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Disney (NYSE: DIS) CEO Bob Chapek said Sept. 21 at a virtual convention organized through Goldman Sachs that would be dedicated to releasing videos exclusively in theaters beyond 2021 This is smart news for AMC Entertainment (NYSE: AMC) or AMC inventory owners.
Disney’s loss of content is one of the many problems memes inventory faces as it tries to bring retail investors to their valuation in nearly 8 years of history as a public company.
While Disney will continue to cobriot in combination the balance between theatrical and Disney premieres, I don’t think that’s the biggest concern of the film’s operator.
What would happen to AMC if all movie makers gave up theatrical releases forever and opted for movie releases through streaming services?
It would be a bloodbath.
Of course, you can pivot towards streaming concerts, live sporting events, etc. , for other people to come to your theaters, but the burden of that may be simply astronomical.
AMC’s most productive year in sales and profit in 2018, when it generated $265 million in an operating profit source on a profit of $5. 46 billion. Of this total, 7. 4% came from other profits, with the sale of price tickets and the lion’s percentage of sales.
Even after the break of the old Hollywood formula of studios with movie theaters, Paramounts and Disney around the world still control the movie chains. The best live-streaming typhoon and the pandemic driving audiences away has caused movie studios to question the relationship.
“The studios and exhibitions have had a captivating but debatable relationship,” a film operator with locations in the southern United States told CNBC in early January, on condition of anonymity. “The exhibit is essentially a company that has blank screens and empty seats and we can’t do what we do without the studios. “
In my experience, the movie chains, which added AMC, haven’t done enough to diversify their revenue beyond their 4 walls and while I don’t think the appointment between studio and exhibitor will end anytime soon, it might have been sensible for AMC to imagine a globalization. in which the sale of price tickets was not the company’s biggest source of income.
Canada’s largest cinema chain is Cineplex (OTCMKTS: CPXGF). While AMC’s inventory has increased by 661% over the previous year, Cineplex is up 84%. Both corporations have the highest market share in their respective markets. Both have significant debts.
In the case of GAC, it has net debt of $9. 26 billion, or 48. 8% of its market capitalization, while Cineplex has net debt of C$1. 87 billion ($1. 47 billion), or 220. 9% of its market capitalization. Therefore, the inventory buyers themselves have made AMC look like a more powerful company.
However, if you know what could happen in the long run where studios use streaming for movie releases and then put them in theaters, Cineplex has a head start in terms of diversification.
Unfortunately, despite ambitious steps to go beyond movies, the company’s plan to open TopGolf locations in Canada in partnership with the American company was cancelled in 2020 due to Covid-19. .
For me, the company’s ongoing efforts in location-based entertainment responses and entertainment services across Canada (it has 10 open arcades with up to 15 long-term and 3 Playdium venues with up to 15 long-term) make it a big, horniest personal equity goal than AMC.
The downside is that someone will check their luck in Cineplex. Au as the price games disappear, a recovery means a bigger increase for speculative investors.
As for AMC, it’s more productive to expect Disney and others not to permanently transfer to streaming because it’s a one-trick pony with too much debt to spin elsewhere.
At the time of publication, Will Ashworth had (directly or indirectly) no position on the values discussed in this article. The perspectives expressed in this article are those of the author, the subject of InvestorPlace’s publication Guidelines. com.
Will Ashworth has been writing about investments full-time since 2008. The publications he has made his impression on come from InvestorPlace, The Motley Fool Canada, Investopedia, Kiplinger and several others in the United States and Canada. The time check. He lives in Halifax, Nouvelle-Écosse. Al time of writing, Will Ashworth did not hold a position in any of the aforementioned titles.
Disney’s launch is just one of the many issues facing AMC Entertainment Stock that first made its impression on InvestorPlace.