In another bad sign for movie theaters, AMC Entertainment is warning it’ll run out of cash in January, citing the lack of moviegoers during the pandemic.
The company estimates it’ll need at least $750 million in additional funding “to remain viable through 2021,” AMC said in a securities filing on Friday. The theater chain also admits there’s “substantial doubt” over whether it’ll survive.
“The longer and more severe the pandemic, including repeat or cyclical outbreaks beyond the one we are currently experiencing, the more severe the adverse effects will be on our business,” the company added.
AMC made the announcement as film studios are starting to bring their newest blockbusters to online video streaming services instead of solely through theaters. The biggest blow comes from WarnerMedia; it plans on releasing 17 Warner Bros. films next year over both the HBO Max streaming service and through theaters at the same time.
AMC is no fan of the change. In the securities filing, the company warns other movie studios might end up adopting WarnerMedia’s strategy, which could draw consumers away from traditional theaters. “These practices have significantly impacted our revenues and are expected to continue to have an adverse impact on our business and results of operations going forward,” the company added.
In the US, AMC currently is operating 409 of its 594 theaters with limited seating capacity. But even so, many of the theaters remain largely empty.
“During the fourth quarter from October 1, 2020 to November 30, 2020, we have experienced an overall attendance decline in the US of approximately 92 percent compared to the same period a year ago,” the company said in the filing.
However, AMC is banking on the pandemic ending soon, citing the new COVID-19 vaccines, which should begin rolling out in the coming months. As a result, the company is hoping for a rebound in moviegoer attendance. But if it doesn’t materialize, AMC warns it may need more than $750 million in cash to keep operating in 2021.
In the meantime, the company is trying to raise additional funding. On the same day, the theater chain announced it had secured $100 million in financing from Mudrick Capital Management.