Per usual, Hollywood studios dominated the spotlight this week at the exhibition industry’s annual CinemaCon confab. But AMC Entertainment CEO Gerry Lopez was the star of many private conversations about the future of the theater business. It isn’t just because the former Starbucks exec runs the second largest chain, with about 5,000 screens in 33 states, the District of Columbia, Canada, Hong Kong and the UK. Execs are closely monitoring Lopez’ two-year-old initiative to reduce the number of seats in many AMC theaters to make room for luxurious recliners — which come with a higher ticket price. It’s an adventurous departure in a business that typically tries to pack as many people as possible into venues.
Lopez also seems to enjoy speaking his mind, a rarity in exhibition where leaders tend to be private and circumspect. He has a good story to tell: AMC’s owner, China’s Wanda Group, offered a 22% stake to the public in December, and the shares since then have appreciated 26.4% — well ahead of other major theater chains and the overall market. I caught up to him at this week’s CinemaCon. Here are his thoughts, edited for length and clarity, on a few of the industry’s front burner issues.
Not according to AMC, you don’t — which a Columbus, Ohio, man discovered the hard way Saturday night when he and his wife went through a 3 1/2-hour ordeal at the AMC Easton 30, where he wore his Google Glass with prescription lenses to a showing of Jack Ryan: Shadow Recruit. For those who don’t follow tech news,Google Glass is a kind of eyewear that shows computer information to the user on a tiny screen — but also has a built-in camera capable of recording video. About an hour into the movie, the man told website Gadgeteer, “a guy comes near my seat, shoves a badge that had some sort of a shield on it, yanks the Google Glass off my face and says ‘follow me outside immediately’.” The official, with others, was from the Department of Homeland Security, which handles movie theft cases. The moviegoer said there was a misunderstanding and that he wasn’t recording anything. “They wanted to know where I got Glass and how did I came by having it.” After telling them that he had applied for the Google explorer program, “I offered to show them receipt and Google Glass website if they would allow me to access any computer with internet. Of course, that was not an option. Then they wanted to know what does Google ask of me in exchange for Glass, how much is Google paying me, who is my boss and why am I recording the movie.” Read More »
The addition of the No. 2 exhibition chain is a coup for MovieTickets.com — and a logical development following the settlement in November of the online ticketing company’s suit that charged AMC with a breach of contract when it went exclusively with Fandango. The new non-exclusive relationship adds 4,950 AMC screens to MovieTickets’ tally, for a total of more than 22,000. That “substantially increases our domestic reach” with “some of the highest grossing and busiest locations in many of the strongest markets across the country,” says MovieTickets CEO Joel Cohen. The ticketing service also has deals with Carmike Cinemas, CineMark, Cinepolis, Landmark, Rave Cinemas, and Regal. MovieTickets co-owner Hollywood Media noted in an SEC filing last year that the court agreement with AMC included a “non-exclusive ticketing agreement,” but the terms were confidential. The companies have had a rocky relationship since 2000 when they created MovieTickets as a 50-50 venture, later adding National Amusements. In 2012 Hollywood charged AMC with “unconscionable, unfair, and deceptive acts and practices” that culminated with its decision that year to move its online business exclusively to Comcast-owned Fandango. The suit added that MovieTickets’ “current viability has been threatened” by AMC, which at the time still owned 26.2% of MovieTickets. AMC said in a recent SEC filing that Fandango sold 17.2M tickets for the chain in 2012. AMC is owned by China’s Wanda Group, but … Read More »
Deadline Financial Editor David Lieberman and host David Bloom look ahead to the six big questions facing big media after a big 2013, as potentially huge changes loom in the coming year. What does 2014 hold for Netflix, Apple, cable TV consolidation and the broader pay-TV industry, local broadcasting and theatrical exhibition? Lieberman puts on his fortuneteller hat and looks at what paradigms could be shifting.
The No. 2 exhibition chain will trade on the NYSE under the symbol “AMC.” It will use the proceeds from the $331M offering to pay down some of its high-interest debt and for the catch-all “general corporate purposes.” The offering will leave China’s Wanda Group, which paid more than $2.6B for AMC last year, firmly in control of the theater company. It is selling 18,421,053 shares of its Class A stock that entitles owners to one vote per share, and will keep the Class B stock with three votes per share. Class A owners just have 7.8% of the votes while Class B holders have 92.2%. The stock price values AMC Entertainment at about 6.8 times its estimated cash flow for 2014, a bit lower than rivals Regal Entertainment and Cinemark at about 7.5 times cash flow, MKM Partners’ Eric Handler says. AMC has a lot of debt and its theaters, concentrated in major cities, pay high rent. Handler estimates that AMC pays about $90,000 per screen for rent vs. $58,000 for Regal and $55,000 for Cinemark. But exhibition stocks have been hot: Regal shares are +37.7% in 2013, Cinemark is +25.3%, and Carmike is +65.9%. AMC’s expected to end this year generating $103.3M in net income from continuing operations on revenues of $2.78B.
This is unusual: The exhibition chain is telling members of its loyalty program today that a limited number of them, and other customers, can buy shares in AMC Entertainment without paying fees when it launches its $370M stock sale. “The price per share will be determined by negotiations between us and the underwriters of the IPO, but it will be the same price per share as offered to Wall Street investors,” CEO Gerry Lopez says in an email to Stubs members. (The price is key: The offer only makes sense if you think the stock’s value will appreciate after the IPO.) Customers who participate in the first-come-first-served effort will join employees who have a 24-hour head start on the general public. Read More »
Exhibition chains have done pretty well on Wall Street this year, so this planned stock offering may interest investors who want additional opportunities to bet on the industry. But the sale of 18.4M shares at between $18 and $20 a share won’t dramatically change AMC Entertainment — aside from putting it back under analysts’ microscopes. The No. 2 theater chain disclosed its IPO plan in August; today’s filing adds several details. It wants to trade on the New York stock Exchange under the symbol “AMC.” It expects to net $322.6M after paying underwriting expenses, and will use cash from the stock sale to retire some debt and for undefined “general corporate purposes.” It especially wants to ditch some 8.75% Senior Fixed Rate Notes that mature in 2019. AMC currently carries a lot of debt — about $2.2B — and warns that “if interest rates increase, we may be unable to meet our debt service obligations.” China’s Wanda Group, which paid more than $2.6B for AMC last year, will retain control. It’s selling Class A stock that entitles owners to one vote per share, and will keep the Class B stock with three votes per share. When the IPO is complete, Class A owners will control 7.8% of the votes while Class B holders have 92.2%. Read More »
Was the Dalian Wanda Group just whetting its Hollywood appetite with the $2.6B acquisition of AMC Entertainment? The president of the Chinese property developer has hinted as much in a recent interview with Reuters. According to the news agency, Wang Jianlin said that Wanda can spend as much as $5B a year on foreign acquisitions and would be prepared to pay more than $5B for a single acquisition, if the right opportunity avails itself. Although he did not specify which firms or assets his company is eyeing, he told Reuters that the focus will continue to be on hospitality and entertainment. In September last year, Wanda closed its $2.6B purchase of AMC, making it the world’s biggest owner of movie theaters. In June, it signaled it would acquire a majority stake in yacht maker Sunseeker International whose boats have appeared in at least four James Bond movies. It also has plans to build five-star luxury hotels in London and New York, investing more than $2B. Wanda also said today that it will hold the opening ceremonies for its new $4.9B film studio in Qingdao later this month. The company currently owns 72 Wanda Plazas and 40 five-star hotels in China, 6,000 movie screens, 62 department stores and 68 karaoke centers, according to Reuters.
The nation’s second-biggest theater chain has tried for an IPO more than once in the past, and the last effort was scotched last September after it was officially acquired by China’s Wanda Group in a deal worth $2.6 billion. The acquisition made Wanda the world’s largest global cinema owner. AMC Entertainment unveiled its latest plan today in an SEC filing, though it was short on details other than its suggested $400M offer and that it has applied to list its shares on the NYSE. As of June 30, the company reports, it owned, operated or held interests in 343 theatres with a total of 4,937 screens primarily in North America. AMC may use proceeds from the offering to expand and repay debt. Today’s news comes after AMC reported a Q1 net loss of $7.46M, down from a $727,000 profit in the period last year, on revenues of $577.8M, -9.2%. Admissions revenues fell 10.1% to $382.9M as attendance fell 11.3% to 42.7M. At the end of April, AMC borrowed $925M mostly to refinance existing debt.
The year started off badly for the theater chain owned by China’s Wanda Group. AMC Entertainment reports that it had a Q1 net loss of $7.46M, down from a $727,000 profit in the period last year, on revenues of $577.8M, -9.2%. Admissions revenues fell 10.1% to $382.9M, as attendance fell 11.3% to 42.7M, offsetting a 1.2% increase in the average ticket price. AMC says that it raised prices for 2D films, but fewer people ended up paying premiums to see 3D or large-screen films. Concessions fell 2.1% to $167.9M, largely due to the attendance drop. While the company’s film exhibition costs fell 13.5% to about $191M, concession costs rose 2.6% to $23.2M. At the end of April, AMC borrowed $925M mostly to refinance existing debt.
2ND UPDATE 2:30 PM: The largest domestic movie theater chain Regal Entertainment says this post is going up on its Facebook page: “Regal has Iron Man 3! After some extensive talks with Disney, we’re glad to say that Tony Stark will definitely be in our theatres for Iron Man 3. We’ve got Fandango working overtime right now to place tickets back on sale at all Regal Cinemas, United Artists and Edwards Theatres.”
UPDATE 12:37 PM: AMC just released this pro forma statement. (Don’t you love how everybody is friends again?): “Iron Man 3 tickets are now on sale and we’re excited to welcome guests to the 9 PM debut and Marvel’s Iron Man Marathon at AMC, both on May 2. We thank our partners at Disney for working with us to achieve economical terms so we can present our guests with one of the biggest blockbusters of 2013 and solidly kick off the summer movie season.”
BREAKING… As I first broke the news on April 16th, AMC was one of the biggest theater chains refusing to put Iron Man 3 tickets on advance sale even though this summer’s hotly anticipated movie opens on May 3rd. That’s because Disney decided to leverage the film in order to renegotiate the studio’s future terms with the chains beginning with this humongous Marvel blockbuster. At one point AMC, Regal, and Carmike were among those holding out. On … Read More »
Like most of its peers, the No. 2 exhibition chain has good reason to look fondly at the results from 2012 — a year when industrywide domestic box office hit a record high of $10.8B. AMC Entertainment says it generated net income of nearly $58M for the year, up from a $242.4M loss in 2011, on revenues of $2.65B, +10.8%. Much of the increase was due to the 6.8% pickup in attendance, to 199M. With that and a 1.9% increase in the average ticket price, to $9.04, total admission revenues increased 8.8% to $1.79B. In addition, concession sales rose 12.3% to $743.4M. AMC didn’t include quarterly results in the report it filed at the SEC to account for changes in its fiscal year, which now will end in December instead of March. The report notes that CEO Gerald Lopez received $4.1M in compensation for the nine-month period that ended in December, up from $1.7M for the fiscal year that ended in March. Read More »
The soft results in an SEC filing this evening are consistent with some of the numbers we’ve seen elsewhere for the quarter — but with a lot of financial noise resulting from Wanda Group’s $2.7B acquisition of the No. 2 U.S. theater chain at the end of August. AMC says that it had $33.2M in net earnings for the quarter that ended in September, up from a $10.2M loss in the period a year ago, on revenues of $650.2M, -3.1%. But the profit figure was inflated by a $39M gain from the sale or closing of its theaters in Canada and the UK. (That covers proceeds from the sales as well as the write-off of long-term lease liabilities.) Admission revenue came in at $460M (-4.2%) as the number of tickets sold at the theaters owned at the end of the quarter fell 5.3% to nearly 49M. AMC had better luck with concessions, which generated revenues of $182.5M, (+1.9%). AMC reports that financial advisers and consultants were paid $32.3M in “success fees” for their work on the deal with Wanda.
BEIJING, China and KANSAS CITY, Mo., Sept, 4, 2012 — Dalian Wanda Group Co., Ltd. (“Wanda”), a leading Chinese private conglomerate and China’s largest investor in cultural and entertainment activities, and AMC Entertainment Holdings, Inc. (“AMC”), a preeminent U.S. movie exhibitor, today announced the successful completion of Wanda’s acquisition of AMC, creating the world’s largest cinema owner. The transaction is valued at approximately US$2.6 billion.
Word is that the re-structuring will result in dozens of layoffs — in the field as well as at AMC’s new headquarters on the Kansas side of Kansas City. But the company says that it will lose two longtime execs with the closest ties to Hollywood: Film Programming President Sonny Gourley (a 37-year AMC vet) and film buyer Dave Hull (40 years). Many of their responsibilities will be taken on by Elizabeth Frank, who is being promoted to Chief Content and Programming Officer from SVP for Strategy where she managed AMC’s relationships with IMAX and National CineMedia, among other things. She will still report to CEO Gerry Lopez and remain on the board of Open Road Films (AMC’s joint venture with Regal) – but the company says she’ll also “take a growing and active role in working with our new parent company, The Wanda Group”. That’s the Chinese company that’s poised to pay $2.6B for AMC, most of it from assuming AMC’s enormous debt. Read More »
Wanda says its acquisition of AMC Entertainment should close at the end of August. The $2.6B deal — mostly from Wanda’s assumption of AMC debt — was cleared by the Committee on Foreign Investment in the U.S. and the Federal Trade Commission as well as China’s National Development and Reform Commission, Ministry of Commerce, and State Administration of Foreign Exchange. The company’s betting on U.S. exhibition at a time when the industry’s prospects are murky — and not simply due to last week’d tragedy in Aurora, Colo. Things look good now: Stock prices for chains including Carmike, Cinemark, and Regal have outperformed the overall market over the last few years — including over the last 12 months and year-to-date in 2012. Investors have been impressed by theaters’ ability to keep raising prices for tickets and concessions even as the number of admissions has either remained flat or declined. But consumers are starting to push back. For example, many chains have had to lower their pric- hike expectations for 3D movies. Studios also haven’t abandoned their hope to offer recently released movies on VOD, which theater owners say could cut into their sales.