AMC Theatres Loss Narrows on Record Attendance, Stubs A-List Reaches 900,000 Subs

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Adam Aron

The cinema giant, led by CEO Adam Aron, saw attendance rise at its U.S. and international theaters.

Cinema giant AMC Theatres on Thursday said its third-quarter loss narrowed as revenue rose amid a quarterly company record of 87.1 million tickets sold at its theaters.

AMC also reported its Stubs A-List movie subscription program has crossed the 900,000-member milestone since launching in June 2018, ahead of a first-year forecast of 500,000 subscribers. The circuit also said the Stubs A-List program was profitable during the latest quarter.

"We are about 18 months ahead of schedule on A-List profitability ... Our membership base is solid, growing and, more importantly, profitable," AMC Theatres CEO Adam Aron told analysts during a morning call. He added growth for the Stubs A-List program would begin to slow going forward after an initial ramp-up phase with an "exponential pace."

AMC and rival exhibitors have expanded their customer loyalty programs, including paid tiers, to offset the impact of consumers increasingly streaming movies in their home via Netflix and other digital options.

AMC, which is owned by China's Dalian Wanda Group, recorded a loss of $54.8 million, compared to a year-earlier loss of $100.4 million for the three months to Sept. 30. The diluted loss-per-share was 53 cents, compared to an 82 cents per-share loss last year.

That beat an analyst forecast for a 42 cents per-share loss during the latest quarter. Overall revenue rose 7.8 percent to $1.31 billion, compared to $1.22 billion in 2018.

Admissions revenues jumped to $797.3 million, against a year-earlier $751.4 million, as attendance at U.S. theaters rose to 61.7 million, compared to 58.9 million patrons in 2018. International markets attendance was also up to 26 million, against a year-earlier 23.7 million tickets sold.

Overall food and beverage revenues rose to $420 million, against a year-earlier $384.8 million. Concessions sales per-patron were $5.35, up from $5.11 in 2018.

On the analyst call. Aron said 2019 could potentially hit $12 billion in box office revenues to set a new record year, but hitting that mark would depend on a slew of year-end Hollywood tentpole releases. "We're really not going to know where 2019 ends up until the Christmas and New Years weeks," he said.

Aron also discussed the exhibition giant pursuing an ambitious plan to build more theaters across Saudi Arabia following the opening of its first in Riyadh, which he reported was doing 11 times the revenue of a typical AMC location in the U.S. or European markets.

"It's a significant opportunity for us," Aron said, as AMC expects to have 12 to 20 theaters open in that Middle Eastern market by the end of 2020, and 40 to 50 theaters launched within five years. Most of the construction costs will be covered by AMC's local partner, the Public Investment Fund of Saudi Arabia. The Riyadh location opened after the Saudi government lifted a 35-year ban on cinemas.

Aron also talked about the decision by AMC Theatres to not join rival exhibitors and run commercials in its trailer block before movies screened in its cinemas and as patrons settled into their seats. He instead warned about a consumer backlash.

"It's commonly done in Europe. It's not commonly done in the United States and we think U.S. consumers are going to react pretty negatively to it. As the leader in the industry, we pass," he told analysts. Aron added he preferred to stick to displaying upcoming movie trailers as a source of advertising revenue, while also selling movie tickets.

"We'll make far more money from that than we would make if we accepted what NCM (National Cine-Media) had offered us, to show unrelated third-party advertising in that space," he said.

Nov. 7, 6:45 a.m. Updated with comments by AMC Theatres CEO Adam Aron made during a morning analyst call.