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AMC fears the worst for the future of movie theaters

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An unprecedented loss comes with no sign of recovery

A view outside AMC Kips Bay 15 movie theater during the coronavirus pandemic on May 14, 2020 in New York City
An AMC Theatres location in New York City. Major theater chains like AMC have been closed since mid-March.
Photo: Noam Galai/Getty Images

The existence of movie theaters is in question. As the COVID-19 pandemic keeps multiplexes and art houses closed, and the release calendar remains up in the air until safe reopenings are imaginable, theater chains are bracing for the worst. In a financial filing published Wednesday, AMC Theatres, the largest chain in the U.S., warned that it expects to report a net loss of between $2.1 billion and $2.4 billion for the first quarter of 2020, compared to a net loss of $130.2 million for the same period in 2019. The company will release its full quarterly earnings report on June 9.

This spring, AMC and other American chains shut down as government-imposed restrictions on social gatherings rolled out across the country. Hollywood studios responded by pulling most of their major blockbusters from the summer release slate. The hope was that theaters could reopen in June, and according to the AMC filing, the company is working to ensure that possibility. But the tone of the report is dire; if the timeline doesn’t play out as planned, and there aren’t actually new movies to show when reopenings occur, the financial disaster will continue.

“We believe we have the cash resources to reopen our theatres and resume our operations this summer or later,” said AMC. “If we do not recommence operations within our estimated timeline, we will require additional capital and may also require additional financing if, for example, our operations do not generate the expected revenues or a recurrence of COVID-19 were to cause another suspension of operations. Such additional financing may not be available on favorable terms or at all. Due to these factors, substantial doubt exists about our ability to continue as a going concern for a reasonable period of time.”

Currently, there are no major theatrical releases planned for the month of June. Unhinged, a cat-and-mouse thriller starring Russell Crowe that is on no one’s radar, hopes to be the first movie back in theaters on July 1. Warner Bros. Pictures still intends, as of this reporting, to release Christopher Nolan’s anticipated new blockbuster Tenet on thousands of screens starting July 17, followed by Disney’s Mulan on July 24. That could all change in a week, as lawmakers decide just how much progress America has made with COVID-19 testing and social distancing methods. AMC’s entire business model remains a gamble for now.

If the movie releases do proceed, there remains the question of whether audiences will show up. Some theaters are betting against safety: Cinemark recently announced that its theaters would offer $5 tickets and would not require masks during screenings. AMC, which implemented social distancing requirements in March as the coronavirus made bigger waves across the country, offered no tactical plan for its theaters in the financial filing but said that it will take measures to make customers comfortable. That may not be enough, the company suggested.

“If we do not respond appropriately to the pandemic, or if customers do not perceive our response to be adequate, we could suffer damage to our reputation, which could significantly adversely affect our business,” AMC said. “Even once theatres resume operations, a single case of COVID-19 in a theatre could result in additional costs and further closures, or a ‘second wave’ or recurrence of COVID-19 cases could cause another widespread suspension of operations.”