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AMC Theatres May Run Out of Cash, Despite PVOD Deals

Fern Siegel

AMC Theatres is in trouble. The world’s largest movie-theater company has a grim forecast: It’s running out of cash.

And that’s even with its PVOD deal with Universal, which was viewed as an economic lifesaver.

The premium VOD deal it signed in July with Universal, was meant to keep both sides happy. It revamps release times, so a studio can stream movies on PVOD just 17 days after a big-screen debut. In exchange, AMC will share in the revenue. Most movie theaters aren’t keen on the schedule, but AMC is onboard.

The deal gave AMC what it needed most, new content, and gave studios the flexibility they require in a challenging environment. Universal’s upcoming releases are the comedy “Freaky” (Nov. 3) and “The Croods: A New Age” (Nov. 25).

But what happens if AMC can’t deliver its end of the bargain? What if, as feared, it runs out of cash by the end of the year or early 2021?

Attendance at the 494 of its 598 U.S. locations is down an estimated 85% in recent weeks. Theaters in the country’s two biggest markets — LA and New York — remain closed, due to the pandemic.

And blockbusters throughout the year, from “Scoob!” to the latest James Bond, “No Time To Die,” to “Soul” are either delayed or, like “Soul,” moved to streamers. (Disney+ streams “Soul,” while “Scoob!” scored as a rental/buy VOD.) Universal released “Trolls World Tour” on-demand for $19.99 in April and amassed over $100 million in the first three weeks it was available.

According to an SEC filing today, AMC Entertainment noted: “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.”

Already heavily leveraged and in debt, the company is scrambling to consider other options, from new lease leads to selling assets.

And while Regal Cinemas already shuttering in the U.S. and the U.K., AMC Theatres said on Oct. 7 that it would not close any of its reopened movie theaters — about 80 percent — in the U.S.

That optimistic outlook has been thrown into chaos, per the company reporting: “There can be no assurance that the assumptions used to estimate our liquidity requirements and future cash burn will be correct … and our ability to be predictive is uncertain due to the unknown magnitude and duration of the COVID-19 pandemic.”

AMC operates theaters in the U.S., Europe and the Middle East.