Shares of AMC surged Monday after Governor Cuomo announced he was hoping that NY movie theaters would be able to reopen on October 23. The Final Round panel breaks down the details.
SEANA SMITH: Well, a group of stocks, though, bucking the downward trend. In the green today are the movie theater chains. AMC one of the big outperformers there, shares up just around 13%. Now this huge move to the upside coming after New York Governor Andrew Cuomo said that most-- the keyword there is most-- of the state's movie theaters are going to reopen on Friday.
Dan, this doesn't include New York City theaters, but it's still a huge relief for this industry. We talk about, time and time again, just how these theaters have been under a tremendous amount of pressure. Many of them have been closed since mid-March. And even though this reopening comes with the caveat that they're only going to be able to, obviously, have a limited capacity, still a major step in the right direction for a lot of these movie chains.
DAN ROBERTS: Yeah, it's a major step in the right direction. How much of a financial relief is it? Well, that'll depend on comfort level, right? I mean, everyone's kind of reporting on, OK, New York state is going to reopen them at 25% capacity. As you said, the fact that it's not New York City is still a big, big caveat. And of course, as Melody knows, California still isn't opening its movie theaters. So those are two key markets.
But what people aren't as often saying in these stories, you know, the state allowing them to reopen is just part one. Part two, will people go? Because it doesn't help very much if people don't choose to go.
And I still think there is quite a comfort spectrum where, you know, I'll use myself as an example. We've gone to two movies during the pandemic in Connecticut, where theaters are open. You wear a mask. We were practically the only people in the theater. I felt safe. I had a lot of friends who, you know, they've told me, nope, they would not do that. They do not feel safe.
So that's fine. If that's the case, if a larger portion of people still think, you know, they have no business going into a movie theater right now, then it's not going be very helpful to these chains. But good for AMC. We'll see what happens.
Worth mentioning that 500 of AMC's 600, roughly, US theaters have now reopened already kind of country wide. But again, at 25% capacity, that's still really tough. This is a company that, just a week ago, filed with the SEC to warn that it might run out of cash by the end of the year. And that's after early in the pandemic, AMC, I believe it was reported already, took some kind of bridge financing that was basically emergency debt financing.
And that's just AMC. I mean, we're seeing stunts like AMC, Cinemark, and Alamo Drafthouse are allowing people to rent out entire theaters for their friends. And the headlines make it look very cheap. There's always headlines on the internet today that AMC will let you rent a whole theater for $99.
There's a little bit of fine print. There's a $250 additional fee if you want to bring your own food. And you're not going to rent out the theater and not bring your own food. So it's $99. It's still pretty cheap, depending on how many people you bring, if you divide it up per person. The point being, I mean, these theaters are desperate. They need something. They need some revenue.
So the other chain reaction here that'll be fascinating to watch is, will big blockbusters that have already been announced for a theatrical release that have already pushed it, will they keep their current date now that New York state is letting them do it?
So "Wonder Woman 1984," as of now, coming out Christmas Day, and maybe this New York news helps Universal decide, or Warner Brothers, in that case, decide to still have the movie come out Christmas Day in a time when a lot of studios are saying, let's just go straight to digital.
MELODY HAHM: Yeah, and Dan, some other movies here, when you think about the mechanics we've talked about, logistically speaking, comfort level. Even if the government does authorize you to go to the movie theater, does that incentivize you to actually go?
My thinking is not quite yet, just because the movie viewing experience is inherently anti-social, right? The whole point of us wanting to go to new places when the lockdowns have been lifted is to interact with other people theoretically, right?
You can watch a Netflix movie. You can watch "Mulan," Disney, whatever you want, in the comfort of your own home. So I don't know if it's as much of a draw, to your point, to not even have a full theater, to not have the energy of the crowd, to watch a movie together in a collective sense.
And then to your point, the "Wonder Woman" movie, "Soul" by Disney, which is supposed to be sort of the sequel to "Inside Out," really trying to appeal to the kids, that's supposed to be coming out around Thanksgiving. I am curious, guys, whether the holiday movie season will actually be benefited because people are not choosing to travel perhaps to see their families. And therefore, they're trying to find things to do.
That could be a possible huge benefactor here in a way that movie theaters always do well, right, during the holiday season. I wonder if there will be additional sort of pent-up demand for those families who previously would never go into a movie theater and would rather stay at home and play board games, if that could be sort of a stealthy surprise winner during this holiday season.
DAN ROBERTS: And just worth a quick mention, guys, "Soul" is now going to go straight to Disney Plus. And it's interesting. People predicted that. Disney still hasn't said what it will do with "Black Widow," the Marvel movie with Scarlett Johansson.
But, you know, "Soul" going straight to streaming, it's a contrast to, remember we talked so much about Universal, which had the "Trolls World Tour" success with going straight to digital.
This summer, after that happened and movie theaters were so upset about that, AMC and Universal cut a deal where Universal movies will go to theaters first, but only have to do 17 days in theaters, and then they can go to digital. So AMC at least gets 17 days with Universal movies, but that's what'll happen with "The Croods 2," an animated Universal movie coming out soon.
SEANA SMITH: Yeah, and guys, I mean, I could even argue both sides of this, right? That people are hesitant to go to movie theaters. Flip side, people are almost looking for any reason to get out of their house. And I think there's also the argument out there that people are hesitant to bring their kids to theaters.
I don't know if I buy that, though, because once you're inside with toddlers or with young kids, you're looking for any reason to get them out of the house. And if it's socially distanced, if you could be convinced that it is safe and you're comfortable with it, I think you would be quicker to go to the movie theaters than maybe you would initially expect.