Could Amazon be about to take over your local cinema?
With Odeon’s owner in trouble, deal could help tech giant shoot ahead in movie wars
AMAZON is circling the troubled owner of Odeon Cinemas, The Mail on Sunday can reveal. Sources said the online shopping and technology giant, run by billionaire Jeff Bezos, has run the rule over America’s AMC Theatres, the world’s largest cinema chain, which also owns Odeon in the UK.
The duo are thought to have held talks about a potential takeover of AMC by Amazon. However, it is not clear if the discussions are still active or if they will lead to a deal, sources said.
A deal would mark a pivotal moment in the history of the film industry and would give the streaming giants an even tighter grip on Hollywood.
Amazon and Netflix have shaken up the film industry in recent years by offering subscriptions to watch films and television shows at home and on the go. However, they have not yet made a move into cinemas.
AMC is reportedly on the verge of bankruptcy, giving Amazon the opportunity to snap it up on the cheap. The company is the latest target on Amazon’s hit list as it looks to take advantage of the coronavirus crisis, which has left many major firms in need of rescue.
Amazon is understood to have held talks about running the National Lottery in recent months and is said to be eyeing a takeover of satellite company OneWeb, the British firm backed by Sir Richard Branson, which filed for bankruptcy in March in the US.
Bezos founded Amazon in 1994 as an online bookstore, but has since grown it into one of the world’s largest companies, with a number of giant divisions. It is now the world’s best-known shopping site, it has a huge cloud computing business and a popular video service, and even produces its own films and television shows through Amazon Studios.
IT BECAME the first streaming service to win an Oscar in 2017 for its movie Manchester By The Sea, starring Casey Affleck and Michelle Williams. The company bought supermarket chain Whole Foods Market in 2017 in a sign that Bezos was willing to spend money buying nonweb-based companies. Buying a cinema chain would enable Amazon to control the screening of films, giving it greater dominance of the industry. Amazon’s interest in cinemas is not new. In 2018, it looked at buying American arthouse cinema chain Landmark Theatres, but lost out to the eventual buyer, Cohen Media Group. Netflix was also reportedly in the running to buy Landmark.
But a takeover of AMC would be on a different scale as Landmark only had about 250 screens in the US, while AMC has about 10,000 around the world.
Amazon certainly has the firepower to buy AMC, whose stock market value has collapsed in recent years to just $420million (£339million). Amazon generated profits, or net income, of $2.5billion in the first three months of this year.
AMC was bought by Chinese conglomerate Dalian Wanda for $2.6billion in 2012, but it bought back $600million worth of shares in 2018 after Beijing cracked down on overseas investments by Chinese companies.
Under Wanda, AMC launched a major expansion plan, and in 2016 bought Odeon in the UK for £920million from British financier Guy Hands’ private equity firm, Terra Firma, and US group Carmike Cinemas for $1.1billion.
The deals turned AMC into the world’s largest cinema company, with 1,000 outlets and 10,000 screens around the world.
However, the expansion plan backfired and left AMC saddled with debts that are now close to $5billion. Last month, AMC raised $500 million from bond investors in an effort to stay afloat during the crisis. However, investors still questioned whether AMC could avoid bankruptcy, given its parlous financial state.
A group of AMC’s lenders reportedly hired lawyers to advise on restructuring options last month, underlining AMC’s financial strife. In 2019, it generated revenues of $5.5 billion, but made a loss of $149 million, with its net debt standing at $4.7billion.
Since the coronavirus crisis struck in early February, AMC’s shares have halved. But even before the pandemic had shut down cinemas around the world, AMC’s share price had slumped by 80 per cent since the end of 2016, shortly after it took over Odeon and Carmike.
Last month, AMC stunned the industry when it announced it would no longer screen films made by Universal Pictures, one of the largest studios in Hollywood and behind new Bond film No Time To Die. This followed comments made by NBC Universal Media chief executive Jeff Shell, who suggested Universal could start releasing films on demand at the same time as in cinemas after the successful release of Trolls World Tour.
Amazon declined to comment on its interest in AMC. AMC did not respond to requests for comment.
Cinema operators in the UK are hoping to reopen outlets by midJuly, in time for the release of Tenet, the new blockbuster by director Christopher Nolan. The industry has been lobbying the
Government to allow them to operate, having drawn up detailed plans to allow for social distancing, including staggering showings to limit crowds and ensuring groups from different households are not sat close together.