AMC spikes 56% on reports Amazon may be considering a takeover

Frederic J. Brown/AFP via Getty ImagesMovie goers purchase automated tickets at an AMC movie theatre in Arcadia, California on August 2, 2017. FREDERIC J. BROWN/AFP via Getty Images
  • AMC spiked as much as 56% Monday following a report from The Daily Mail that suggests Amazon is eyeing a takeover of the beleaguered movie theatre chain.
  • Amazon’s video streaming ambitions have already left their mark on Hollywood, but the company’s original movies are still shut out of movie theatres as most chains mandate a three-month exclusivity window.
  • While the report cautioned that it’s not clear if discussions between the two companies are still active, a potential acquisition by Amazon would likely open the door for Amazon Prime original movies to be shown in theatres and streamed at home at the same time.
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AMC Entertainment spiked as much as 56% Monday after The Daily Mail reported that Amazon is eyeing a takeover of the beleaguered movie theatre chain.

According to The Daily Mail’s sources, “The duo are thought to have held talks about a potential takeover of AMC by Amazon. However, it is not clear if the discussions are still active or if they will lead to a deal,” the report said.

AMC was recently the subject of bankruptcy rumours as the chain’s liquidity position worsened as movie theatres shut down across the country due to the coronavirus pandemic.

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The company raised $US500 million in debt in mid-April to help boost its cash balance and ride out the current period of lockdown orders.

If the report is accurate, the move would represent a strategic shift for Amazon as it continues to expand its physical brick-and-mortar foot print and boost its Hollywood exposure.

Movie theatre chains often require a three-month exclusivity window for movies shown in their locations, which means a film distributor cannot allow consumers to stream or rent its content until three months after it has left movie theatres.

For the most part, because of this rule, Amazon has been foregoing theatrical releases for its content and instead opting for a direct-to-consumer streaming release on its platform.

The problem for Amazon is that in order to be eligible for awards, like the Oscars, a movie needs to be shown in theatres.

If Amazon acquired AMC, it could abandon the three-month exclusivity window and release its films simultaneously, in movie theatres and through direct streaming, eliminating a major headache that the streaming giants have been grappling with over the years.

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Highlighting the tension between movie theatre chains and film distributors is the recent streaming release of “Trolls: World Tour.”

The film was scheduled for a theatrical release this spring, but Universal opted to stream the film directly to consumers for $US20 rather than postpone the scheduled release. The move was a hit for Universal, as the film brought in more than $US150 million domestically.

But AMC viewed the move as a threat, and along with Regal Cinemas threatened to ban all future showings of movies that don’t respect the three-month exclusivity window.

In a world where Amazon buys AMC Entertainment, consumers would likely see new movie releases simultaneously playing in theatres as well as streaming at home.

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