AMC Theatres CEO Sees "Little Chance" of Premium VOD This Year
"We've never been more confident that, overall, the movie industry is strong, stable and growing over the long term," said Adam Aron.
Exhibition giant AMC Theatres, which is owned by China's Dalian Wanda Group and has expanded internationally via acquisitions, on Thursday reported that it swung to a fourth-quarter loss due to a one-time $310 million tax expense following the recent U.S. tax law overhaul.
The mega-exhibitor posted a loss of $276.4 million, compared with year-ago earnings of $29 million, due to the $310 million impact related to the tax law change. Excluding the tax impact, earnings would have reached $33.6 million. The diluted loss per share came to $2.14, well behind Wall Street's consensus forecast for a profit of 27 cents per share.
Shares in AMC Theatres were up 30 cents, or 2 percent, to $15.30 in pre-market trading on the New York Stock Exchange.
AMC Theatres president and CEO Adam Aron pointed to Disney and Marvel Studios' Black Panther having broken box-office records in his theaters across the country and in Europe. "With more great movies on the horizon, and further investment at AMC in guest-heralded amenities, we are increasingly optimistic about the potential for success at AMC [Theatres] in 2018 and the years to come," he said.
Aron returned to that bullish theme in an analyst call. "We've never been more confident that, overall, the movie industry is strong, stable and growing over the long term," the exec said.
He also reiterated the prospects for an initial public offering for his new European theater assets on the London Stock Exchange. "We are working closely with advisors about those options," Aron told analysts, as he argued an IPO in Europe could raise cash and reduce overall debt for the company.
Aron also said his company's first theater in Saudi Arabia could open later this year as AMC moves closer to a partnership with Saudi Arabia's Sovereign Wealth Fund. The exhibitor late last year announced it had signed a non-binding Memorandum of Understanding to explore building theaters in Saudi Arabia after the Middle Eastern kingdom announced it will allow cinemas for the first time in 35 years.
During the analyst call, Aron also said the major Hollywood studios’ push for premium video-on-demand via negotiations with North American exhibitors had stalled. "In our opinion, there is little chance — and if Disney acquires Fox, there is no chance — that PVOD will be implemented in the United States in 2018."
He added that there were no ongoing discussions between the major studios and exhibitors on PVOD. "Accordingly, our attention has turned to other possible ideas, in lieu of PVOD, that can grow the pie for all of us," Aron said.
And while hesitant to talk about Movie Pass, the AMC Theatres boss said its business model was "unsustainable" when asked about the movie subscription service. AMC, with 8,000-plus screens in the U.S., has done significant business via Movie Pass, which allows subscribers to pay $9.95 a month to see as many films as they want.
In January, Movie Pass subscribers visited AMC locations nearly three times each, on average, and paid an average $11.90 per ticket. "That means Movie Pass paid us in excess of $32 per subscriber that showed up at an AMC theater, where they were charging $9.95 a month. We don't see where those numbers add up," Aron said.
During the fourth quarter, overall revenue rose 53 percent to $1.41 billion for the three months ended in December after AMC acquired Odeon Cinemas Group and Nordic Cinema Group in Europe in addition to Carmike Cinemas in the U.S.
The revenue line included $438.5 million from AMC's international cinema network.
Admission revenue at AMC during the fourth quarter jumped to $897.1 million from a year-earlier $588.8 million, and food and beverage, or concession, revenue rose 47 percent to $415.3 million from $282.5 million.
The average ticket price paid in the U.S. market during the fourth quarter rose to $9.92 from $9.74 a year earlier, while the average ticket price in international markets was $9.29, up from a year-earlier $8.08, the company said.
March 1, 9:30 a.m. Updated with comments by executives during an analyst call.