Movie theaters have taken a huge hit from the coronavirus outbreak and now it could soon put the largest movie theater chain in the world out of business.
AMC Theatres, a movie theater chain that operates 21 movie theaters across Dallas-Fort Worth, has been unable to generate revenue since audiences stopped going to movie theaters at the end of last April. Company officials stated in its most recent filing with the Securities and Exchange Commission that AMC may not be able to stay in business for ]long.
"If we do not recommence operations within our estimated timeline, we will require additional capital and may also require additional financing if, for example, our operations do not generate the expected revenues or a recurrence of COVID-19 were to cause another suspension of operations," according to the filing. "Such additional financing may not be available on favorable terms or at all. Due to these factors, substantial doubt exists about our ability to continue as a going concern for a reasonable period of time."
The theater chain has taken on $500 million in new debts bringing its total to $5.3 billion in order to stave off complete closure with a possibility of reopening "this summer or later," according to the filing. The company also estimates that it may only carry them to November at its current revenue rate.
AMC has suspended almost its entire operation since April 30 including its theaters, marketing and promotional campaigns and "all non-essential capital expenditures to minimum levels." The company also furloughed all staff members and management to "the minimum level necessary to begin resumption of operations when permitted," the filing reads.
Despite the cutbacks and closures, revenue remained stagnant, causing AMC's losses to mount. The company estimates it lost between $2.1-$2.4 million in its first quarter of 2020, causing its stock price to move in a similar direction, down to $7.46 per share at the start of the year to $5.45 as of Wednesday.
The news is just the latest in a string of bad luck since the outbreak forced people to shelter at home in order to lessen the spread of the coronavirus back in April. Around the same time, Universal Studios announced it would release the highly anticipated kids film Trolls World Tour as a video on demand release, generating $100 million in revenue in its first three weeks without theater distribution. Universal also re-released recent films that were in theaters just before the start of the outbreak like The Invisible Man, Emma, The Hunt and Judd Apatow's The King of Staten Island starring Pete Davidson.
NBCUniversal CEO Jeff Shell told The Wall Street Journal that even if movie theaters chains like AMC reopen in the coming month, audiences should still expect Universal "to release movies on both formats" in theatrical and video on demand formats. AMC responded in a press release that it "will not license any Universal movies in any of our 1,000 theatres globally on these terms."
Keep the Dallas Observer Free... Since we started the Dallas Observer, it has been defined as the free, independent voice of Dallas, and we would like to keep it that way. Offering our readers free access to incisive coverage of local news, food and culture. Producing stories on everything from political scandals to the hottest new bands, with gutsy reporting, stylish writing, and staffers who've won everything from the Society of Professional Journalists' Sigma Delta Chi feature-writing award to the Casey Medal for Meritorious Journalism. But with local journalism's existence under siege and advertising revenue setbacks having a larger impact, it is important now more than ever for us to rally support behind funding our local journalism. You can help by participating in our "I Support" membership program, allowing us to keep covering Dallas with no paywalls.