With a complete lack of major new releases coming to theaters over the next couple months, and potentially through the rest of the year, the movie theater industry is in trouble. Cineworld just closed all of their Regal Cinemas locations in the United States (with the exception of a handful of key locations in California) last week because of how many blockbusters shifted to 2021, but AMC Theatres, along with Cinemark, pledged to stay open, but it doesn’t mean they’re in a good position at all.
AMC Theatres has revealed that if things don’t improve in the near future, they might be out of cash by the end of 2020 or sometime in early 2021. They’re not the only ones in imminent danger either, because B&B Theatres, the sixth largest cinema chain in the U.S., has announced that they’re months away from filing for bankruptcy protection if nothing changes. Needless to say, this is bad news.
Deadline has the latest troubling update on the state of AMC Theatres. The company’s SEC filing explains the precarious situation that they find themselves in. The company states:
“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.”
AMC Theatres isn’t going through cash any faster than they anticipated, but they’re not bringing in as much money as they were hoping for when movie theaters reopened. That’s due to both decreased attendance from audiences and a lack of new movies to draw them back in. One might say that the latter caused the former, but the release of Christopher Nolan’s Tenet seems to have proved otherwise. Though one does wonder if a movie like Black Widow or Wonder Woman 1984 might have fared better.
AMC Theatres notes that they “will require additional sources of liquidity or increases in attendance levels” in order to avoid running out of cash sooner than later. The company notes that their survival is dependent on a variety of other factors including “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.”
Over the summer, AMC Theatres had some major debt restructuring, and they brought in several hundred million dollars in cash along with negotiating reduced interest payments and extended maturities on loans. But since the situation with the coronavirus pandemic hasn’t improved much, neither has the resurgence of movie theaters. So now they’re looking at more debt and equity financing to stay afloat, and they’ll go back to the table with landlords to figure out what can be done about their lease payments. Apparently, they’re even considering striking arrangements with existing business partners and possibly even becoming a joint-venture by bringing in another company to help them out.
Even though a lot of moviegoers are still leery about returning to theaters in general, AMC Theatres recently decided to follow in the footsteps of Cinemark by offering private theater rental for a bargain price. AMC will now let you watch recent theatrical releases and older favorite with your own private group of friends, starting at $99.
But even so, AMC Theatres is essentially on life support, and they’re hoping for a miracle. And they’re not the only ones.
CNBC has learned that B&B Theatres, the sixth-largest movie theater chain in the United States, may be forced to file for bankruptcy if the current environment doesn’t improve. This is a company that’s been operating for nearly 100 years, and the coronavirus pandemic is on the verge of shutting them down.
B&B Theatres has 48 movie theaters in eight states, and they’ve been unable to pay full rent for them. Plus, after a majority of their locations were closed from March through August, they had to spend hundreds of thousands of dollars to repair projectors after they were unused for that entire time. Brock Bagby, an executive vice president at B&B Theatres and part of the fourth generation of his family to operate the theater, said:
“We are probably a few months out if nothing changes. If we run the course that we are running now, we are probably a few months out. It’s bad.”
This is a family business. Bob Bagby is the CEO, and his siblings Bobbie Bagby Ford and Brittanie Bagby Baker also have executive vice president roles alongside his son Brock. So you can see where the B&B name comes from.
B&B Theatres has been working with the National Association of Theatre Owners to plead their case to the government in order to receive some level of financial assistance in order to survive this economic downturn brought on by the coronavirus pandemic. But NATO sounds desperate too. Esther Baruh, director of government relations for NATO, said:
“The stark reality is that many movie theaters will not be able to open again if they don’t receive government help. This is as urgent as it gets. The exhibition industry thrived before this pandemic and it will thrive again, but theaters and their employees need a bridge to get them to that point.”
If things don’t improve, NATO estimates that 69% of small and mid-sized cinema companies would be forced to file for bankruptcy or close permanently. And that will be a crushing blow to the movie theater industry, and it could end up hurting studios too, giving them fewer theaters for their movies to play in. Sure, movie studios could buy some of those movie theaters, but we’ve already talked about why that’s not a best-case scenario. That’s why some of the biggest filmmakers in the business are also pleading to the government for help.
A big part of the blame for the lack of a bigger box office is the fact that New York and California haven’t allowed most movie theaters to open yet. With New York City and Los Angeles driving box office in those states, they make up 21.5% of the total box office in the United States. But even when you take that into account, the rest of the country’s box office still isn’t doing nearly as well as it needs to be in order to save movie theaters.
This sounds like the beginning of the end for the movie theater industry as we know it. Though movie theaters won’t disappear completely, this will cripple them for a long time unless something changes soon.