AMC Theaters expected to file for bankruptcy

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AMC Theaters expected to file for bankruptcy

Post by Brian Lutz »

https://komonews.com/news/business/amc- ... 9-shutdown

It sounds like they have been on shaky financial ground even before the COVID-19 crisis. With the expectation that movie theaters most likely won't reopen before August, this will likely drive them into bankruptcy.
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Re: AMC Theaters expected to file for bankruptcy

Post by jamcool »

Not one dime for them....they are Chinese owned
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Re: AMC Theaters expected to file for bankruptcy

Post by storewanderer »

This may well be the end for the movie theater business in general. They were already a really rough business to make money in. Too easy to get content to users in other ways, reach more users, albeit at a lower price, but with much less overhead.

I did not know about the ownership of AMC. They don't operate in my area so they were never an option anyway.
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Re: AMC Theaters expected to file for bankruptcy

Post by Knight »

Movie theater chains have struggled in recent years with high admission and concession prices, declining attendances, and seats not being filled. Some will survive if they change their strategies.

AMC Theaters have been in danger for years.
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Re: AMC Theaters expected to file for bankruptcy

Post by reymann »

the movie theater industry is never gonna recover from this, the movie industry is gonna have do something similar to netflix and go digital. people are not going to go to the movie theater with some form of half capacity and social distancing rules remaining in place for the foreseeable future. amc may have to shutter the less profitable theaters and divest the others to another chain like regal.
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Re: AMC Theaters expected to file for bankruptcy

Post by architect »

A big part of the issues which the movie theater industry is facing now can be attributed to industry consolidation in recent years. Up until about 5-10 years ago, there were quite a few different theater chains scattered around the US, some which trended toward large markets (AMC, Cinemark, Regal) and some which trended toward smaller or mid-sized markets (such as Carmike and Wallace). However, with the three major chains buying out the majority of the theater base in the US in an effort to gain more leverage with the movie studios, they have often been left with a substantial amount of dead weight which doesn't fit their business models, primarily theaters which are either outdated or in close proximity to co-owned properties. With the rise of dine-in theaters and recliner seating, the differences between the theater haves and have-nots has become more pronounced, particularly in AMC's case as they have designated their lower-performing or small town theaters under the "AMC Classic" banner and have essentially abandoned them to rot (a decent amount of these are former Carmike locations). Personally, unless if AMC can pull of a miracle bailout, I expect that their intellectual property and high-performing theaters in major cities will be sold as a package to the highest bidder, while many of their lower-tier locations will simply close or may be sold off piecemeal.
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Re: AMC Theaters expected to file for bankruptcy

Post by storewanderer »

The social distancing rules in themselves will doom the movie theaters and turns the entire revenue process upside down for the movie theaters. The way this business works is when a new movie shows up, the studio/producer takes most of the ticket sale amount and the theater is left with almost nothing (though they are told that the increased foot traffic will drive their concession sales). Then the longer the movie is out, the better the "spread" goes where the theater gets to keep more and more of the ticket price. Of course, by the time the spread is favorable to the theater, the showings are unlikely to sell out anyway.

So the goal is to pack the theater on a new release as this creates the maximum revenue opportunity for both the theater and the producer. Social distancing rules will make it so you can no longer "pack the theater" anymore.

Once the social distancing concerns get lifted, there could be an opportunity for smaller theater operators to come back in and take over some of the locations abandoned by the larger chains that may go under in this mess. This would be a good thing.

Many older or small town theaters already closed in the past decade between the last recession and then a few years ago a push for them to upgrade to digital projection systems which many small town theaters simply could not afford to do.
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Re: AMC Theaters expected to file for bankruptcy

Post by arizonaguy »

storewanderer wrote: April 14th, 2020, 10:41 pm The social distancing rules in themselves will doom the movie theaters and turns the entire revenue process upside down for the movie theaters. The way this business works is when a new movie shows up, the studio/producer takes most of the ticket sale amount and the theater is left with almost nothing (though they are told that the increased foot traffic will drive their concession sales). Then the longer the movie is out, the better the "spread" goes where the theater gets to keep more and more of the ticket price. Of course, by the time the spread is favorable to the theater, the showings are unlikely to sell out anyway.

So the goal is to pack the theater on a new release as this creates the maximum revenue opportunity for both the theater and the producer. Social distancing rules will make it so you can no longer "pack the theater" anymore.

Once the social distancing concerns get lifted, there could be an opportunity for smaller theater operators to come back in and take over some of the locations abandoned by the larger chains that may go under in this mess. This would be a good thing.

Many older or small town theaters already closed in the past decade between the last recession and then a few years ago a push for them to upgrade to digital projection systems which many small town theaters simply could not afford to do.
Maybe you can help explain something that has always puzzled me. In the Phoenix area there are 4 chains of what I would consider "traditional" multiplex theaters: Harkins, AMC, Regal, and Cinemark. Harkins is a large local chain (although they have expanded to a few other markets) whereas AMC are the #1, 2, and 3 national chains. However Harkins and AMC are the only 2 that have multiple multiplex locations in the market (each with over a dozen multiplexes). Regal and Cinemark each have 1 theater location (and neither would be considered "prime" real estate). Is there some incentive for Regal and Cinemark to be in the market but have such a limited physical presence? It's clear that neither Regal's or Cinemark's theater in the Phoenix market is a priority for either chain (these are what I'd consider "B list" locations that aren't as nice as the typical AMC or Harkins in the area).

I'd imagine if AMC liquidated Harkins, Regal and Cinemark would probably take over most of their locations (if the industry rebounds) as AMC has some great real estate.

AMC and Harkins seemed to be locked in fierce competition with most locations receiving upgrades like dine-in and/or 100% recliner seating. They only have maybe 1 "low-tier" location in the Phoenix area (a multiplex in Downtown Phoenix in a shopping center that has been rumored for redevelopment for about 10 years). They spent a decent amount of money upgrading the former Carmike location to the standard of the rest of their locations in the area.
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Re: AMC Theaters expected to file for bankruptcy

Post by storewanderer »

arizonaguy wrote: April 15th, 2020, 11:26 pm Maybe you can help explain something that has always puzzled me. In the Phoenix area there are 4 chains of what I would consider "traditional" multiplex theaters: Harkins, AMC, Regal, and Cinemark. Harkins is a large local chain (although they have expanded to a few other markets) whereas AMC are the #1, 2, and 3 national chains. However Harkins and AMC are the only 2 that have multiple multiplex locations in the market (each with over a dozen multiplexes). Regal and Cinemark each have 1 theater location (and neither would be considered "prime" real estate). Is there some incentive for Regal and Cinemark to be in the market but have such a limited physical presence? It's clear that neither Regal's or Cinemark's theater in the Phoenix market is a priority for either chain (these are what I'd consider "B list" locations that aren't as nice as the typical AMC or Harkins in the area).

I'd imagine if AMC liquidated Harkins, Regal and Cinemark would probably take over most of their locations (if the industry rebounds) as AMC has some great real estate.

AMC and Harkins seemed to be locked in fierce competition with many competing locations receiving upgrades like dine-in and/or 100% recliner seating. They only have maybe 2 low-tier locations in the Phoenix area (1 is a former Carmike in a decent location that Harkins, Cinemark, or Regal would probably be interested in and 1 is in Downtown Phoenix in a shopping center that has been rumored for redevelopment for a decade).
How did Regal and Cinemark get those two locations? Were they part of an acquisition? They may be stuck in a lease, hold outs from a previously larger presence, or part of a planned expansion that simply never got off the ground.

There was an odd Regal in a casino up in South Lake Tahoe (Stateline) which was a first run cinema, which they "inherited" from a company called Hollywood (rebranded from Wallace). The casino closed in 2014, so with it went the theater. Many years ago in my market, in the 90's, Wallace had multiple small 2-3 screen type theaters in Carson City, one in Sparks (the $1.50 movie theaters), and one in a Reno casino as well. Wallace was out of Reno/Sparks by the end of the 90's but hung on a lot longer down in Carson City. So it is possible those leftovers in AZ are the final remaining pieces of what was once a larger presence of smaller locations under whoever they acquired.

In my immediate market (Reno/Sparks) for many years starting in the mid 90's Century had a complete monopoly (then Cinemark) and even kept operating the local drive in to maintain that monopoly. Century over the years was also real good at announcing new locations they planned to open a theater and never opened them, but did buy the real estate, in an effort to maintain the monopoly. A new Regal was built in downtown Reno in the mid 90's as part of a redevelopment that nobody wanted any part of (horrible flop) and Century took it over after a couple years in an effort to protect its monopoly in the market. It is still open and as time has gone on, it actually performs okay. Finally some operator called Galaxy built a big nice new theater in Sparks and that broke the decades long Cinemark monopoly. But, from time to time, Galaxy runs into problems with not getting certain high profile movies upon release because Cinemark will "out bid them" for the movies. More recently, Cinemark closed a theater in downtown Sparks which was part of a redevelopment there, and Galaxy took that over despite that their other location 2 miles away is probably what put Cinemark downtown Sparks out of business. But it gave Galaxy more pull in negotiating with the movie producers to have that additional location.
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Re: AMC Theaters expected to file for bankruptcy

Post by arizonaguy »

storewanderer wrote: April 15th, 2020, 11:58 pm How did Regal and Cinemark get those two locations? Were they part of an acquisition? They may be stuck in a lease, hold outs from a previously larger presence, or part of a planned expansion that simply never got off the ground.
I don't really know the history of the Regal other then it was built and opened around 2001/2002 and was the 1st movie theater in the town of Gilbert. It's in a relatively odd location (at the back corner of a semi developed "mixed use" complex) that also includes a bowling alley (Bowlero) and a few other businesses and restaurants as well as a church. The theater isn't visible from the main road and other than a relatively small sign stating "Regal Cinemas" there isn't really anything else identifying it. It's certainly not a location I could see Harkins or AMC (in prior years) picking up as most of their other locations are visible from major intersections, adjacent to the freeway, or attached to major malls. The Regal in Arizona is none of the above.

The Cinemark has a more interesting history. Harkins Theaters and Century Theaters / Cinemark seemed to have a gentlemen's agreement where Harkins wouldn't open up any theaters in the Tucson area and Century / Cinemark wouldn't open up any theaters in the Phoenix area as Harkins was the dominant owner of movie theaters in the Phoenix market and Century / Cinemark was the dominant chain in Tucson. Harkins decided it wanted to expand to other markets so in 2006/2007 it announced it was building a theater in Tucson (breaking that agreement).

Also in 2006/2007 two different developers and the cities of Mesa and Tempe (adjacent Phoenix suburbs) were building 2 mixed use shopping centers essentially across the freeway from one another (they're less than 2 miles apart). Harkins had committed to the development in Tempe so to retaliate for Harkins entry into Tucson Cinemark committed to the development in Mesa. I assume that if Cinemark didn't commit to that development AMC probably would've opened there instead.

I don't think Cinemark intends to expand in the market (unless AMC liquidates). Their theater probably does okay but the Harkins location is the dominant theater for the trade area. Cinemark only built it because it wanted to show that it was committed to protecting its cash cow in the Tucson market. AMC, incidentally, opened up a theater in the old Harkins theater in downtown Tempe that was vacated when the newer theater opened in 2007.
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