AMC, Cinemark won't close theaters even as blockbusters flee 2020

Key Points
  • AMC says that 80% of its U.S.-based theaters are open and it doesn't plan to shutter them, even as competitors announce temporary closures.
  • Cinemark also is operating 80% of its U.S. theaters and there are no plans to close. 
  • Big blockbusters like "Dune" and "The Batman" were pushed from the calendar on Monday.
  • Major theater chains are still waiting on California and New York legislators to allow more theaters to reopen.

In this article

AMC multiplex movie theater.
NicolasMcComber | Getty Images

AMC Theatres, the largest cinema chain in the U.S., and rival Cinemark said they have no plans to shutter theaters even as additional Hollywood blockbusters postpone their release dates to next year.

Early Tuesday, both chains said that 80% of their U.S.-based locations are open to the public and will remain so in spite of daunting headwinds.

Shares of AMC were down more than 1% on Tuesday afternoon, while Cinemark shares were up more than 3%. AMC's stock, which has a market value of around $450 million, has plunged 43% so far this year. Cinemark's market value is $980 million and has seen its shares fall nearly 75% since January.

The announcement comes after Cineworld said Monday that it would temporarily shutter all of its U.S. and U.K. locations due to disappointing box-office results and the postponement of films like "Black Widow," "Wonder Woman 1984" and "No Time to Die."

Total box-office receipts for the most recent weekend were just over 6% of last year's levels, Jeff Bock, senior box-office analyst at Exhibitor Relations, reported.

With 500 fewer theaters open in the U.S., Warner Bros. postponed a number of its big-budget features including "Dune," "The Batman" and its new "Matrix" film

Theater chains are waiting for New York and California to allow more locations to reopen. Spikes in coronavirus cases in those states have led lawmakers to slow down reopening plans and place steep caps on attendance for locations that are permitted to restart.

"Some of our best partners like Disney, with its much anticipated 'Soul,' and Universal with 'The Croods: A New Age,' have new movies scheduled for theatrical release over the next month and a half," AMC CEO Adam Aron said in a statement.

While Universal's sequel to "The Croods" may remain in theaters, due to the studio's new video on-demand agreement with AMC, it's very likely that Disney will uproot "Soul" from the calendar in favor of a later theatrical release or a push to its own streaming service, Disney+.

Movie theater chains are looking for new ways to earn money during the coronavirus pandemic. AMC, in particular, has been challenged by the more than $4.75 billion in debt it amassed before the crisis from outfitting its theaters with luxury seating and from buying competitors such as Carmike and Odeon. 

In June, the company acknowledged that the coronavirus could push it into bankruptcy. AMC was able to close a debt deal in July to make itself solvent through 2021.

On Friday, S&P Global Ratings lowered its issuer credit rating on AMC from CCC+ to CCC-, saying that the cinema chain could run out of liquidity over the next six months unless it raises additional capital or movie attendance levels substantially improve.

AMC is hoping that the deal it struck with Universal in July, which allows Universal to play a movie for as little as 17 days in theaters before being permitted to release it on premium video on demand, will offset some of its losses. AMC gets a cut of revenue streams from those PVOD sales.

The expectation is that Universal will tap into this deal with its second "Croods" film, due out on Thanksgiving. That would allow Universal to bring the film to the home market just ahead of the winter holidays.

Cinemark, on the other hand, is leaning into private theater rentals to boost revenue. Before the Covid-19 outbreak, renting a theater could cost $250 to $500, depending on the size of the auditorium. Now, rentals cost between $99 and $175. 

"Cinemark's reopening plan was designed with multiple contingencies in place to ensure we are able to be nimble and react as needed to this ever-changing environment," the company said in a statement. 

Disclosure: Comcast is the parent company of NBCUniversal and CNBC.

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