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Coronavirus Causes AMC, Regal, and Alamo Drafthouse to Close All U.S. Theaters

By Keith Noonan - Mar 17, 2020 at 10:40AM

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The theatrical market is getting crushed this year, and recovery isn't a sure thing.

Leading theater chains are drawing the curtains on theater operations in response to the coronavirus. AMC EntertainmentCineworld Group's Regal Cinemas, and Alamo Drafthouse Cinemas have closed all U.S. movie theaters, and it's unclear when their respective businesses might reopen. 

The theater closure announcements follow actions by California and New York state governments to implement mandatory theater shutdowns. With the CDC advising against hosting or attending gatherings of more than 50 people, it's likely that most U.S. theaters currently remaining in operation will close as well -- either by way of proactive decisions by their operators or by government mandate. 

Empty theater seats.

Image source: Getty Images.

What does it mean for theaters and the entertainment industry?

With a much smaller selection of blockbuster franchise films set for release compared to last year, 2020 was already primed to be a down year for the movie theater industry. However, concerns related to COVID-19 and efforts needed to stem the novel coronavirus' spread have drastically altered the outlook for the space. 

Major chains like AMC and Regal were already struggling due to increased competition from streaming video, alternative entertainment options including video games and social media, and heightened leverage being exercised by film companies like Disney (DIS 3.33%). There are now concerns within in the movie theater industry that lasting effects from the coronavirus could accelerate the decline of the theater model even after immediate challenges presented by the virus begin to diminish.  

Companies with sizable film production businesses including Disney, AT&T, Comcast, and Lions Gate are also feeling the squeeze. Many leading film companies now have streaming-video offerings, but theatrical distribution is still crucial to the movie industry, and it's possible that film producers and theaters could form less adversarial relations to help support the theatrical distribution model.

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Stocks Mentioned

AMC Entertainment Holdings, Inc. Stock Quote
AMC Entertainment Holdings, Inc.
AMC
$11.58 (-3.74%) $0.45
AT&T Inc. Stock Quote
AT&T Inc.
T
$20.74 (1.67%) $0.34
The Walt Disney Company Stock Quote
The Walt Disney Company
DIS
$105.83 (3.33%) $3.41
Comcast Corporation Stock Quote
Comcast Corporation
CMCSA
$42.88 (2.07%) $0.87
Cineworld Group plc Stock Quote
Cineworld Group plc
CINE
$23.46 (2.18%) $0.50
Cineworld Group plc Stock Quote
Cineworld Group plc
CNWGY
$1.20 (0.00%) $0.00

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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