Four years ago, AMC became North America’s largest cinema circuit with a $1.2 billion deal to acquire U.S. rival Carmike. To win regulatory approval, the merged company agreed to divest theaters in 15 markets. Now, as COVID-19 ravages the exhibition industry, AMC is taking steps to again own what it previously was forced to sell off.
Ten theaters, operating in nine states, are the subject of an unusual motion in D.C. federal court in an antitrust case that has been asleep for more than three years. Those theaters were being run by New Visions Cinema LLC, which was set up by a private equity firm in 2017 to take on theaters that AMC/Carmike had to divest to satisfy competition regulators and complete the megadeal. But now, New Vision has commenced liquidation proceedings in Georgia state court, and landlords are in the midst of terminating leases for the movie houses. AMC, which has been the subject of bankruptcy and acquisition rumors for months, is instead primed to grow larger. The company, whose major shareholder is Chinese conglomerate Dalian Wanda Group, is asking for permission to modify final judgment in the government’s antitrust suit so as to be able to reacquire these theaters with the government’s approval.
“The degree of economic hardship currently being experienced by AMC, New Vision, and the entire theatre exhibition industry is a unique changed circumstance that could not have been anticipated at the time the Final Judgment was entered,” states the motion, which briefly argues that allowing AMC to negotiate leases and operate theaters is in the public interest.
AMC’s motion is unopposed, which basically signals that the Department of Justice is on board this plan. It’s perhaps evidence of how the ongoing health crisis will mean the toleration of more consolidation.