COVID cases are dropping across the country as more Americans get vaccinated, and industries that were rattled by the pandemic are starting to see the light. Movie theaters, among the hardest hit businesses, are welcoming back viewers, with cinema giant AMC ($AMC) announcing that roughly 527 out of its 589 national theaters are now open. However, only 78 out of its 356 global theaters are open.
This comes a few months after AMC Theatres confirmed in a December SEC filing that the company would be out of cash by January. The ultimatum followed the explosive news that Warner Bros. would release its entire 2021 movie roster on HBO Max the same day they hit theaters. The movie theater industry, which saw ticket revenue fall 75% from 2019, is terrified that at-home premieres will crush what’s left of box offices. AMC sales fell 89% at the end of 2020.
AMC’s bad year
AMC has been crippled perhaps more severely than rivals thanks to a nearly $5 billion pre-pandemic debt load. It racked up the figure over the last five years by outfitting theaters with luxury recliners and acquiring pricey cinema competitors like Odeon and Carmike.
2020 US lockdowns began in the northeast, home to most of AMC’s theaters. The company closed locations accordingly, starting in mid-March, and hemorrhaged $561 million in April, May and June alone, with revenue down 99%.
Back in August and September, AMC began to reopen select theaters in time for blockbuster hopefuls like Disney’s latest X-Men installment and Warner Brothers’ Tenet. AMC sold 15-cent tickets on opening day to attract viewers. Still, the company saw fourth quarter attendance down 92% from 2019. AMC even tried out an “optional mask” policy, but rolled it back within 24 hours after online backlash.
The theater owner watched in horror as Tenet fell flat on Labor Day weekend. While COVID rates were low and theaters were open in 68% of the US, the $200 million film only collected $9.4 million on the first weekend. Within weeks, COVID cases were spiking again, causing several of AMC’s reopened locations to re-close.
Post-vaccine cinema competition
New funding and stir-crazy, vaccinated viewers could begin to offset last year’s losses. Recently, AMC picked up $100 million from investment firm Mudrick Capital Management and private equity firms are circling. Last June, AMC had just one job listing, down from 761 openings in February of 2020. The company has since revamped hiring efforts, now with 459 job listings.
AMC stock has been rebounding, spiking to $19.90 in January, following last year’s $2 lows. But a year’s worth of injury will certainly hinder AMC in the post-vaccine battle for viewers. The company’s Facebook mentions surged in September to almost 200,000 along with theater reopenings. The latest round of reopenings hasn’t seen the same kind of engagement, with just 25,400 mentions on Facebook.
Cinemark ($CNK) is slowly following AMC’s lead, reopening several theaters in California as its stock price rises. Meanwhile, Regal, the second-largest cinema chain, has yet to reopen any of its locations. Cinemark’s rising Facebook mentions, as high as 108,000 in December, reflect viewers ready to return to the silver screen. Regal fans have been quiet, with mentions currently at 4,550.
Cinemark’s revenue fell even further than AMC’s in the third quarter, 96% compared to 91%. However, Cinemark says it has plenty of cash to get through 2021, even with closures and a barren release schedule. Regal “temporarily” shut down all of its 536 cinemas as a cost-cutting measure, furloughing 40,000 employees in early October. While some thought this was a certain death knell, Regal’s parent company has had better luck than AMC, recently scoring a $450 million lifeline loan, plus $750 million in additional liquidity measures.
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