Adam Aaron, CEO of AMC (AMC) is preparing to go on a shopping spree if struggling theater operators start selling their locations amid financial difficulties.
“I think there will be an opportunity for us to pick up theaters very inexpensively and pick out quality theaters and theaters that could be very profitable,” Aaron said on Yahoo Finance Live (video above). “Right now, given the unique position that we have, and that we have liquidity and a lot of our competitors don’t, I think we will be able to pick up more very good spots and do that in the basement of the bargain prices.”
Cinemas have experimented with a range of strategies to re-attract customers after the pandemic lockdown and increase direct-to-consumer entertainment that has prompted some studios to release box office titles directly on streaming services such as Netflix (NFLX), HBO Max (WBD) and Disney+ (DIS).
But a poor third-quarter box office lineup didn’t make that comeback story any easier for the industry, despite the best efforts of Dwayne “The Rock” Johnson on “Black Adam.”
“There are a number of small movie circles that are in real trouble because they haven’t collected the money we raised during the pandemic,” Aaron said. “And they work with fumes.”
In September, Cineworld — the parent company of Cinemark, Regal and Picturehouse theaters — filed for Chapter 11 bankruptcy and began a “property improvement strategy.” The operation began after less-than-expected traffic in its theaters slowed recovery efforts amid the pandemic.
Meanwhile, AMC capitalized on the insight it received after a short squeeze that stocks jumped briefly in January 2021. The movie theater chain implemented strategically timed stock offerings to raise additional funds.
“AMC raised a lot of money in 2020 and 2021,” Aaron said. “We raised $2.25 billion by selling shares in the market. So when you look at our cash reserves, at the end of the third quarter, we had $900 million in cash.”
However, the CEO’s desire to spend on theater locations is offset by AMC’s closing of underperforming venues. Since the pandemic began, AMC has reduced its reach to 57 locations overall, closing 106 locations and opening 49 new locations.
That wasn’t deterred by Aaron, who sees a hotspot for moviegoers returning to the theater experience as well as a larger market that could be addressed with new investments, which include a mining company, AMC-branded credit cards, and a recent partnership with Zoom (ZM). ).
“We believe this will be a real boost to our meetings business,” Aaron said of the company’s Zoom Rooms partnership, adding, “This is the next step that will come after our investment last winter in Hycroft, the gold and silver mine located in Nevada.”
Brad Smith is an anchor at Yahoo Finance. Follow him on Twitter Tweet embed.
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