Entertainment

AMC CEO says reopening New York theaters is 'a monumental step forward' for battered industry

Key Points
  • New York Gov. Andrew Cuomo said most of the state's movie theaters could reopen, except for those in New York City.
  • The announcement was applauded by cinema owners and likely means that major tentpole films planned for later this year will maintain their release dates.
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AMC Entertainment CEO Adam Aron on reopening plan

Movie theaters, thrashed by the pandemic, received some hope after New York Gov. Andrew Cuomo announced they could start to reopen on Oct. 23.

The reopening does not include movie theaters in New York City, but the gesture boosted AMC Entertainment's stock 17% in early trading Monday. Cinemark was up around 11% and Marcus Theatres hovered around 2.5% higher.

"The news from Governor Cuomo on Saturday was a monumental step forward for the cinema industry," AMC CEO Adam Aron said Monday on CNBC's "Squawk Box."

New York is an important market for movies. While it accounts for only around 6% of total ticket sales, it's a symbolic entertainment hub. Movies that perform well in New York can generate buzz and help sell tickets in other parts of the country. With its theaters closed to the public, studios told cinema owners that they would not release major blockbusters.

"AMC has been able to open our theaters across the country," Aron said. "Now that we can open in New York, New York state first, but that means New York City is right behind. That also means that the Christmas movies are going to hold."

Theater owners are hoping "Wonder Woman 1984" will remain on the calendar for Christmas Day. The Warner Bros.' movie is one of only three major releases set for the rest of 2020,. The others are Universal's "The Croods: A New Age" on Thanksgiving and 20th Century's "Free Guy" in early December.

Theater operators are cautiously optimistic that the debuts of these films won't move into 2021 but want guarantees from studios. They already have ramped up safety measures and marketing spending, only to see films get pushed to a new release date.

New content is vital to theater chains big and small. Without new movies, people are less inclined to venture out to cinemas. Aron equated the scenario to being a new car dealer without any new cars to sell.

Over the weekend, Liam Neeson's newest film "Honest Thief" hauled in $3.7 million in North American ticket sales, making it the number one film at the box office. For comparison, this time last year, Disney release "Maleficent: Mistress of Evil" tallied more than 10 times that amount.

"Like the airline industry, we're doing a fraction of what we did a year ago, but the question is not what we were doing yesterday, it's what will we be doing over the next three, six, nine months," he said. "I think finally with New York open, we can say our future is bright again."

This is particularly good news for AMC, which only last week warned investors that a combination of lackluster attendance and limited new movies has left it in dire need of financial assistance. The company has said it could run out of cash by early next year unless its circumstances change.

The world's largest cinema chain has been fundraising for months and has already renegotiated its debt earlier this year to improve its balance sheet. According to a filing with the Securities and Exchange Commission last week, AMC is exploring a number of ways of acquiring additional sources of liquidity.

It is also trying to figure out ways to increase attendance levels, which have fallen 76% compared with last year.

The company's stock, which has a market value of $332 million, has plunged nearly 60% this year.

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