Table of Contents
Section 1: A Positive Week for AMC Cinema’s
Section 2: My Stance on Amazon’s potential AMC purchase
A Positive Week for AMC Cinema’s
AMC Entertainment Holdings Inc. has now jumped almost as much of 56% on a media report that Amazon.com Inc. has discussed a potential AMC takeover. The percentage gains were stopped when another outlet said the companies aren’t talking.
As of right now it is unclear if the talks are currently active or will even end-up leading to a deal. A spokeswomen for Amazon said the company doesn’t comment on speculation. AMC has also not responded about any talks with Amazon.
The trade publication Deadline reported on Monday morning that “there are no talks,” citing unidentified sources.
Currently AMC shares have risen as much as $2.31 to $6.41 in New York trading. They were up 19% minutes after the Deadline report. The shares went up again to 36% to $5.58 at around 11:28 a.m. The current pandemic has shot AMC stock down 43% this year through last week. All the other cinema industry’s are also taking a huge hit from this pandemic and may not ever recover or open their doors again. Many movies that were scheduled to be released in theaters have paired with Amazon or Netflix to release new films. Movie fans seem to be happy with this new way to watch movies.
AMC’s bonds surged when reports surfaced of talks with Amazon. AMC was among some of the top gainers in the U.S. high-yield market.
The reported discussions are unlikely to create a price war for AMC, Amine Bensaid, a Bloomberg Intelligence media analyst said in a recent note. “Movie-going is unlikely to fully bounce back in a post-Covid-19 world and may create risks for an acquirer,” he said. “AMC’s elevated debt load and unavoidable fixed costs mean the company’s near-term financial flexibility will be severely challenged.”
AMC showed its concern about current threats with its reaction to the previous month’s straight-to-streaming relase of “Trolls World Tour.” AMC has now decided to no longer show Universal movies of any kind.
Amazon is a big player in streaming with its Prime Video platform, all while releasing original films. Like their competitor Netflix Inc., Amazon is eager to shore up its current position in Hollywood as new and old players fight for content deals. Buying a big theater chain would guarantee another outlet for Amazon movies.
My Stance on Amazon’s potential AMC purchase
Amazon is always looking to find ways to better their company as a whole. Though they already have Prime video, adding a Cinema chain could be good for business. Amazon does need to consider that movie theaters are on the decline and fast approaching extinction. Though movie theaters do provide nice date nights from time to time they tend to end up being really expensive, which is a huge turn off for couples on a tight budget.
Movie theaters use to be much cheaper and now it costs more to get a decent meal at the theater then the actually movie ticket itself. I recently took my fiancee to see a movie at a theater in Alexandria VA and for just 2 bottles of water it cost me around $14.00. With the $14.00 spent on water alone I could have gone to a grocery store and bought two cases of water. The movie theater food never lives up to the hype either and you can end-up spending close to $30-50 on food, plus the tickets itself. What is suppose to be a cheap fun date ends up hurting your wallet all for a 2 hour span of time. This excludes if the movie theater has a timed parking lot that you are charged for by the hour.
To make matters worse if you have a family of four or five people the prices have now tripled or quadrupled. Since prices are so high this has stopped many families from giving the movie theaters their business.
Amazon also needs to be aware that movie goers can literally watch movies that are in the theater currently online for free and in decent or HD quality. Though this method of watching movies is illegal there are thousands of sites who promote watching free new movies. This excludes the millions of people around the world who watch the movie. Its very hard to regulate the thousands of current illegal movie streaming sites. To make matters even worse if regulation enforcers shutdown sites another site will open up tomorrow, so its an endless uphill battle. Amazon and AMC are competing with this completely free and no driving involved way of watching movies. This will be a hard market to compete with. Unless Amazon has some high tech ideas up their sleeve to get customers back in seat’s, if not, this may be a huge loss for the company.
Amazon is always using cutting edge technology, so if they do decide to go though with this purchase, they will find a way to make it profitable. They may try to introduce augmented reality glasses to better the experience or use Virtual Reality to better the movie experience. No one knows for certain, but without the help of Amazon, AMC will not last to much longer based on the huge decline in customers.
Article was created by:
Tony Steiner 5/14/2020