To best understand the bold daylight heist that has been committed at AMC Entertainment, let’s go back to August 2019. That’s when C.E.O. Adam Aron announced layoffs and a restructuring, even as global box office was headed for a record $42.5 billion year. Investors, along with any semi-coherent person, saw the Netflix revolution as probably a bad thing, long-term, for movie theaters, and that AMC, as the world’s largest chain, would be hit the hardest. The company’s stock floundered. And that was before the pandemic.
Cut to March 2020, and we all know the story: AMC shut down its 10,000 or so screens and laid off or furloughed most of its roughly 30,000 employees. Various hail marys ensued: Aron raised $500 million from the bond market and renegotiated leases, but it wasn’t nearly enough. Burning through $100 million a month, with $6 billion in debt, AMC felt heat from Apollo, one of its biggest creditors, to declare bankruptcy, just as smaller chains like Alamo Drafthouse and Pacific Theaters (owner of Arclight) had done. Aron refused, no doubt suspecting Chapter 11 might result in his ouster. Instead, he resorted to two unusual “at-the-market” equity offerings, where a company sells new shares at market prices to any random investor. In January 2021, AMC raised a surprising $917 million, despite a stock price around $2. “Today, the sun is shining on AMC,” Aron declared.
But with Covid raging, studios delaying titles and Warner Bros. and Disney going day-and-date for big movies, institutional investors weren’t feeling the warmth. The theatrical window, sacrosanct for a century, was forever shattered. Depressing stuff, if your entire business depends on that window.