AMC Theaters needs $750 million to survive 2021. The theater business has been in turmoil ever since the start of the pandemic. COVID-19 has led to theaters closing, movies delayed, and studios favoring streaming. The company needs to raise nearly a billion dollars by the end of next month. Even though the vaccine is on its way, theaters across the country likely won’t be back to business-per-usual for months.
In an SEC filing, AMC Theaters expanded on their money problems. “A significant spike in coronavirus cases, together with delays of major movie releases or the direct or simultaneous release of movie titles to the home video or streaming markets in lieu of theatre exhibition, have led to theatre closures, prevented the opening of theatres in major markets and have had, and are expected to continue to have in the future, a material adverse impact on theatre attendance levels and our business,” the filing read. “These challenges have been exacerbated by the announcement by Warner Bros. that its entire studio film slate for 2021 will move to simultaneous release, which may result in other studios adopting a similar strategy.”
With a stimulus package still up in the air with negotiations once again stalled, there’s no help in sight for AMC Theaters and other businesses struggling. To keep AMC Theaters alive, the company needs $750 million. This year alone, AMC has deferred $400 million in rent obligations for 2021.
So far, the biggest theater company in the United States has raised $100 million of the $750 million needed. The company did so by turning debt into 13.7 million shares. In October and November, the theater chain lost $125 million per month. The theater set up a series of safety precautions to protect theatergoers, but major states, such as California and New York, have kept their theaters close to lessen the rapid spread of the coronavirus.
Making matters worse, AMC’s representatives have been in a losing battle against studios diverting their attention to streaming. Earlier this year, the company announced Universal films would no longer play in their theaters after the studio proclaimed more films will go to streaming. In the end, the theater and the studio struck a deal that satisfied both parties. Still, worse news came along regarding streaming. AMC Theaters is furious with Warner Bros., as mentioned in the filing.
AMC’s CEO, Adam Aaron, who once thought theaters and major movies would return safely over the summer, has called out the studio. Recently, Aaron expressed more displeasure with HBO Max. “Clearly, Warner Media intends to sacrifice a considerable portion of the profitability of its movie studio division, and that of its production partners and filmmakers, to subsidize its HBO Max start up. As for AMC, we will do all in our power to ensure that Warner does not do so at our expense. We will aggressively pursue economic terms that preserve our business. We have already commenced an immediate and urgent dialogue with the leadership of Warner on this subject.”
Aaron and Warner Bros. haven’t made any progress known. Filmmakers, just like theater owners, aren’t happy about studios choosing streaming over theaters at the moment. The AMC CEO remains optimistic that audiences will return to theaters soon, though, once the vaccine is widely available. Then again, he was optimistic about the summer, too.