AMC Finds the Right Price with WarnerMedia | Sidnaz Blog


AMC Entertainment’s revenue plunged 89% in its fiscal fourth quarter.


Ron Adar/Zuma Press

WarnerMedia may have bought itself some peace with the world’s largest movie theater chain. And that chain could use the good news.

AMC Entertainment

AMC 3.95%

may be best known these days as the second-most-popular “YOLO stock” after


: AMC shares were up 365% from the start of the year before the company’s fiscal fourth-quarter report Wednesday afternoon. But those results were never going to justify the action. Revenue plunged 89% year over year to $162.5 million.

Like rivals such as


AMC’s near-term results are less important than its prospects for reviving an exhibition business following a yearlong shutdown. That recovery may be more challenging given that most of Hollywood’s studios now have their own streaming outlets to feed.


WarnerMedia made the most aggressive—and controversial—move late last year by announcing plans to put its entire 2021 film slate on its HBO Max service on the day of release for a 30-day window.

So it was a bit surprising that AMC gave a shout out to incoming Warner movies on its conference call Wednesday. That included “Godzilla vs. Kong,” which is set for release on March 31. AMC Chief Executive

Adam Aron

said “You should probably assume that if we’re playing Warner movies, we came to agreement with Warner that any changes in their strategy are being done in ways where AMC shareholders benefit as opposed to are being penalized.” He declined to discuss further details, but added later that concessions would likely show up in the fees AMC pays to rent movies.

Film rentals are typically a theater’s largest single cost item.

Meghan Durkin


Credit Suisse

estimates that studios typically take 55% or more of the domestic box office on a major release. Exhibition costs consumed more than 50% of AMC’s annual admission revenue for the five-year period prior to the pandemic. So a break in costs could help the company’s gross margins at a time when it also is facing a much higher debt load, along with the need to make good on property rents that were deferred by many of its landlords due to the pandemic’s long shutdown.

It also helps AMC that WarnerMedia has been in damage-control mode, since the decision to put first-run movies on HBO Max angered many in Hollywood’s creative community. WarnerMedia CEO

Jason Kilar

told a

Morgan Stanley

investment conference last week that “we absolutely are developing and producing movies for theatrical exhibition,” similar to public statements made recently by the heads of


and Paramount. Michael Pachter of Wedbush guesses that WarnerMedia may be discounting rental rates by as much as 10%. At the right price, AMC will make the show go on.

The coronavirus pandemic shuttered every single AMC theater for months. But the pandemic isn’t the only thing pushing the company onto financially shaky ground. Photo Illustration: Jacob Reynolds/WSJ

Write to Dan Gallagher at

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