AMC Theatres May Be In BIG Trouble After The COVID-19 Pandemic

Photo by Denise Jans on Unsplash

Photo by Denise Jans on Unsplash

Is AMC Theatres in big trouble?

In case it hasn’t been clear from the past month or so of constant news…things are bad. Real bad. Studios are losing hundreds of millions of dollars, but as they lose money, they aren’t even the ones being hit the worst. At the end of the day, if worse came to worst, they could always pivot. They could release on VOD or their respective streaming services. In essence, they have alternate ways of making money. Theaters do NOT have that same luxury.

We knew going into this thing that there would be smaller theaters that wouldn’t be able to survive. I figured the bigger chains would suffer, but I never thought there’d be a possibility they’d collapse altogether. Unfortunately, that may be a possibility. In a note on Thursday, S&P analysts wrote the following in regards to AMC Theatres.

“While there is a high degree of uncertainty about the rate of the coronavirus’ spread and when the pandemic will peak, some government authorities estimate that the peak will occur between June and August,” they wrote. “We expect AMC Entertainment Holdings Inc.’s (AMC) theaters will remain closed beyond June due to the impact of the global coronavirus pandemic. We do not believe AMC has sufficient sources of liquidity to cover its expected negative cash flows past mid-summer, and we believe the company will likely breach its 6x net senior secured leverage covenant when tested on Sept. 30, 2020, absent a waiver from its lenders.”

And AMC’s problems came long before the pandemic. Last year, the chain reported a $5 billion-plus deficit. They lost $149 million that year, which is a stark contrast to the $110 million they made in profit in 2018. 

RELATED – Is The End Of Theaters Nigh?

“Even after significantly lowering its fixed costs and capital spending requirements, we only expect the company’s liquidity sources to last through mid-summer and are revising our assessment of AMC’s liquidity to weak” analysts wrote. “The company will likely pursue incremental financing through the CARES act or its lenders, but it is unclear when or if it will be able to secure additional liquidity.

“While unlikely, we could raise the rating if AMC were able to secure additional liquidity without further burdening its capital structure and if we expected the company would be able to generate substantial cash flow in 2021,” they continued. “This would likely require conclusive knowledge about the length of the theater closures and a view that the box office would return to normalized levels in 2021.”

While things aren’t looking good, you never know how it will all shake out in the world of business. After this pandemic runs its course, audiences may very well want to run out to the theaters in droves. I know some folks have expressed their thoughts that this would, in fact, be the case. But, until then, it seems increasingly unlikely that that will be the case. Will AMC Theatres actually be able to survive? 

That’s hard to say. Regardless, it does seem like theaters will remain closed for a while even past June.

Do you think AMC Theatres will survive this rough time? Let us know your thoughts down below!

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SOURCE: TheWrap, Deadline

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Joseph Jammer Medina

Joseph Jammer Medina is an author, podcaster, and contributor at LRM Online. A graduate of Chapman University's Dodge College of Film and Television, Jammer's always had a craving for stories. From movies, television, and web content to books, anime, and manga, he's always been something of a story junkie.

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