AMC CEO Says Theater Competitors ‘Run With Vapors’ And Can Buy Locations ‘For Cheap’


AMC (AMC) CEO Adam Aron is preparing for a shopping spree if struggling theater operators start selling their locations amid financial difficulties.

“I think we’ll have the opportunity to buy theaters cheaply and pick some very high quality theaters and some potentially very profitable theaters,” Aron said on Yahoo Finance Live (video above). “Right now, because of the unique position we’re in, the fact that we have cash and a lot of our competitors don’t, I think we’re going to be able to find more really nice pitches and doing it in the basement. prices.”

Theaters have tried a range of strategies to re-engage customers after pandemic shutdowns and an increase in direct-to-consumer entertainment that prompted some studios to release box office titles directly to streaming services such as Netflix (NFLX), HBO Max (WBD), and Disney+ (DIS).

But weak third-quarter box office programming didn’t make this comeback story any easier for the industry, despite Dwayne “The Rock” Johnson’s best efforts in “Black Adam.”

A photograph of a closed movie theater in small town America (Getty Images).

“There are a number of smaller film circuits that are in big trouble because they haven’t raised the kind of money we’ve raised during the pandemic, Aron said. “And they run on fumes.”

In September, Cineworld – the parent company of Cinemark, Regal and Picturehouse theaters – filed for Chapter 11 bankruptcy and launched a “real estate optimization strategy”. The process was launched after lighter-than-expected traffic to its theaters slowed recovery efforts amid the pandemic.

Meanwhile, AMC capitalized on the exposure it received after a short push briefly catapulted the title into January 2021. The theater chain executed equity offerings at a strategic time to raise additional cash. .

“AMC raised a lot of money in 2020 and 2021,” Aron said. “We raised $2.25 billion by selling shares in the market. And so when you look at our cash reserves, at the end of the third quarter we had $900 million in cash.”

Moviegoers purchase automated tickets at an AMC theater in Arcadia, California on August 2, 2017. AMC Entertainment Holdings, the world's largest theater owner, announced a

Moviegoers purchase automated tickets at an AMC movie theater in Arcadia, California on Aug. 2, 2017. (FREDERIC J. BROWN/AFP via Getty Images)

Nonetheless, the CEO’s willingness to spend on theater locations is offset by AMC’s own closings of underperforming theaters. Since the start of the pandemic, AMC has reduced its footprint by a total of 57 sites, closing 106 sites and opening 49 new sites.

That hasn’t deterred Aron, who sees a connection point for moviegoers returning to the theater experience as well as a broader addressable market through new investments, including a mining company, AMC-branded credit cards and a recent partnership with Zoom (ZM).

“We think this is going to be a real boost for our meetings business,” Aron said of the company’s Zoom Rooms partnership, adding, “It’s next to come after our investment last winter in Hycroft, Nevada’s gold and silver mine.

Brad Smith is a Presenter at Yahoo Finance. Follow him on Twitter @thebradsmith.

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