health, sanitization and cleanliness efforts.” This leads to speculation whether the movie industry will adopt a COVID-19 rating system similar to the familiar PG-13 ratings for content.
In addition to the restrictions on public gatherings, theatrical releases have been as scarce as theatergoers, with Hollywood studios and indie filmmakers alike sharply cutting back new releases, postponing many films until later this year and beyond. Describing this situation to the Hollywood Reporter, Aron used an aviation analogy: “The CEOs of two major studios each told me that a good metaphor for AMC’s circumstance is that we are LaGuardia Airport closed by a thunderstorm with tons of planes circling overhead all waiting and needing to land.”
According to an official statement by Aron posted on the company’s website, “This past year has presented AMC with the most challenging market conditions in the 100-year history of the company. Noting the “brisk clip” of vaccinations in the first weeks of 2021, he announced that “our theatres in New York City have finally opened with theatres in Los Angeles likely opening shortly as well, blockbuster movie titles are currently scheduled to be released in significant quantity in the coming few months, and we have more than $1 billion of cash on hand. Taking these facts together, we have reason to be optimistic about AMC’s ability to get to the other side of this pandemic.
In a frank discussion of the immediate course of action AMC would be taking, Aron declared that “Our most important single point of focus, after ensuring a safe and clean environment for our theatre guests and workforce, has been to strengthen AMC’s liquidity profile. Since March of 2020, we have raised approximately $2.2 billion of gross cash proceeds from new debt and equity capital, securing more than $1 billion of concessions from creditors and landlords, raising more than $80 million from asset sales and seeing $600 million of convertible notes convert from debt to equity.
I am confident that the actions that we have taken have positioned us well to capitalize on pent-up demand for movie going as the rollout of vaccines accelerates. We look forward to returning to an environment of unfettered movie theatre access for our guests, and we are eager to showcase the sizable and widely anticipated slate of new films that our studio partners have to offer.”
AMC is the largest theatrical exhibitor in the United States and the largest throughout the world with about 1,000 theatres and 10,700 screens across the globe, including Europe and the Middle East.