AMC, the company behind the largest chain of cinemas in the U.S. bared priorities and progresses made in navigating toward economic recovery.
Adam Aron, the CEO of AMC Entertainment said the company was able to resume international operations when 37 theaters in 9 countries reopened in June; albeit with limitations on audience capacity. In the U.S., the firm still aims to have at least ⅔ of its theaters back in operation by August, in preparation for the showing of “Tenet on September 03, 2020,” a UK-US collaboration movie, written, produced and directed by Christoper Nolan.
CEO Aron also revealed the extent of the financial damage wrought by the COVID-19. According to Mr. Aron, the closure of its domestic cinemas for two quarters, had sunk overall revenues down to $18.8 million; a measly sum compared to the $1.5 billion earned as of the same period in 2019. AMC shares also took a hit as prices went down by $5.44 per share. The loss actually went beyond Wall Street’s projection of $4.27 loss per share for the cinema-chain giant.
AMC’s Economic Recovery Priorities
AMC’s CEO revealed the three priorities they aim to achieve as they move forward with their economic recovery strategies. The first is to reduce capital and operating expenditures; the second is to strengthen the company’s liquidity and the third is to put into motion their plans for reopening all theaters successfully.
Actually, the reopening strategies started when they resumed operations in international countries last June 30, 2020.
As far as cost reduction is concerned, Mr. Aron said that the company aims to cut down capital and operating expenditures in terms of hundreds of millions of dollars. Presumably, the plans are linked to a recent deal made with Universal Studios to reduce the traditional theatrical window. Although the AMC CEO did not mention the nascent streaming platform that the company launched last October 2019, he mentioned that the cost reduction is in line with their participation in the new film release model.
Back in October 2019, AMC became the first theater chain to join the streaming industry when it launched a streaming services platform called “AMC Stubs.” The platform immediately signed up more than 20 million households. Through the new film-release model and AMC’s huge chain of theaters, the company will be able to cut down on non-essential costs like promotions, marketing, entertainment and travel.
So far, the company has already taken initial steps in achieving its goal of improving liquidity. AMC recently entered into a restructuring deal with bondholders, which assured them of receiving $300 million in fresh funds.