Can this executive save movie theaters?
Adam Aron endures pandemic ups and downs as AMC boss
Most of the time, the 116-yearold movie theater business is rather humdrum.
Tickets get sold. Images get projected onto screens, sometimes in 3-D. Every now and then, change-phobic cinema operators get excited about an innovation. The armrest cup holder, for instance, was patented in 1981.
But these are not normal times at movie houses. Just ask Adam Aron.
A year ago, Aron, who runs AMC Entertainment, the world’s largest multiplex chain, was feeling unusually invigorated about his antiquated industry. Even with streaming services proliferating — and attendance in North America declining — cinemas worldwide collected $42.5 billion in 2019, a record high.
“We see dramatic growth in the size of the domestic box office not so far away,” he said with flourish in late February.
By mid-March, the coronavirus had forced Aron to furlough 35,000 workers, including himself, and close every AMC theater: 10,700 screens in 15 countries. As the coronavirus surged and retreated and resurged, AMC reopened most of its theaters, reclosed many of them and, lately, started to reopen some of them again.
To keep the debt-saddled chain alive, Aron and his chief financial officer, Sean Goodman, who joined AMC just a couple of months before the crisis, have done financial backflips, narrowly averting bankruptcy four times in nine months. AMC has raised more than $1 billion in fits and starts and has secured another $1 billion or so in rent deferrals from landlords.
It has been one of the wildest corporate rides of the pandemic, which has severely tested chief executives everywhere. And it is not over yet.
With some film studios now predicting that moviegoing will not begin to recover until midsummer — and postponing releases yet again as a result — Aron has said AMC needs to raise an
other $750 million to squeak through. AMC has raised $204 million toward that goal as of mid-January. AMC said in a recent securities filing that, without added cash, liquidation or bankruptcy restructuring was “likely.” One potential new lifeline involves a financing package tied to Odeon, a European theater chain owned by AMC.
“Many have repeatedly underestimated the sheer will of our management to power through this crisis,” Aron said in an interview, adding a bit of the droll brashness that is his trademark: “We have not yet begun to fight!”
On front line
The pandemic has also thrust Aron, 66, to the front lines of the streaming wars, where, over the past six months, his industry has blasted him as a traitor one minute and followed him as a trailblazer the next.
Aron, a relative newcomer to the multiplex business, broke ranks with other chains in July and agreed to drastically shorten the exclusive window that AMC receives to play Universal films. The studio, home to the “Despicable Me” and “Fast and Furious” franchises, now has the right to make movies available in homes through premium video on demand after just 17 days in AMC theaters — down from roughly 90 days, long the industry norm. In return, Universal agreed, for the first time, to share a portion of the premium on-demand revenue with AMC.
Mooky Greidinger, who owns Regal Cinemas, the No. 2 chain in North America, dismissed Aron’s deal as “the wrong move at the wrong time” in an August interview. He cited the usual reason: People will be reluctant to buy tickets if they can see the same film on their living room television set or iPhone screen just a few weeks later.
“This is not a business that you are shaking up that easily,” said Greidinger, whose family has operated cinemas since the 1930s.
Consider it shaken: Regal is now in talks with Universal for a similar arrangement, according to two people with knowledge of the matter, who spoke on the condition of anonymity to discuss private negotiations. Two other chains, Cinemark Holdings and Cineplex, have already followed AMC.
Given the initial blowback, Aron should be taking a victory lap. Instead, he has found himself back on the defensive.
Aron has been sparring with Warner Bros., which is owned by AT&T, over streaming. Warner recently vowed to release 17 films without giving theaters any exclusive play time — or any financial sweeteners. To play a Warner film with no exclusivity, AMC initially demanded up to 80% of revenue from ticket sales, according to two people briefed on the matter, who spoke on the condition of anonymity to discuss the private talks. Warner rejected that request. Ticket sales are typically split 50-50 between studios and theaters.
Even if he does manage to steer AMC through the pandemic, Aron faces challenges on the other side. At best, the company will emerge deep in debt. Moviegoing could surge with pent-up demand. Or the masses, now trained to expect instant access to major films on streaming services or online rental platforms, could be reluctant to return. Nobody really knows.
Diverse background
How much fight does Aron really have left in him?
Darryl Hartley-Leonard, who ran the Hyatt Hotel Corp. in the 1980s when Aron served as chief marketing officer, laughed when asked that question.
“Let me explain Adam to you this way,” Hartley-Leonard said. “Had he been the band leader on the Titanic, not only would he have gone down with the ship, he would have looked over the side as the dark, icy water got closer and asked, ‘Do you think we have time to write another song?’ ”
Adam Maximilian Aron is not well known in Hollywood. He lives in Kansas, where AMC is based, and arrived at AMC in January 2016 by way of the hotel business.
After breezing through Harvard University in three years and earning his Master of Business Administration (also from Harvard, with distinction), he went to work for Pan American World Airways in the marketing department. In his early 30s, he became Hyatt’s marketing chief and subsequently held the same job at United Airlines. Then he began making a name for himself as a turnaround artist, serving as the chief executive of Norwegian Cruise Line, Vail Resorts and the Philadelphia 76ers. For a time, he was a senior operating partner at Apollo Global Management, the private-equity powerhouse. Before AMC, Aron ran Starwood Hotels.
He can be marvelously blunt. “The quarter was simply a bust,” Aron told AMC analysts in 2017. More often than not, however, he drifts into monologues and voluminous lists. “Before turning to your questions, I’d like to comment on eight important specific topics,” he said on AMC’s mostrecent earnings call. Bad puns delight him, as do folksy interjections. (“Whoa, Nelly!”)
He has a tendency to grandstand, quoting, for instance, a wartime Winston Churchill to sum up AMC’s pandemic mindset. “We shall fight on the beaches,” Aron told analysts with flourish in November. “We shall fight on the landing grounds. We shall fight on the fields and in the streets.”
Tapping his experience with hotel and airline loyalty programs (he created Pan Am’s frequentflyer program in 1982), Aron improved AMC’s version, Stubs, which has 25 million members, up from 2 million in 2016. He also moved AMC into the video-ondemand business by starting an iTunes-style online store.
“In terms of innovation, Adam has done a great job,” said Eric Wold, a senior analyst at B. Riley Securities.
Even so, Wold noted, AMC shares have struggled. The company’s market capitalization in March, just as the pandemic started, was $780 million. It was $2.2 billion when Aron arrived.