More workers across the country could be headed to a movie theater — but not to see the latest blockbuster. Instead they may be sitting back in the reclining seats and munching on popcorn at a business meeting.
AMC Theatres, the world's largest cinema chain, is joining with Zoom Video Communications to use AMC cinemas in up to 17 U.S. regions as “Zoom Rooms” for businesses and other organizations hosting “all hands” and other gatherings involving large groups in multiple locations. The effort is set to roll out next year.
The Leawood, Kansas-based operator of about 950 theaters, including nearly 600 in the United States, is looking to boost revenue from its properties while awaiting the full return of moviegoers and profits. While prices and locations haven't been set, AMC plans to offer food and beverages, movie viewings and “concierge-style” personalized services geared to meeting planners.
AMC CEO Adam Aron told analysts the company is looking to compete with sites such as hotel ballrooms that typically host large regional and national group meetings.
“When you compare the comfort of an AMC signature recliner seat to what you might get at a hotel, we beat them,” Aron, a former longtime hotel executive, said during a quarterly earnings call Tuesday.
The strategy is the latest AMC effort to supplement revenue and stem quarterly losses, including a net loss of nearly $227 million in its latest quarter, as the industry remains far from full recovery from the pandemic despite steady growth in ticket sales during the past year. This year's global box office revenue will be about $7.9 billion, down 30% from the pre-pandemic 2019, with 2023 revenue reaching $9.5 billion, down 16% from 2019, B. Riley Securities analyst Eric Wold estimates.
Other plans in the works include the sale of AMC-branded popcorn in supermarkets and establishing its own snack stores and kiosks in retail locations apart from its theaters.
Ticket Sales Drop
“We’re not out of the woods yet,” Aron told analysts, referring to a drop in industry ticket sales over the past two months after a well-attended summer season. “While the box office is unmistakably on the rise, it’s still falling short of pre-pandemic levels.”
On the real estate front, AMC is planning to follow up on the past year’s acquisition of several leased U.S. locations vacated by chains such as Pacific Theatres and ArcLight Cinemas.
While not specifically targeting properties in the planned divestment of multiple theater leases by rival Regal Cinemas parent Cineworld, Aron told analysts AMC’s “eyes are open to new opportunities that may arise.”
The company has been shoring up its balance sheet in the past two years by restructuring its debt and equity, and has permanently closed more than 100 underperforming locations.
Chief Financial Officer Sean Goodman said AMC in the latest quarter repaid about $23 million in deferred rents owed to retail landlords, bringing its cumulative balance to $196 million, down from more than $470 million as of March 2021.
For its third quarter ended Sept. 30, AMC reported total revenue rose nearly 27% from the year-earlier period to $968.4 million. The company reported a net loss of $226.9 million, about even with the year-earlier net loss of $224.2 million.
In a research note Wednesday, Wold said AMC’s latest quarterly revenue came in slightly below his firm’s estimate but above the consensus for firms tracking the company. Wold said the company remains well positioned to maintain market share through “non-organic expansion as other exhibitors exit the market,” financed through moves including its recent issuance of a new type of preferred stock.
Theaters are big drivers of retail center traffic but are facing their own attendance challenges. Prior to the AMC earnings call, Wold noted that the lack of a “normal” schedule of major-studio film releases remains an obstacle for the movie theater industry, with releases still down 50% from pre-pandemic times because of production delays in the first year of the pandemic.