MOVIE THEATERS GETTING PINCHED
AMC shares tumble 27% as summer box office slumps
Is Netflix killing the multiplex? Wall Street apparently thinks so.
Shares of AMC Entertainment fell 27% to $15.18 Wednesday — hitting an all-time low of $15.15 at one point — after the nation’s largest movie theater chain said it would report a net loss for the April-June period of between $174.5 million and $178.5 million, compared to profit of $24 million during the same period in 2016.
Other movie chains’ shares also took hits Wednesday. Shares of the nation’s second-largest chain, Regal Entertainment Group, were down about 5% to $18.19. Cinemark saw its shares fall 5% to $37.82, while IMAX shares dipped 8% to $20.27.
“There are concerns that box office attendance is declining, both as a result of weaker-thanexpected performance of some releases but perhaps more importantly because of less interest in movie-going by consumers,” said Christopher Vollmer, global entertainment and media analyst with consulting firm Pricewater- houseCoopers.
And a weak summer box office lineup isn’t helping.
Compared to moviegoing, consumers last year spent even more (an estimated $11.9 billion) on subscription streaming services such as Netflix and digital movies delivered on demand via services such as Apple’s iTunes and Google Play, PwC estimates. This year, consumer spending on Net video is projected to hit $13.6 billion, surpassing box office by more than $2 billion, according to PwC.
“Because of their heavy emphasis on high quality, original video entertainment, the growth of (streaming) SVOD services is having an impact on all the traditional video businesses,” Vollmer said.
The biggest problem, says Michael Pachter, analyst with Wedbush Securities, is 2017’s slate of films has not matched the record pace of last year’s, which resulted in an all-time box office high of $11.37 billion.
Poor performing films are driving AMC’s dour forecasts, the company says. The U.S. box office for April-June fell 4.4%, compared to the same quarter of the year in 2016. And AMC expects a “challenging ” environment in the current July-September third quarter, it said in an announcement Tuesday.
Wall Street’s reaction to cinema stocks is a wrong-headed bear thesis “that no one is ever going to go to the movies again,” Pachter says. “Being down 4% from an all-time record box office is just not a big deal.”