Exhibitor AMC Entertainment beat Wall Street estimates in the first quarter thanks to the surprise of Black Panther, doubling net income to $17.7 million, or 14 cents a share, from $8.4 million in the year-ago period. Total revenue increased 8% to $1.38 billion from $1.28 billion.
“Praise be the king of Wakanda!” gushed CEO Adam Aron during a conference call with analysts. He also raved about Avengers: Infinity War, which came out after the March 31 end to the quarter but also during the historically less-explosive month of April. Seventy-four AMC locations set house records the weekend Avengers opened, he noted. Aron even added a plug for Disney’s Mary Poppins revamp coming at Christmastime, noting the 1964 original grossed $102 million long before the days of recliner seats and online surcharges.
As an outspoken critic of MoviePass, though, Aron knew to expect questions about the controversial monthly subscription service that has perplexed so many in the movie business. He calmly reiterated his past critiques, saying that at $9.95 a month, the service just does not add up.
“There’s nothing wrong with subscription programs,” Aron said, noting that AMC itself has one in the UK called Limitless. “They can be quite positive if they’re done rationally and intelligently. But they have to be done at a price that is sustainable.” At the current price point, he added, “there is not enough money to spread around MoviePass and Hollywood studios and theater operators so that Hollywood can make quality movies and theaters can operate quality theaters.”
In March and April, he said, MoviePass paid AMC $12.02 per ticket on “hundreds and hundreds and hundreds of thousands of tickets” each month. Subscribers attended movies at AMC sites an average of 2.62 times in March and 2.75 times in April. “I took my calculator out,” Aron added, “and I got to a number that was considerably larger than $9.95” in terms of the company’s monthly expenses. “Apparently we’re not alone in that view. Our concerns are shared and articulated by MoviePass’ auditors.”
Aron said that while subscription ticket sales represent less than 5% of the total, the circuit is moving aggressively to change its traditional methods and mix of revenues. Last week, he noted, 47% of AMC tickets were booked online in advance. “This is another benefit of AMC introducing recliner seating. We can do advance ticketing by seat,” he said. “It takes a lot of the anxiety out of moviegoing.” Four or five years ago, Aron said, that number would have been around 20%, with three-quarters of that being Fandango, the consortium ticketing app. (Today, AMC’s own ticketing app accounts for 27% of all the circuit’s online sales.)
Dynamic pricing, something other exhibitors have experimented with, remains of interest, but Aron shrugged, “You can only do so many things at once.” The company already effectively has a 10% weekend surcharge, he noted, and in Europe it charges more for the best seats.
AMC, which now operates in 16 countries, did not have especially robust quarterly numbers outside the U.S. in the first quarter on an apples-to-apples basis. Aron blamed the softness on Black Panther being a more “American” release than most global tentpoles, as well as weaker local product in some territories. Still, “nobody should be spooked because Europe had a soft quarter,” he said. The period also saw an historic international expansion, the opening of the first commercial movie house in Saudi Arabia in 37 years. As the country’s marketplace adds dozens of theaters in the coming years, he said, profitability in Saudi Arabia “is going to be a big lift” and the profit will be “a direct result of us going into Europe.”
On a similar theme, Aron was asked about the state of the company’s potential IPO in Europe given that AMC operates the Odeon circuit in the UK and just bought Nordic Cinema Group. “No new news and nothing has changed,” he said.