AMC Theaters is warning investors about its incredibly uncertain future as financial fallout from the pandemic continues, blatantly stating that “substantial doubt exists about our ability to continue as a going concern for a reasonable period of time.”

A new 8-K filing arrived ahead of AMC Theaters’ upcoming earnings call next week, and it wasted no time going over the disastrous situation the company has found itself in. The filing comes with a long list of ways that AMC Theaters, the largest theater chain in the United States, is trying to stay afloat, but it acknowledged that the pandemic makes the future more uncertain than ever before. The theater chain already carried a massive debt load of approximately $5 billion by the end of 2019 and is continuing to borrow more as the company tries to make it through an unprecedented tumultuous period. AMC Theaters expects a loss of somewhere between $2.1 and $2.4 billion in the first quarter, and it maintained a cash balance of $718.3 million as recently as April.

Over the last few months, AMC Theaters has effectively generated no revenue, as government-imposed restrictions and theatrical delays have stopped the company’s primary revenue generator: movie tickets and concessions. AMC Theaters, alongside competitors, is hopeful that theaters can begin to reopen en masse in July, just in time for Warner Bros.’ highly anticipated Christopher Nolan feature, Tenet.

If AMC Theaters isn’t able to begin operations by then, “substantial doubt exists about our ability to continue as a going concern for a reasonable period of time.” The filing adds that because AMC has never “previously experienced a complete cessation of our operations,” the company is unable to make any predictions because everything is up in the air and changing all the time.

One of the biggest changes AMC is faced with — one that may last beyond the pandemic — is the seemingly successful shift to premium video on demand for the studios. NBCUniversal decided to release Trolls World Tour in April through digital marketplaces, bypassing a theatrical release entirely. The film generated close to $100 million, according to NBCUniversal chief Jeff Shell, who said Trolls World Tour “exceeded our expectations and demonstrated the viability” of premium video on demand. The decision to go straight to video was seen as a rousing success for the company.

Not everyone was happy, though. AMC Theaters CEO Adam Aron issued a letter to Universal chairman Donna Langley declaring that, effective immediately, “AMC will no longer play any Universal movies in any of our theaters in the United States, Europe or the Middle East.” Aron added that his decision was “not some hollow or ill-considered threat.” Critics soon admonished AMC’s statement, noting that AMC Theaters was already carrying massive debt load. Also, the idea that AMC Theaters wouldn’t carry potential billion-dollar movies like F9 and Jurassic World: Dominion was ludicrous.

Studios also aren’t turning their backs on the theatrical system. Executives from Disney, Warner Bros., Sony, and Universal have all said as much over the last few months. Delaying movies like Mulan, Black Widow, Wonder Woman 1984, and F9 are all examples studios gave as proof of their commitment during the ongoing public feud between theater chains and the studios.

What’s also apparent, however, is how quickly the industry is undergoing a radical shift. Studios like Disney, Warner Bros., and Universal now have streaming services that can act as a first-option distribution path. For certain movies, like Trolls World Tour, Scoob!, and Artemis Fowl or Hamilton, it makes more sense to go directly to streaming or video on demand. Theaters reportedly take up to 50 percent of the revenue, but studios get up to 80 percent on rental or on-demand platforms. On streaming platforms — like a Disney movie going directly to Disney Plus — Disney takes everything (additional signups for Disney Plus). Blockbusters like Black Widow or Wonder Woman 1984 will continue to go to theaters for now, but the theatrical model is changing.

Looking ahead, even if theaters are able to open, AMC can’t promise investors that everything is smooth sailing.

“We will continue to monitor the potential lifting of various government operating restrictions, or whether such operating restrictions are extended with respect to some or all of our theaters,” the company said in its filing. “Even if governmental operating restrictions are lifted in certain jurisdictions, distributors may delay the release of new films until such time that operating restrictions are eased more broadly domestically and internationally, which may further limit our operations.”

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