Investors May Love AMC, But Movie Theaters Still Have Long Way To Go

Box office numbers were up over Memorial Day, but attendance is still down from pre-COVID levels

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Are we back at the movies?

Investors are pumping money into AMC, studios are celebrating their first big, box-office weekend and movie theaters are finally starting to fill up again. But, amid all the hoopla, it should be noted that movie theater fundamentals are still lagging.

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While approximately 72 percent of theaters were open over Memorial Day weekend, traffic was down about 60 percent on average for three large national chains — AMC, Regal Cinemas and Cinemark — compared with 2019 levels, according to data from analytics firm Placer.ai.

“While all of retail felt COVID’s effects, few were as adversely impacted as movie theatres,” said Ethan Chernofsky, vice president of marketing at Placer.ai. “The restrictions fundamentally undermined the capacity to operate, creating a huge challenge for a sector that had already been facing challenges — not to mention the impact COVID had on major motion film releases.” 

Theaters saw a large bump in traffic over Memorial Day weekend, the first $100 million box-office weekend since the pandemic began, but attendance remained far lower than 2019 levels.

For Tennessee-headquartered national chain Regal Cinemas — which closed 536 locations after the pandemic set in — foot traffic was 65.4 percent below 2019 levels the week of May 24, compared to the 83.1 percent that it was down by the week of May 3. For Cinemark, which was down from 2019 levels by 73.8 percent the week of May 3, Memorial Day weekend increased its traffic to the point that traffic was down 57.4 percent from 2019 levels, according to Placer.ai’s data. 

But Chernofsky was optimistic about a recovery, seeing Memorial Day weekend as a sign of progress for the industry.

“A recovery does appear to be underway with Memorial Day weekend providing a needed boost,” he noted. “Visits to three leading chains the week of May 24th were at their strongest point since the onset of the pandemic’s retail impact in March 2020.”

Optimism seems to be the prevailing feeling among retail investors, which have caused AMC stock to shoot up during the pandemic. On June 5, the value of AMC stock was more than double the entire movie theater industry’s 2019 domestic box-office ticket sales, according to Propmodo. Thanks to a retail investor fervor on the social media platform Reddit, the stock price has skyrocketed more than 2,900 percent this year, even while very little has changed about the way the company does business and the industry as a whole reels from the pandemic. 

And the holiday weekend did prove a surprising showing for the formerly shutdown silver screens. U.S. movie theaters brought in nearly $100 million in ticket sales over the four-day weekend.

These numbers are less than half of the $232 million bag theaters secured in the same weekend of 2019, but this holiday weekend was in stark contrast to the start of the pandemic, when theaters shut their doors, turned off their popcorn machines and said goodbye to glitzy premieres. 

Two films proved much-needed cash cows for theaters: Paramount’s much-anticipated sequel “A Quiet Place Part II” reeled in $48.4 million — the highest film debut in the pandemic — while the in-theater and online premiere of Disney’s “Cruella” cashed in $27 million in ticket sales, according to CNBC. 

As Tom Cruise famously said while attending a London screening of “Tenet” during the pandemic: “Here we are, back to the movies.” 

But, for landlords, the real question is: Are theaters back to paying rent? 

Rent collections for national movie-theater chains stood at 63 percent of total rent owed in May, up 17 percent from March, according to a report from data portal Datex Property Solutions, based on a subset of theater locations throughout the country. That’s a huge leap from this month last year, when rent collections for theater chains stood at only 11.6 percent. 

Much of that came from AMC, flush as it is with Reddit cash. Rent collections for AMC Theaters stood at 94 percent of rents owed as of May 31, up from 85 percent in April and nearing the 99 percent it paid in 2019. 

“With more major movie releases expected in the critical summer season, the wider sector may be seeing the silver lining it so desperately needs,” Chernofsky added.

But movie theaters still have a long way to go, and landlords have struggled to collect rent from theaters, particularly during the pandemic. Palm Springs Mile Associates, the owner of Palm Springs Mile shopping center, sued AMC seeking more than $7.5 million in damages for the $52,154 it said the theater owed in rent at the AMC Hialeah 12 Theater in April 2020, reported Variety. Palm Springs Mile Associates did not immediately respond to a request for comment. 

Other large movie landlords, like EPR Properties, did not respond to requests for comment either. AMC accounts for 17.7 percent of EPR’s annualized rents, according to Seeking Alpha. Terranova Corp., which serves as the landlord for a Regal Cinema in Florida, did not immediately respond to a request for comment. Weingarten Realty declined to comment.

Chava Gourarie contributed to this reporting.