Craig Ramsey, CFO of AMC Entertainment, addressed hot topics including the exhibitor’s flagging stock price and its outlook on the 2020 film slate, streaming and windows in an appearance at Citibank’s TMT West Conference.
“Everybody’s been saying it’s not going to be as good a year” in 2020, Ramsey said. “Well, we’ll see. Clearly, it doesn’t look like, just in terms of the titles, like it’s going to be as strong. That’s going to fit into this whole streaming dialogue as well.”
Earlier Tuesday, AMC’s stock fell to a multi-year low of $7 a share before closing at $7.13. It posted one of the sharpest declines of any media or entertainment stock in 2019. One source of investor angst is Netflix’s multibillion-dollar investment in its movie business, manifest in 2019 with marquee titles like The Irishman and 6 Underground. Box office was the third-highest total ever recorded last year, but revenue slipped 4%. Many investors fear the rising influence of streaming, even though AMC and its large-circuit peers continue to refuse to play streaming titles in shorter theatrical windows.
Streaming as well as the company’s debt, which is “higher than we’d like it to be,” are two big factors in the “overhang” on the stock, Ramsey said. Even though owners of major studios — Disney, NBCUniversal and WarnerMedia — are in the process of mounting major new streaming services of their own, Ramsey remains upbeat about the company’s long-term potential.
“Over the years, there have been a lot of threats to our window, our theatrical window,” which now ranges from 70 to 80 days for most major releases, Ramsey said. “We think the evidence suggests that moviegoers are streamers and streamers are moviegoers … and at some point, they’re going to want to leave home” and visit a theater.
It isn’t easy to tweak the traditional exhibition model to accommodate release patterns that combine streaming and theatrical, Ramsey reasoned. “There are movies where demand is sated early,” he said, but even so, top circuits like AMC are “not going to be willing” to dramatically shrink the window.
As to the threat of studios leaning more toward streaming, having invested billions of dollars in the race to catch up with Netflix, he elaborated, “there are many other touch points in our relationship” beyond the length of the window. “It’s what we share on the tickets, how we support the branding of that content to our 22-million-household loyalty program” and other initiatives, he said.
While windows have been cut nearly in half over the past decade or two as electronic sell-through and other revenue opportunities have arisen, Ramsey said another halving of the window is extremely unlikely. “It has to be a package deal. It has to make sense,” he said. “We have to be compensated. And, frankly, if there were some way to shorten the window around smaller releases, but not around larger releases, to the point where it was not predictable by the consumer,” confusion in the marketplace could result.
The bottom line, the executive emphasized, is that theater owners “can’t be economically disadvantaged.” Controlling the first window for Hollywood releases is “an important asset for us.”
A few minutes before Ramsey took the stage, AMC announced a noteworthy executive shift, with Dan Ellis being promoted to head of the company’s Development & International department. Ellis is succeeding Mark McDonald, a 41-year veteran of AMC who is retiring in February. Among McDonald’s accomplishments is his oversight of the first renovation project to replace an auditorium’s traditional seats with recliners. That 2011 revamp in Lakewood, WA, established a new template for AMC and the entire exhibition sector.
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