Theater chains have struggled throughout 2020, as most major movie releases have either been sent to on-demand platforms or delayed until 2021. Exhibitors and studios thought the release of Tenet in September might change things and provide a much-needed pick-me-up, but that wasn’t exactly the case. Regal has already opted to close its doors temporarily in order to save on overhead costs, but AMC Theatres is pressing forward into the fall, hoping that people will start getting excited to head out to movies again. Unfortunately, without an increase in customers, AMC could be in serious trouble.
On Tuesday, AMC revealed that it could run out of cash by the end of 2020, potentially early 2021. Either way, there isn’t a lot of time left for AMC to get an increase in business or find new assets. Attendance is down by at least 85% in 494 of the 598 US locations that AMC has reopened in recent weeks, and theaters in both New York and Los Angeles remain closed due to the pandemic.
“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,” said AMC. “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.”
Part of the issue for exhibitors is the lack of prominent movies to show in theaters. With No Time to Die moving to 2021 and Soul getting a streaming release, The Croods: A New Age is the only major release for AMC until Wonder Woman 1984 in December. Of course, there’s a possibility that Wonder Woman could be delayed as well.
“There can be no assurance that the assumptions used to estimate our liquidity requirements and future cash burn will be correct, or that we will be able to achieve more normalized levels of attendance described above, which are materially higher than our current attendance levels, and our ability to be predictive is uncertain due to the unknown magnitude and duration of the COVID-19 pandemic,” AMC reported.
AMC remains unsure how much it will need to raise in order to keep its doors open, as its burning through cash faster than it’s able to make it.