AMC says it's running out of cash
AMC, the largest movie exhibitor in North America, said in a regulatory filing Tuesday that given its current cash burn-rate, its existing resources may run out by year's end.
Why it matters: The theater chain warned investors in July that it may not survive the pandemic. The company reopened most of its theaters in August, but with studios delaying major blockbusters, attendance has been abysmal.
Details: While AMC has reopened most of its U.S. theaters, it says it's operating most at 20%–40% of seating capacity.
- As of Oct. 9, the company resumed operations at 494 of its 598 theaters. Since then, AMC says it has only sold about 2.2 million tickets — an 85% decline from this time last year.
- For the remaining theaters that have yet to reopen in states including California, New York, Maryland and Washington, AMC says the company is in touch with local governments, but it remains unclear when reopening will happen.
Be smart: AMC says it has two options moving forward: Borrow more cash or sell more tickets, neither of which will be easy.
- Most Hollywood studios have moved their blockbusters off the release schedule for the remainder of the year and well into 2021.
- To boost cash flow, the company says it's exploring a few options, including further negotiations with landlords regarding lease payments, striking joint use agreements with business partners and even potential asset sales.
- But the theater chain warned that even these options come with risk, and they may not be enough to provide the company with the liquidity it needs to survive the pandemic long term.
The big picture: The movie industry has been crushed by the pandemic, and recent events suggest it's not going to get better anytime soon.
- Cineworld, the parent company of Regal Cinemas, last week said it would temporarily close all of its 663 theaters in the U.S. and U.K.
- In doing so, it noted that movie studios weren't sending enough of its biggest films to theaters to lure consumers.
- Several movie delays have been announced over the past several weeks, including MGM's latest James Bond movie, Warner Bros. "Dunes" and "Wonder Woman 1984."
What's next: AMC says for now it remains committed to staying open.