AMC is heading for bankruptcy, but that may not… | Little White Lies

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AMC is head­ing for bank­rupt­cy, but that may not spell the end

10 Apr 2020

Words by Charles Bramesco

Large red illuminated AMC cinema sign above entrance with text "Moviewatcher.com Our Top Choices", people entering and exiting the cinema.
Large red illuminated AMC cinema sign above entrance with text "Moviewatcher.com Our Top Choices", people entering and exiting the cinema.
Though the US cin­e­ma chain has hit dire straits, the sky hasn’t begun falling yet.

Amidst the assort­ment of pan­ic-induc­ing sur­pris­es held by each new day in these hec­tic times of coro­n­avirus, Vari­ety con­tributed to the over­all impres­sion that the world is crum­bling with a stop-in-your-tracks head­line yes­ter­day: AMC The­atres Bank­rupt­cy Like­ly, Ana­lysts Say.” For those UK read­ers unfa­mil­iar with the brand, the AMC chain runs the major­i­ty of mul­ti­plex­es in Amer­i­ca with near­ly 700 brick-and-mor­tar movie hous­es through­out the States, though any­one with a good sense of con­text clues can intu­it that this spells bad news.

The arti­cle lays out the dis­mal finances of the cor­po­ra­tion, which has ground to a zero-prof­it stand­still as the pan­dem­ic threat shuts down movie the­aters world­wide. With a burn rate of $155 mil­lion per month – all those cen­tral­ly-locat­ed rents can’t be cheap – the arti­cle pre­dicts that they’ll exhaust their cash and cred­it by June or July, at which point bank­rupt­cy will be the only option.

But declar­ing bank­rupt­cy does not nec­es­sar­i­ly spell the end, nor an auto­mat­ic reset. Reor­ga­ni­za­tion,” a sin­is­ter bit of cor­po­rate jar­gon, will be the name of the game; a wave of new tem­po­rary loans would the­o­ret­i­cal­ly keep the busi­ness alive until it can start gen­er­at­ing mon­ey again, pos­si­bly with a hand­ful of the­aters shut down to low­er their over­head spend­ing. The like­li­hood of AMC going ful­ly kaput remains slim, though in that event, the spaces would most like­ly get bought by their pri­ma­ry com­peti­tor Regal as their own­er in the UK Cineworld angles to consolidate.

To the aver­age con­sumer, all this behind-the-scenes indus­try talk might not mean much, but its rever­ber­a­tions will undoubt­ed­ly be felt in the months and years to come. It won’t be the night­mare sce­nario of a nation strewn with defunct cin­e­mas as stream­ing final­ly gets exhi­bi­tion in a stran­gle­hold, but con­di­tions will get harsh­er and less hospitable.

Even before the econ­o­my went into a nose­dive, AMC was oper­at­ing with an indus­try-high debt of $4.75 bil­lion USD, and they’ll have to con­tin­ue everyone’s least favorite trends to sur­vive: ris­ing costs for tick­ets and con­ces­sions, more screens devot­ed to guar­an­teed mon­ey­mak­ers, more con­ver­sions to pre­mi­um-price spe­cial­ty auditoriums.

In times of great cri­sis like this, it’s dif­fi­cult yet vital to cal­i­brate our pes­simism as we aim to pre­pare for the worst with­out slip­ping into pan­ic-mon­ger­ing. Things will get bet­ter, this much is for sure – the film medi­um won’t go down with­out a fight. But the path to its return keeps get­ting longer and more ardu­ous. The time­line for the economy’s recov­ery stretch­es out far past the time­line for beat­ing back the virus, and that one’s still unclear. Lean times lie ahead.

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