How the Biggest Movie Theater Chain Staged a Comeback from Pandemic Woes

By the spring of 2020, most of the world had succumbed to varying degrees of lockdowns and isolation measures. While most governments and citizens struggled to put up a semblance of normalcy, commercial institutions faced exceedingly difficult odds with day-to-day operations and generating revenue.

The problems were amplified in crowd-catering services like the movie theater industry. While many top chains are still grappling with the aftereffects of the dreaded lockdowns, the world’s largest and most substantial theater chain has pushed itself back into course.

Here’s the lowdown on how AMC Entertainment faced the perils of the pandemic, danced with bankruptcy, and still managed to reasonably come out on top.

The Period of Gloom and Doom

While opinions on the effect of lockdowns vary, there’s one thing that everyone agrees on – it was terrible for business. Everyone from multinational trading giants to your neighborhood store owner reeled under the ever-growing pressure of the pandemic.

Of course there were specific industries that really did boom after cashing in on the restrictions of the pandemic. Notable industries include the online course economy and entertainment formats that utilize the internet for delivery. So, people like your online yoga instructor and the snazzy YouTuber got way more than they expected when everyone was stuck under the four walls of their homes.

However, for most other businesses, it was unilaterally a sob story. Maintenance costs, stagnant inventory, minimum to zero sales, escalating laws of restrictions, etc., all played to stifle and suppress any business activity that was worthwhile prior to the pandemic.

The most negative effect was seen in services that dealt with bigger groups of people. While sports stadiums and restaurants were obvious victims, the movie theater industry was especially hard-hit because they had very little room to maneuver.

By the Numbers

Giant theater chains like Cineworld reported losses of over $3 billion in the year 2020 alone, while Cinepolis fared no better. Canadian theater chain Cineplex reported losses of over $42 million in just the first quarter of 2022 and Korean theater chain CJ CVG is facing operating losses of over $240 billion Won.

However, at the top of the theater chain list, the biggest player, AMC, recorded losses of over $4 billion in 2020 and avoided bankruptcy on multiple occasions as the pandemic slowly turned over. 

However, even back in 2019, before the pandemic entered full swing, AMC reportedly salvaged through with a net loss of almost $150 million for the year.

Today, critics and experts alike view AMC’s story of recovery as a clinical demonstration of how big companies should pursue recovery of losses after the pandemic.

The AMC Story

With over a century of delivering theater entertainment, AMC is really not a new name in the industry. Starting from early tent shows across the Midwest in the early 1920s, they soon settled as a mainstay among early theaters in Kansas.

Witnessing steady growth over the following decades, AMC Entertainment grew to be most prominent theater train within the country and outside too. The company engineered the rise of multiplexes in the 80s and pioneered the introduction of megaplexes in the 90s. Today, the chain boasts of over 2,800 screens in Europe and a whopping 7,755 in the United States alone.

In 2012, conglomerate company Wanda Group shelled out a staggering $2.6 billion to claim ownership of more than 5000 screens across the North American continent (US and Canada combined). Eventually, Wanda Group came to control the vast majority of the voting share when it came to AMC Entertainment holdings. 

In 2018, AMC theaters got a $600 million investment from the Silver Lake Partners. The company used this money to buy back more than 30% of the common stocks (Class B) owned by Wanda Group. However, the voting mechanism for Class B stocks was structured in a way that the group continued to enjoy majority voting rights even if their common stock went below 50%.

Effects of the Pandemic

Like all other functioning theaters, AMC was compelled to close down all operational theaters before April, 2020. This restriction applied to all public places, not just theaters, following the CDC’s regulation that congregations of more than ten individuals would not be allowed.

Following this shutdown, AMC had to temporarily relieve the CEO and all the corporate employees who numbered to about 600. In the first quarter of 2020, AMC expected losses to easily go beyond $2 billion.

By the summer of 2020, AMC could well have been on the very edge of diving into bankruptcy. As the second half of 2020r began with lockdown restrictions gradually easing up, AMC began its uphill climb with selectively reopening specific locations and adding promotional prices on their tickets. However, it mostly proved inadequate as they expected low balances by the end of the year or by early 2021.

Rising with Purpose

Early on in 2021, AMC Entertainment turned the tides when it went on a successful fund-raising spree. By January, they acquired over $900 million with more than half of the amount in common shares. Debt financing made up over $400 million in this newly arranged fund.

AMC was also fortunate to have online communities like Reddit vying for its revival. This came as a byproduct of Redditors trying to raise the tides against GameStop. With hashtags like ‘#SaveAMC’ easily trending and trickling over to other social media platforms, AMC Entertainment got that final boost they needed to ride out the pandemic’s losses and get back into gear.

AMC’s stocks witnessed a staggering 300% increase in a short period with big holders like Mudrick Capital Management increasing their profits by almost $200 million.

By late 2021, AMC began accepting cryptocurrencies to maximize their paying customers and began screening concerts and sports events too.

By mid 2022, AMC was well on its way to recovering the dreaded pandemic’s losses and getting back on track to pre-pandemic success. After declaring the special dividend (APE) in 2022, the company rose in double digits on the stock market.

Closing Note

While there’s no doubt that AMC Entertainment faced huge losses during the pandemic, the company’s ride back to recovery has been both fortunate and praise-worthy. It remains to be seen how much further the recovery can grow. But for now, one can safely say their comeback to success has been a story worth following.