AMC might never reopen its movie theaters

Movie theaters have been in serious peril since the start of the coronavirus pandemic. They were among the first gathering spaces to shut down and will likely be among the last to reopen. Wednesday brought another bad omen for the future of cinemas: AMC, the world’s largest movie theater chain, said it has “substantial doubt” it can stay in business after shuttering all its locations during the global health crisis.

Back in April, AMC took on additional debt in a bid to stay in business until it was safe to reopen, sometime ahead of Thanksgiving. But in a new filing with the Securities and Exchange Commission, the cinema company disclosed concerns about its liquidity, ability to make money and the realistic timeline for reopening its theaters.

“We are generating effectively no revenue,” AMC pointed out in its filing. Its first quarter profits dropped 22% this year compared to last; the second quarter, starting March 31 at the height of coronavirus closures, is expected to be far worse. AMC says it expects to have lost between $2.1 and $2.4 billion in revenue in the first quarter alone.

The theater chain has tried to conserve cash during the pandemic by furloughing in-theater employees and halting operations through June. AMC also cut the salaries of its corporate employees and suspended dividend payments and stock buybacks for shareholders. The corporation has been negotiating with landlords to defer rent payments on its theaters.

AMC pointed out in its SEC filing that all its prognostications are guesswork, however, since these times are unprecedented. “We cannot assure you that our assumptions used to estimate our liquidity requirements will be correct because we have never previously experienced a complete cessation of our operations, and as a consequence, our ability to be predictive is uncertain,” AMC wrote. If they can’t reopen this summer or there’s another COVID-19 outbreak this fall, for example, the company’s going to need another cash infusion, at minimum.

At least one blockbuster is still gunning for a mid-summer release: Christopher Nolan’s Tenet aims to be the first major film to open in theaters once the worst of coronavirus is past us. As AMC warily pointed out, however, a quick reopening and return to “business as usual” probably won’t be very easy or practical. Only time will tell what the cinema business landscape looks like at the end of this.