AMC is hoping the field workplace will hit $ 5.2 billion, so why is {that a} large query

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Adam Aron, CEO of AMC Entertainment, has set an optimistic goal for the domestic box office in 2021.

During a conference call Monday, Aron said AMC could see positive theater-level cash flow as early as the fourth quarter if its domestic box office hits at least $ 5.2 billion. This means that AMC’s theaters would make enough cash to cover all operating costs.

However, industry insiders are not convinced that the goal is achievable, especially since a new variant of Covid-19 has forced the local government to reintroduce health and safety measures such as mask requirements. Experts are also aware that the availability of many big blockbusters on streaming platforms has been eating up ticket sales at the same time as theaters.

By Sunday, according to Comscore, the domestic box office had ticket sales of 1.76 billion US dollars. That means Hollywood would have to generate around $ 3.4 billion in revenue for the last 20 weeks of the year – a feat that many box office analysts consider too optimistic.

For comparison: In the last 20 weeks of 2019, the box office has around 4 billion with titles like “Joker”, “It: Chapter 2”, “Frozen II”, “Jumanji: The Next Level” and “Star Wars: The” US dollars earned Skywalker’s rise. “

The last four months of this year are packed with some highly anticipated films. However, films like “Matrix 4”, “Dune” and “Venom: Let There Be Carnage” will debut in theaters and on stream the same day, which could dampen ticket sales. Others like “No Time to Die”, “Eternals”, “Top Gun: Maverick” and “Spider-Man: No Way Home” will have exclusive theatrical releases.

“The final months of 2021 have more potential than any other period to approach pre-pandemic business levels,” said Shawn Robbins, chief analyst at “But it all depends on the level of variants and the comfort of the audience, a higher percentage of vaccinated people and, of course, the studios sticking to their existing release plans. Everything is fluid at the moment and will probably be for the foreseeable future. “

Robbins said $ 5 billion is a possible but “optimistic” target.

Wedbush’s Alicia Reese said her firm’s 2021 domestic box office estimate was $ 4.9 billion at the end of July. However, in recent weeks there has been more headwind that Reese expects will get moviegoers to go to the movies.

“The studios may think more about releases after the fourth quarter day and date, or they might push their releases again if that worsens over the holiday season,” she said. “There are still many variables that make domestic box office a moving target in 2021, but it’s unlikely that domestic box office will hit $ 5.2 billion for the full year by early August.”

Crack the numbers

Comscore’s senior media analyst Paul Dergarabedian itemized weekly box office earnings for the past three years and found that it would take a “perfect rest of the year” in 2021 to hit that number.

“Fall would have to be like summer to bring us to nearly $ 5 billion,” Dergarabedian said. “It seems like an incredibly difficult task at this point in time to get even closer to such a benchmark by the end of the year.”

Between May and August 2019, the box office closed with titles like “Avengers: Endgame”, “Aladdin”, “Godzilla: King of the Monsters”, “Toy Story 4”, “Spider-Man: Far From Home” and. US $ 4.3 billion brought in “The Lion King.”

“It’s a long way, but it is possible,” said Eric Wold, senior analyst at B. Riley Securities.

Wold noted that his company doesn’t currently expect the box office to hit that mark. After all, the domestic box office is currently 75% below its 2019 level and the third quarter is expected to be around 50% lower than in the pre-pandemic period.

He predicts that the domestic box office will hit between $ 4.4 billion and $ 4.5 billion for all of 2021.

“That would mean, that [fourth-quarter] Box office would have to be the same or 5% lower than 2019 to get to $ 5.2 billion for the year, “he said.” We think that’s unlikely given the ongoing short-term traffic uncertainties at this point.

Currently, only about 85% of North American theaters are open to the public, compared to 2019. Some have placed capacity restrictions that limit the number of cinemas per show. Closed theaters will either be completely closed because of the pandemic or are waiting for more favorable conditions to reopen.

Higher ticket prices, more theater

At the end of June, all of AMC’s 593 US theaters were open to the public and 335 of its international theaters, or approximately 95%, were operational.

Around 22 million guests visited AMC’s theaters in the quarter, significantly more than the 7 million in the first quarter. However, it’s a far cry from the company’s all-time quarterly record of 97 million in Q2 2019.

Audiences are returning, which has benefited the chain’s revenue over the past few months, but the crowds have not yet recovered to pre-pandemic levels.

“We’re still losing money,” said Aron when he called on Monday. “We’re still burning cash. We burn less of it. But we use cash to avoid generating cash. “

In the second quarter, AMC posted its sixth consecutive loss. This means the losses stretch back to the third quarter of 2019 – before Covid-19 spread around the world and studios began to focus on new streaming services.

Revenue has stagnated since AMC bought rivals Carmike and Nordic Cinema Group in 2016 and 2017, despite its investments in premium reclining seats and theater dining options. These efforts have placed a heavy burden on the company’s bottom line and cash flow.

AMC has amassed more than $ 1.8 billion in cash, mostly from stock sales, which it uses to further upgrade its theaters and rent new locations. But payments for his massive debt, which is more than $ 5 billion, have been pushed aside. There are no due dates until 2023.

The chain has tried to increase revenue by increasing ticket prices at some U.S. theaters by 5%, or about 50 cents per ticket, last week. The hope is that rising prices and the addition of locations will benefit AMC as more films hit theaters and studios begin to break away from the day and date streaming releases.

“When we look to 2022, when vaccine distribution should be broader and, more importantly, studios return to exclusive cinema windows, we only forecast domestic box office box offices to decline by the median teenage percentage from 2019 – which would bring the exhibition group back slightly.” too positive [adjusted earnings before interest, taxes, depreciation and amortization] and cash flow, “said Wold of B. Riley Securities.” And given AMC’s strong cash position at this point, they are well positioned to make it to this point and beyond. “

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