News was mixed in AMC’s Q4 2020 earnings call–with, naturally, the negative news coming from the effects of Covid-19 upon the theater industry across 2020, and the positive stemming from signs of a global theatrical recovery as we move into Q2 2021.
AMC’s revenue across the entirety of 2020 dipped 77.3 percent from 2019, with Q4 revenues falling 88.8 percent from the same period the prior year. Domestic fourth-quarter attendance fell 92 percent below what it was in 2019, while international attendance over the same period dropped 89 percent. At the same time, 2020’s food and beverage revenue per patron was up more than 22 percent domestically and more than 16 percent (or 10% in constant currency) internationally as compared to 2019. This echoes the experience of Marcus Theatres and Cineplex, which also saw an increase in F&B per caps in 2020 even as admissions declined.
AMC closed out the year with 394 of its 600 (as of EOY 2020) domestic cinemas open at limited capacity, representing approximately 67 percent of its total domestic footprint. Internationally, the end of 2020 saw 30 percent of AMC’s theaters open. While the number AMC locations open internationally remains low moving into March, the result of continued lockdowns in much of Europe, as of March 5 approximately 90 percent of AMC’s domestic theaters are currently in operation.
Among these are 13 AMC theaters in New York City, where cinemas were allowed to reopen for the first time in nearly a year starting March 5. The reopening of New York City, per AMC CEO Adam Aron, “helped drive our weekend attendance a few days ago to be 250% of what it was in the last three weekends January or in the first three weekends of February. New York’s first open weekend gave us, at AMC, our best weekend results standing all the way back to March of 2020.”
With cinemas in New York City and San Francisco recently allowed to reopen, AMC is looking ahead to Los Angeles, where an official announcement about cinema reopening is expected in the coming few days. Noted Aron, “we should be opening our theaters across Southern California, including Los Angeles County, sometime very soon,” possibly as early as March 19. Meanwhile, AMC locations in Alameda County, California are reopening this weekend, on March 12. On the international side, “it’s our current expectation that almost all of our European theaters will, in fact, reopen well in time for the big spate of movie blockbusters that are expected to start getting released in May.”
It’s with these coming late Spring-early Summer blockbusters–paired with the continuing vaccine rollout—that AMC and, indeed the entire theatrical industry, places its hope. Assuming “any semblance of even a partial recovery of movie theater revenues beginning this summer,” said Aron, the approximately $1.1B AMC has on-hand is enough to carry the chain “all the way through the end of 2021 and beyond.”
Part of AMC’s financial strategy in 2020 was to permanently close 60 less-profitable cinemas, 48 in the U.S. and 12 internationally. “Given what our industry has lived through this past year,” Aron said, “our eagerness to continue to operate money-losing theaters is at a very low point of desirability. And so I think [the industry] will be much tougher…. in evaluating the risk that they’re taking and the degree to which they are willing to lease and operate marginal theaters.”
For theaters that do make the cut moving forward, Aron pinpointed some Covid-era innovations that are likely here to stay. This includes private cinema rentals, of which AMC has hosted 115,000 to date, and an increased push towards mobile ordering of tickets and concessions.
Of course, another major change to the industry status quo moving into 2021 has been a change to the windowing model. AMC was an early player here, striking a deal with Universal for a shortened theatrical window for their titles in July 2020. The chain is currently playing Warner Bros. titles despite them going day-and-date on HBO Max, indicating—in Aron’s words—“we came to agreement with Warner that any changes in their strategy are being done in ways where AMC shareholders benefit.”
On the general subject of a changing model of theatrical exclusivity, Aron indicated AMC’s willingness to “engage with every major studio on the same subject,” arguing that, as the world’s largest exhibitor, they have a “legitimate seat at the table” to have windows discussions that don’t leave AMC out in the cold. “Clearly, we need [studios] to exist, but I believe they need us, too… [In] 2019, there was $43 billion of ticket sales generated in movie theaters globally. The Hollywood share of that is a huge number. And I don’t think it’s in their interest to just throw that good money away.”
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