The global lockdowns have certainly had a profound effect on the international economic landscape. Unsurprisingly, some industries have been harder hit than others, with travel and recreational pursuits taking possibly the hardest hit of all. For movie theaters, which weren’t always doing all that well even in the pre-COVID business world, recent losses have reached staggering proportions. We’ve now heard that giant exhibitor AMC entertainment is looking to reopen theaters come July-so BLAKE & WANG P.A, as one of the top entertainment law firms Los Angeles has, are taking a closer look.
Staggering first-quarter losses-and a remarkable turnaround
We certainly can’t debate that they need to kick start revenue generation. From a mere $130million in the red last year, we’ve seen AMC Entertainment losses drop to $2.18 billion through the first quarter (and the COVID crisis). This amounts to a 22% drop in revenue when compared with the same quarter last year. Free cash flow plummeted to $275 million in the negative. The declared adjusted net loss is $231 million. In its centenary year, those results are both sobering and straight-up depressing.
Nor is that the only hit they’ve taken recently. Wall Street has continually lost faith, expecting a Chapter 11 bankruptcy at any moment. Moody’s and S&P have downgraded them, and S&P has even accused their ‘distressed debt swap’ of being a veiled default.
Yet despite this bad news, we’ve seen a remarkable plan of action rolled out. From renegotiating with landlords to have first quarter rents forgiven, to other sweeping talks with stakeholders, no one can accuse AMC of slacking. The plan they’ve rolled out seems quite formidable-on paper, at least.
Theatres set to reopen in July
As it stands now, and with that hard work done, AMC plans to reopen almost every U.K and U.S theatre from July, in time to showcase Warner Bros’ release of Christopher Nolan’s Tenet. An ambitious lineup follows, with Disney’s Mulan (July 24th),Unhinged, Saint Maud, Antebellum, Sponge bob Square Pants, Wonder Women 1984, A Quiet Place II and Black Widow all scheduled, amongst others.
This is in addition to 10 theatres already reopened in areas of the EU and plans to reopen globally by July.
But what about the ongoing public health crisis? That has been covered by the plan too. They have made promises to:
●Carefully coordinate their openings with national and international officials
●Use guidance from former and current Harvard University School of Public Health faculty to shape a safe environment for staff and guests. This is supplemented by a partnership with the Clorox Company.
●Use both guest health education and ‘aggressive marketing communications and promotional activity’ to ‘jumpstart’ consumer demand and bolster trust.
Will it be enough to get the fabled ‘bums on seats’? We shall have to see. AMC Entertainment certainly has high hopes of it being enough, pointing to pre-COVID February revenue increases as a baseline to believe the movie theater industry can be revived from its current slump. This mass turn-around and wide-spread salvage strategy has certainly affected the share price for AMC, boosting it from the lows it had sunk to after the ratings downgrade.
When these announcements were made via conference call earlier this week, the incumbent CEO ended with the lines “We will do everything in our power to make sure that this company thrives and prospers. With that, see you at the movies.” While this probably won’t be a blockbuster summer for going to the movies, AMC Entertainment has certainly tried their hardest to avoid becoming as redundant as the Blockbuster rental chains once did. We can only hope public buy-in is strong enough to show results.
If you’re looking to keep up-to-date with the constantly shifting goalposts COVID-19 has dumped on the TV and film industry, look no further than BLAKE & WANG P.A, one of the best entertainment law firms San Francisco has to offer. We always have our fingers on the pulse of new developments, so rest assured we have the knowledge to help you position yourself in this novel landscape.
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