Relax, If AMC Goes Bankrupt, Another Company WILL Take Their Place

The cliche the buck stops here certainly applies to movie theater chains.

We signed up for the AMC A-List program this past weekend. They have a $5 deal going right now for the first month and you must commit to three months minimum. Will they still be in business three months from now?

We hope so.

If not?

AMC ultimately needs to accept responsibility in business for their success or failure. I’ve said that repeatedly here, and will keep saying it. Not just applied to AMC but to every business.

Put your hands back in your pockets, theater chains, and don’t ask us for bailouts. We’re broke, if you haven’t noticed our debt (see: No, Taxpayers Should NOT Bail Out Cinemas, Sorry Patty Jenkins and Other Millionaire Hollywood Directors). Take care of your business or begone. Sounds hard and cold, but it’s the truth any responsible business needs to hear loud and clear.

International theaters are doing better than America

It’s clear that American cinema is broken right now. #2 Regal is closed everywhere, #1 AMC is furiously trying to stave off bankruptcy and #3 is sort of laying in the weeds, not saying too much one way or the other. And then there are all the independents, and dare I suggest that these businesses have felt the most pain. Many don’t have the financial backing of the three big chains.

I don’t mention often enough here that most of what we talk about is related to domestic cinema business. I will clarify worldwide/international sometimes, but it can be easy for newer readers — especially our friends abroad — to think that we’re talking about cinemas everywhere when often we’re talking more about cinemas locally. Sometimes really locally.

And yet AMC is a global company, so that can make things a bit messy to dissect sometimes. Their business future might be hinged a great part on what’s not going on in the United States currently. We’re a mess here right now on the movie theater front, but some moviegoers — like us — in some states are supporting movie theaters and going to see new movies.

Obviously, cinema experiences vary from US state to state, county to county and perhaps even city to city. There are also cinemas abroad, the whole international audience. Our friends in the U.K and other countries around the world. Then there’s China which is sort of an island all its own in cinema, much like the United States. If a movie does very well in China, where they have more people than anywhere on earth, then the film can still turn a profit. Maybe the only other country that applies to, at least for movies with any significant budget is America.

This is also the place a lot of movies are made. Hollywood is in America. Am sure that’s a major driver of tourism to California. I’ve never been to New York, but my wife lived there when she was a child for a time. We’ve been to California many times. We were there a month ago. Northern California is beautiful country with the red wood forest. Not big fans of Los Angeles and Hollywood, despite being huge movie fans.

For 30+ years we’ve lived in Washington State, near Seattle. You know, the Space Needle, Seahawks, that’s us. That’s our geographic cinema footprint, so when we write “there are no theaters open in our area” that’s the area we’re talking about. We’re not talking about cinema in other countries (unless otherwise noted) which, frankly, many are doing a better job outside the United States. I should be better about making it known, when applicable, that I’m not speaking for the world of cinema at large, just our little tiny corner of the world. Personalizing it, if you will. Sometimes this comes through, sometimes not. It’s my fault when it’s not clear. Often the author’s fault when something isn’t clear. We should write clearly.

Globally the pandemic has been an issue in 2020. America has been hit hard by this pandemic. We’ve had more deaths, more infections, more disruption here than anywhere else on the planet. I don’t want to get into who has it worse, though, because that kind of misses the point. Whatever it’s like where you are, it’s clearly hit America very hard. And continues to be an issue to the day of this writing.

Back to theaters, within the United States there are very clearly two major cinema markets: New York and California. It seems to me that if New York had let theaters reopen with the increased safety protocols in place (they announced on Friday 10/16 that some theaters on a county by county basis can now reopen), Regal Cinemas would have kept all their theaters open. CEO of Cineworld Mooky Greindinger said exactly that. It wasn’t just James Bond No Time To Die and other films being delayed, they needed their strongest domestic market locations to make staying open viable. California had opened theaters in some areas and has been expanding their openings, so it seemed they are on the path to full theater reopening status.

I don’t know whether or not it was safe enough in New York to reopen theaters — and if it truly wasn’t, the government made the right call — but there were businesses allowed to reopen there like casinos, bowling alleys and indoor dining in restaurants that share at least some similar risk as movie theaters. And yet theaters were not allowed to reopen in New York and part of California. It’s puzzling to any reasonable thinking person that one type of business should be able to reopen if a similar type business can. For whatever reason, that has not been the case.

So, the studios got spooked. They saw that Tenet box office without these big markets was underwhelming. Maybe it was more than just these markets being closed, but we’ll never know. Anyway, so they started pushing back bigger budget films and releasing other films to VOD and streaming. Here, at this site, we’ve taken exception with that last part. We want more movies released theatrically. We believe that if movies can be released in theaters as well as streaming, it gives consumers choice how they want to see the movie. Do they want to view it in their home or on the big screen? Maybe they, like us, want in both places. Giving customers a choice is good business 101.

It’s important for movie lovers everywhere in the world to understand that the problems domestically aren’t necessarily the result of every single state. Clearly, when Regal decided to close all their theaters, they were doing it in response at least partly to the inability to open in New York and parts of California.

Now AMC is saying as much that if they run out of business it will be, at least in some part, their “most productive theaters which remain closed” responsible. I’ve bolded that statement in the quoted article below.

Cash burn is, said, is “impacted by, among other things, the timing of resumption of theatre operations, including with respect to some of our most productive theatres which remain closed, the timing of movie releases and the slate of future releases, theatre attendance levels, landlord negotiations and minimum lease payments, costs associated with the AMC Safe and Clean initiative, and food and beverage receipts.”

AMC Entertainment Says Could Be “Largely Depleted” By Year End; Exploring Assets Sales, Joint Ventures – Deadline

They don’t come out and say it, but it’s New York and California. It’s not where we live and probably most of the people reading this live either. If those theaters aren’t open, they are saying they can’t make the box office revenue they need to turn a profit.

History is important here. 2019 was a huge multi-billion dollar year for cinema. This pre-pandemic time was great and yet AMC was still in heavy debt. They had made some acquisitions and over leveraged their company into debt. They were gambling that 2020 and beyond would be big, maybe even bigger revenue-wise and the debt wouldn’t be a major issue.

They were wrong.

Enter 2020 and the pandemic hits and now it’s the finger pointing blame game. Whether it be New York and California not reopening theaters — and maybe they are right that it’s not safe enough to do so, I don’t know, again, don’t live there. If AMC had not been so far in debt before the pandemic, maybe that will be the real reason they go out of business. Maybe it’s not the fault of New York, California or only the pandemic, it’s just AMC making bad business decisions.

Since the pandemic, AMC has made a few good business moves in this author’s opinion. Many disagree with me that the Universal deal for the shortened theatrical window was a good deal, but I stand by that. It’s a deal every theater chain will eventually have to make. Those who are saying otherwise don’t understand what worked yesterday and today don’t always work tomorrow. The very nature of business survival depends on how well it can embrace change. The theatrical window is 50 pound cement ankle bracelet for cinema. It works for only for a subset of movies and only if enough people like said movies and come out and pay to see them. Beyond that, it takes away customer options. Studios are starting to figure that out. Theater chains that adapt as well, including AMC, will have a better chance of survival.

It might be too late for AMC. Who wants to loan money to a company that is so deeply in debt anyway? When people start getting hysterical about “losing art” and “losing experiences” I tune out. We’re not going to lose art or any cinematic experience long term. Sure, short term local theater chains might close as well as some/many/all independents, but I don’t think all theaters everywhere will completely die. That’s fatalist thinking. We will have a different type of cinema experience created going forward. Something new and creative will rise up and seize the business opportunity that exists. I’m ready for and will welcome it. Will you?

AMC, it’s been nice knowing you. If you can survive, great, if not, then the billions you made should have been enough to make your business viable in the future. If not, hey, you just made way for some other entrepreneurs to step up.

When #1 falls, then #2 becomes #1.

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