AMC Theatres, the largest movie theater chain in the U.S., is in a dire situation. The company has confirmed that they are likely going to run out of money by early 2021. This affirms what analysts have been predicting and, barring an unforeseen turnaround at the box office, the chain could find itself in a financial downfall in the coming months.
According to a recent SEC Filming, AMC says that it expects to burn through all of its cash within the next several months. The blame was placed on a lack of big new movies coming down the pipeline, coupled with the extended shutdown earlier in the year. The filming, in part, reads as follows.
"Given the reduced movie slate for the fourth quarter, in the absence of significant increases in attendance from current levels or incremental sources of liquidity, at the existing cash burn rate, the Company anticipates that existing cash resources would be largely depleted by the end of 2020 or early 2021. Thereafter, to meet its obligations as they become due, the Company will require additional sources of liquidity or increases in attendance levels. The required amounts of additional liquidity are expected to be material."
Tenet didn't reignite the box office in the way many in the movie business had hoped. Remarkably, AMC is losing more money by having many of its theaters open than they would by keeping them closed. The chain has opened 494 of its 598 locations. But that is with a heavily reduced capacity, with theaters in New York and Los Angeles, two of the biggest moviegoing markets, still closed. The company is exploring further options to gain some liquidity, such is selling assets or possible joint ventures. But AMC warned in the filing these measures may not be enough.
"There is a significant risk that these potential sources of liquidity will not be realized or that they will be insufficient to generate the material amounts of additional liquidity that would be required until the company is able to achieve more normalized levels of operating revenues."
The sharp decline in box office dollars in 2020 has ravaged the exhibition business. Cineworld, which owns Regal in the U.S., recently closed all of its theaters again indefinitely. Meanwhile, prominent filmmakers have been lobbying the federal government to get movie theaters financial assistance. AMC, in the filming, explained what is contributing to the current rate of cash burn.
"The timing of resumption of theatre operations, including with respect to some of our most productive theatres which remain closed, the timing of movie releases and the slate of future releases, theatre attendance levels, landlord negotiations and minimum lease payments, costs associated with the AMC Safe and Clean initiative, and food and beverage receipts."
The only major movies left on the calendar for 2020 are The Croods 2, Free Guy, Death on the Nile and Wonder Woman 1984. Paramount recently sold Coming 2 America to Amazon, which sent yet another big release straight to streaming. We'll be sure to keep you posted as the situation unfolds. This news was previously reported by Deadline.