Nation's Largest Theater Chain Braces for the Worst: Shares Plummet After Nasty Forecast
There is going to be a very difficult, very somber conversation about what Hollywood and the film industry will look like in the near future — and that conversation may be faster approaching than Tinseltown would ever like to admit.
At nearly every step of making a movie, Hollywood is grappling with one issue or another.
Take, for instance, the rather important step of movie distribution.
In short: It’s not going well.
AMC Entertainment, which oversees the largest movie chain in America, saw its stock plunge on Thursday, following some less-than-glamorous announcements, according to Deadline.
AMC stocks fell a painful 16 percent after the company announced that it was exploring the possibility of selling $250 million in stock to address crippling debt.
Why sell so much debt? Because of poor financial management and poorer box office returns.
Per Deadline, AMC’s untenable pre-COVID expansion left the expansive theater chain in an already precarious position.
Couple that poor financial management with a lack of cash flow from a soft box office, and you have a recipe for disaster.
(And yes, selling off hundreds of millions of dollars of your own stock to address debt is an unequivocal disaster.)
Perhaps the most haunting part of all this is that there doesn’t appear to be any sort of a fix looming.
First of all, the luster of the movie-going experience seems greatly diminished, at least among American adults.
According to a March IndieWire poll, two-thirds of American adults preferred watching movies at home (via streaming) to going in-person to the movies.
Calling that growing sentiment an existential crisis for movie theaters would be an understatement.
Second, if 2023 was any indication, those soft box office returns aren’t getting any firmer.
If anything, studios appear to be wising up to the perils of massive budgets in movies. AAA budgets need AAA box office returns, and that’s clearly becoming a riskier and riskier proposition with moviegoers opting to stay home.
In lieu of that, studios seem more open to mid-sized movies — and budgets. But mid-sized movies and budgets require smaller fan turnout, which is something that won’t be aiding the soft box office.
So between dwindling public interest and dwindling box office return needs, there is no clear path back to profitability for AMC.
Well, no clear path that won’t include selling off even more millions of dollars of their own stocks, which seems like a worst-case scenario for the massive theater chain.
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