COVID-19 is threatening to kill off the US’s biggest movie cinema chain, AMC Theatres, potentially forcing Hollywood studios to stream their newest films over the internet.
On Wednesday, AMC said it had “substantial doubts” the company can continue to operate, citing the pandemic, which has forced the temporary closure of its movie theaters through June. “During this period, we are generating effectively no revenue, AMC said in the 8-K filing.
In total, AMC operates 996 theaters, 366 of which are based in the US. However, in mid-March, the company and Regal Cinemas began temporarily shutting down all theaters in the country.
The current plan is to start reopening theaters later this summer when on July 17th the upcoming Christopher Nolan film Tenet is scheduled to premiere. According to the filing, AMC has $718 million in cash and borrowings, which it intends on using to resume operations.
However, the company is forecasting a myriad of challenges that could derail the plan, including a “second wave” of COVID-19 cases that would force the theater chain to once again shut down.
If that happens, AMC will need to borrow more funding, which it may be unable to secure on favorable terms, the filing goes on to warn. It also remains unclear whether enough moviegoers will risk venturing back into theaters. “Even once theatres resume operations, a single case of COVID-19 in a theatre could result in additional costs and further closures,” AMC says in the filing.
The other problem is how movie production has come to a halt, limiting the number of films that can be released in the future. “Some movie studios have also reduced or eliminated the theatrical exclusive release window as theatres are not operating,” AMC adds, a reference to how studios are already releasing select films directly online, effectively bypassing cinemas.
The 8-K filing is pretty bleak. “We cannot predict when or if our business will return to normal levels,” it says. But in the short-term, AMC does expect to see “pent-up” demand from consumers once theaters do reopen.
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