Investors have a lot to choose from when it comes to picking the riskiest propositions for AMC Entertainment (AMC -5.17%).

Is it accepting cryptocurrency as payment or maybe starting its own token? Perhaps it's partnering with fellow meme stock GameStop (GME -19.73%)? Maybe ignoring Wall Street analysts on earnings conference calls in favor of taking questions from small, individual shareholders is beyond the pale? (CEO Adam Aron did take one question from an analyst during the theater operator's third-quarter call the other day.)

I actually think that AMC embracing all those ideas is very shrewd because it needs to continue bringing moviegoers to its theaters if it's ever going to get out of the deep hole it's in. Maintaining a close connection with small investors will undoubtedly help narrow the gap.

Director's board with money stuck inside.

Image source: Getty Images.

Yet, there is a risk associated with acting on every suggestion from your customers. And one of the riskiest suggestions Aron said AMC is considering seems to have been barely covered in the press, even though it threatens to undermine the nascent recovery the theater operator is experiencing in its business.

AMC is thinking about getting back into the content creation business and financially backing movies, which could be exclusive to AMC theaters. But it's a bad idea, just as much as it was the last time AMC did it.

People in theater laughing

Image source: Getty Images.

Lights, camera, action!

Aron told shareholders that raising over $1.2 billion earlier this year gave AMC a lot of options for deploying the capital to regrow the business, one of which could be to make its own movies.

He pointed out that several years ago, AMC had been a 50% owner with Cineworld's (CNNW.F) Regal Entertainment in Open Road Films, a studio that won Academy Awards for best picture and best original screenplay for the 2016 movie Spotlight.

Noting that content creation among media companies is a popular theme these days, Aron mused, "it is interesting to contemplate should AMC fund content? Should AMC fund exclusive content that might only be seen at our own theaters? These are all possibilities, again, possibilities that we'll be exploring in 2022 and beyond."

What he failed to point out, however, was why AMC was no longer a content creator: It lost the theater operator a ton of money.

Movie theater projector.

Image source: Getty Images.

A box office failure 

Open Road Films was launched in 2011 as a joint venture between AMC and Regal. Its first movie was Killer Elite, with Jason Statham and Robert DeNiro, which flopped. It generated around $57 million in worldwide box office receipts on a $70 million budget.

It did better with its next film, the Liam Neeson feature The Grey, which earned almost $80 million globally on a budget of $25 million. However, even after Spotlight's award-winning performance saw it take in just under $100 million at the box office, AMC and Regal could not generate profits.

From the time of the studio's founding until its eventual sale six years later, the theater owners had racked up nearly $100 million in losses between them (AMC's share of the cumulative losses was $43.7 million at the end of 2016), and they were unwilling to dump any additional money into the operation.

Open Road was eventually sold for $28.8 million. AMC received half of that sum in exchange for its 50% stake in the business.

People eating popcorn in a theater.

Image source: Getty Images.

Regaining lost ground

AMC reported that for the first time since the fourth quarter of 2019, virtually all of its 1,000 movie theaters were open and operational, and it was reflected in its results.

Some 40 million moviegoers were entertained in the third quarter, and while revenue of $763 million obviously far outstripped what it generated in 2020, it had nearly climbed back to even with the $797 million it made two years ago.

Yet, it is also still producing significant operating losses, even if they have narrowed considerably to $145 million this year from $675 million a year ago (it only made a $21 million profit in 2019).

Now is not the time to start sinking considerable sums of money into a very difficult business, something Aron already intimately knows.

Bring down the lights

I like that AMC is willing to entertain ideas from its shareholders and to think beyond just the movie screen on ways to improve its position, but being a content creator again could stall the upward momentum it is beginning to see.

The theater operator needs to bring the curtain down on this proposal. It would probably be better off with its other idea of launching its own AMC cryptocurrency.