- AMC Theatres is the biggest movie theater chain in the world, but the company says it has “substantial doubt” that it can survive the coronavirus pandemic and may have to shut down.
- AMC says it lost between $2.1 billion and $2.4 billion in the first quarter of 2020.
- If theaters can’t reopen or draw a crowd by the end of the summer, it’s a huge issue.
When the novel coronavirus outbreak reached US shores, the number one priority was to slow the rate of infection as quickly as possible. Therefore, social distancing guidelines were introduced and countless businesses were forced to close up shop. Some of those small businesses will never come back, even once the worst of the outbreak is behind us, but the long-term consequences of the pandemic could be far greater than we imagined.
In a regulatory filing on Wednesday, AMC Theatres — which is the largest movie theater chain in the world, with over 660 theaters in the US — said that it is “generating effectively no revenue” in the second quarter of the year. Having closed all of its theaters when the virus made its way through Europe and the US, AMC expects that it lost between $2.1 billion and $2.4 billion in the first quarter. As a result, the chain’s future looks decidedly grim.
“We cannot assure you that our assumptions used to estimate our liquidity requirements will be correct because we have never previously experienced a complete cessation of our operations, and as a consequence, our ability to be predictive is uncertain,” AMC said in the filing. “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.”
But the following line was clearly the most impactful of the entire filing: “Due to these factors, substantial doubt exists about our ability to continue as a going concern for a reasonable period of time.”
With a cash balance of $718.3 million as of April, AMC believes that it has the resources “to reopen our theatres and resume our operations this summer or later,” but the timing of that resumption, the timing of movie releases, and the company’s ability to generate revenues will be key to determining AMC’s future.
Put simply, there are many factors that will decide whether or not AMC Theatres ever looks anything like it did six months ago or even exists at all, and AMC Theatres has little to no control over any of them. All of the year’s biggest blockbusters have already been delayed to later in the summer or to the fall, starting with Tenet and Mulan in July. If the release dates of these movies are pushed back further due to theaters remaining closed or a lack of demand as Americans and Europeans continue to avoid enclosed spaces, AMC might be in real trouble.