AMC Theatres is feeling the pinch of the coronavirus pandemic as the world’s largest operator of cinemas saw its revenues plunge by 99 per cent during the most recent quarter.
The Leawood, Kansas-based company, which is owned by the Chinese firm Dalian Wanda Group, operates 630 theaters in the United States.
Since March, all of them have been shut down due to the ongoing pandemic.
In the three-month period that ended in June, AMC Theatre generated just $18.9million, according to the Los Angeles Times.
During the same period last year, the company raked in $1.5billion.
AMC reported an overall loss in the second quarter of $561.2million. During the same period last year, it earned a profit of $49.4million.
Wall Street analysts are predicting that AMC’s revenue will drop even further during the third quarter to $11.9million.
Since March, all of the company’s American cinema locations have been shut down. Internationally, AMC reopened 37 theaters beginning on June 30.
The company is hoping to have two-thirds of its US cinemas up and running this month – in time for the September 3 opening of Christopher Nolan’s highly anticipated offering Tenet.
AMC is also aiming to have ‘essentially all international theaters’ reopen this month.
‘It should be no surprise to anyone that with our operations shut the world over, and almost no revenues coming in the door, this was the most challenging quarter in the 100-year history of AMC,’ CEO Adam Aron said.
Despite the grim second quarter results, AMC doesn’t appear to be in danger of bankruptcy just yet, according to The Hollywood Reporter.
The company recently completed a debt restructuring with most of its bondholders who own an aggregate $2.6billion in subordinated debt.
As part of the restructuring AMC will receive a cash infusion of $300million.
‘The result of all these actions during the quarter combined with this successful debt restructuring extends our ability, if need be, to weather a hypothetical suspension of all our theatre operations globally into 2021,’ Aron said in a statement.
The latest financial data comes just a week after AMC and Universal Studios agreed to shorten the exclusive theatrical window to just 17 days for its films.
The standard window of theatrical exclusivity typically runs about 90 days.
Up until now, the largest chains have steadfastly refused to screen films that don’t give releases a lengthy and exclusive run in theaters before moving onto video-on-demand or streaming services.
Studios, meanwhile, have increasingly sought to deliver new movies more quickly into the home.
The new deal covers Universal films — which include the Fast & Furious franchise, Jurassic Park movies and the Despicable Me series — in the US over the next three years.
After a run of at least three weekends, Universal (and its specialty label, Focus Features) will have the option of steering a film to premium on-demand, including AMC’s own service.
The shortened window only applies to premium video-on-demand — which often means digital rentals of $20 — not standard on-demand or other home platforms.
The deal has potentially profound ramifications for an industry reeling from the coronavirus pandemic.
It’s all but certain to lead other studios to press for similar terms from AMC and other exhibitors.
Netflix, which hasn’t been able to previously agree with major chains over briefer runs for its premier releases, could now find deals more palatable.
If widely embraced, a three-week window would also put further pressure on independent theaters which tend to rely on longer runs for films.
Aron called it ‘a historic, industry-changing agreement.’
The deal repairs a rift between AMC, the world’s largest theater chain, and Universal, which is owned by Comcast Corp.
In April, with theaters shuttered nationwide, Universal released the animated sequel Trolls World Tour by video on demand.
NBCUniversal CEO Jeff Shell then trumpeted the digital release as a success and said the studio would, even once theaters reopened, ‘release movies on both formats.’
That infuriated theater owners.
Aron said the company would no longer play Universal releases and claimed he would do the same for any distributor that ‘unilaterally abandons current windowing practices absent good faith negotiations between us.’
Terms of the deal weren’t disclosed, but AMC will get a share of the premium video-on-demand revenue.
‘The theatrical experience continues to be the cornerstone of our business,’ said Donna Langley, chairman of Universal Filmed Entertainment Group.
‘The partnership we’ve forged with AMC is driven by our collective desire to ensure a thriving future for the film distribution ecosystem and to meet consumer demand with flexibility and optionality.’
Defending the impact at the box office, Aron said that the first three weeks of ticket sales is when ‘a considerable majority of a movie’s theatrical box office revenue typically is generated.’
The largest chains have been closed in the US for more than four months, threatening their solvency.
Exhibitors, including AMC, are currently planning on a large-scale reopening by late August, with Warner Bros.’ Tenet prepared to usher moviegoers back over the Labor Day weekend, after debuting a week earlier overseas.
Universal has opted to postpone its largest upcoming films — including F9 and Minions — into next year.
The studio sent The King of Staten Island directly to homes.
Its next scheduled release expected in theaters is Candyman on October 16.
The National Association of Theater Owners, the trade organization that represents the country’s theaters, declined to comment on the new deal.