ONE SCARY PLOT
AMC’s 27% plunge rattles US cinema sector
The movie theater business is turning into a horror show.
Shares of the nation’s largest theater chain, AMC Entertainment, suffered the worst of the chill on Wednesday, plummeting 27 percent after it reported dwindling attendance nationwide.
The news sparked an investor stampede from the sector and stirred concern that the industry is on the edge of a significant retrenching.
“The malls are dying and the business is not well managed,” said Ross Gerber, an analyst at Gerber Kawasaki, noting that upstarts like iPic, which serve food and cocktails, have done a better job than the cinema giants of catering to moviegoers.
One influential analyst, Robert Fishman of MoffettNathanson, downgraded the whole sector on Tuesday.
AMC, owned by Chinese real estate conglomerate Dalian Wanda Group, plans to slash costs as it expects its loss in the current quarter to widen in the $178.5 million range amid weaker-than-expected revenue.
The biggest obstacle for the Leawood, Kan., company, which operates 1,000 cinemas and four of the nation’s top five grossing theaters, is the growing indifference from a new generation that has grown up with Netflix- style home entertainment.
Millennials are eschewing the multiplex for movies and videos streamed to smartphones and other devices.
The shift, which hasn’t been helped by the increasingly stiff price of admission at cinemas, comes as AMC has doubled down on the sector, paying $1.2 billion to buy rival Carmike in December.
AMC said it took a $202.6 million pre-tax impairment charge related to its acquisition of in-cinema ad firm National CineMedia.
As of July 31, North American ticket sales were off 4.9 percent, to 768 million, versus the year-earlier period, according to Rentrak, while revenue slipped 1.8 percent, to $6.8 billion, despite jacked-up ticket prices.
While AMC shares plunged to $15.20, shares of IMAX dropped 7.9 percent. Elsewhere, Cinemark fell 4.9 percent and Regal Entertainment declined 4.7 percent.
Hollywood’s next act isn’t going to help, either. Studios are planning to launch premium video-on-demand platforms, which will charge prices as high as $30 to stream early releases of movies on cable TV.
“We think choices are running out for the studios. They’re going to have to face reality,” Fishman told The Post, explaining that socalled premium VOD is the only way to address the studios’ lack of profits.
“Netflix is going to be double the size of a major studio with over 40 movies per year,” Fishman added. “Eventually, that will take some attendance out of theaters.”
Netflix was at Comic-Con in San Diego, Calif., last month with Will Smith promoting “Bright,” an original movie.“It’s really exciting to be at the forefront of whatever this new way of consuming media is,” Smith told reporters at the time.
US box office is down 4.4 percent compared with the year-earlier period, according to an AMC statement.
Business is expected to continue to underperform through the third quarter, but expectations are high that the December release of “Star Wars: The Last Jedi” will buck that trend.