It was never going to be an easy year for the cinema industry, but despite predictably poor earnings results, AMC might have some hope.
Is cinema dead?
That’s the question everyone’s asking, and while COVID-19 makes its future seem pretty bleak, perhaps AMC (NYSE: AMC) can shed some light on, well, keeping the lights on…
Can cinema be saved?
When it’s not a “YOLO” meme stock, AMC is managing to survive the industry’s worst-ever crisis, as evidenced by its Q4 results:
- Revenue of $162.5 million and losses per share of $3.15 — both exceeding expectations.
- It secured $1 billion+ in concessions from creditors and raised more than $80 million in asset sales.
- 90% of its theaters have now reopened.
On top of this, AMC is the only cinema that’s embracing the new straight-to-stream business model that many services are providing, being the only major national theater showing Disney’s animated ‘Raya and the Last Dragon’ last weekend.
And now, the cherry on top for AMC: they have made a deal with WarnerMedia for the upcoming year — the only major chain to do so. During its earnings call, AMC Chief Executive Adam Aron gave a shout out to several incoming Warner movies, followed by:
“You should probably assume that if we’re playing Warner movies, we came to agreement with Warner that any changes in their strategy are being done in ways where AMC shareholders benefit as opposed to are being penalized.”
Cinema is in trouble, no doubt about it, but AMC is taking decisive steps to ensure its longevity at a time where those left in the industry will likely succumb to Darwinian principles where only the smartest and fastest survive.
With the industry in decline, one big winner could lap up the market share left behind by the losers, and by making peace with streamers and adapting, AMC is proving that it is the fastest, and probably the smartest.
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