At 8,000 plus theaters AMC is America’s biggest theater chain and it is now circling the drain. It is as of this writing trading at about $2 a share. It had already slashed its dividends before the crisis broke making it a particularly bad risk. They are not in a position to go to the debt market in any serious way. Even if the Quarantine is lifted soon I strongly suspect they will file for bankruptcy by the end of 2020.
The second largest at 7,000 plus theaters is Regal, which is owned by Cineworld. The market has more confidence in Cineworld because its holdings are worldwide. However, even they have admitted that if the quarantine is extended they will have a debt breech.
At 4,500 theaters Cinemark is in third place but looks to be in the best position to ride this out. They had 479 million in cash at the start of March. They have been ruthless in cutting expenses and salaries, suspended 42 million in dividend payments. They still look like a decent risk on the debt market.
My predictions about the fall of theater exhibition of motion pictures were wrong. The market is hurt and rather badly but it is likely to survive.
ASSUMING that my prediction about film studios shifting their resources away from making just a few high budget tent pole films, towards a mass production of medium budget projects specifically for the streaming market, is also wrong.
And I’m not certain that I did get that one wrong. Studios have missed the spring season and nobody knows just how long it’s going to take before the theaters are packed again. Maybe people will flood them as soon as the quarantine is lifted but maybe not.
People have gotten used to social distancing. The term “rubbing elbows with a stranger” is currently skin-crawling and it takes time for social mores to vanish, even newly acquired ones.
That is the biggest question mark over the future of the theater chains.
Will people go back to their old habits fast enough for them to survive?