Movie theater chain AMC Entertainment (NYSE:AMC) is facing many important questions these days. When can the theaters open back up again? How long will the company's cash last in this zero-revenue situation? Will AMC's landlords forgive any part of the company's lease payments for the business-less period?
All of these questions are essential to AMC and its investors, and I'm really just scratching the surface of AMC's woes here, but all of this really boils down to a single query at the end of the day. If AMC doesn't have a grip on this crucial detail by the fall equinox, I don't see how it can stay in business. What am I talking about? Here it is:
If you build it, will they come?
Very funny, Anders. What do you mean?
You can approach that simple question from a couple of different angles.
- Will audiences be ready to return to movie theaters when AMC cuts the reopening ribbon?
- Will Hollywood send in fresh reels to the cinema when the doors reopen?
- Will the combination of fresh content and returning viewers be enough to sustain AMC's business?
For the audience-focused form of my question, AMC stands a decent chance at filling its theaters to the reduced levels allowed under social distancing guidelines. Movie theaters opening back up in China have been selling out their reduced theater seats, for example. It's far from a simple return to normal operations, though. In Spain, theaters reopened in June but closed their doors again as the second wave of coronavirus infections hit the country in July. That's a realistic plotline for the American market, too. Many states are still struggling to control the first COVID-19 wave, and I'm not at all sure that we're ready for crowded movie theaters anytime soon.
And that's why leading movie studios are rethinking their premiere dates.
Walt Disney (NYSE:DIS) has moved all of its expected fall and winter premieres to 2021 and beyond, including eyeball magnets like the live-action Mulan remake as well as planned sequels in the Avatar and Star Wars franchises. The next phase of the Marvel saga has also been pushed out, affecting at least two highly anticipated titles.
The House of Mouse does not stand alone in these difficult decisions. Viacom (NASDAQ:VIAC) subsidiary Paramount Pictures kicked A Quiet Place 2 into the spring of 2021 and Top Gun: Maverick into next summer's tentatively scheduled blockbuster season. The Top Gun title was supposed to take audiences by storm over the holidays and John Krasinski's heartfelt horror series was just about to hit the silver screen when COVID-19 shut down the theaters in March.
In other words, I'm not convinced that AMC will have a whole lot of new content to show if and when it opens up theaters this fall.
The chain currently advertises August and September opening dates for a handful of fairly big names. Disney's superhero romp in the X-Men world, The New Mutants, is currently slated to hit the screen on Aug. 28. Indie film Unhinged, starring Oscar winner Russell Crowe, explicitly wants to be among the first films in reopened theaters on August 21. Christopher Nolan's Tenet is now expected to premiere on American screens on Labor Day weekend, following an international debut on Aug. 26. AT&T (NYSE:T) studio Warner Bros. has delayed that potential blockbuster several times, so let's see if this schedule will stick.
I suppose AMC could keep audiences entertained with a handpicked selection of classic titles for years long past, but the novelty of watching something like Jerry Maguire, Field of Dreams, or the original Avatar in a half-empty theater should wear off quickly. AMC needs fresh content to stay in business, and there's not a whole lot of that heading for theaters in 2020.
So there you have it, AMC. Pushing a quick reopening date before audiences and studios are ready doesn't look like an effective lifeline to me. If you build it, will they come?
And will that really be enough?