Regal Cinemas at the Edge of Bankruptcy: Can AMC Stay Afloat?

August 22, 2022 ·

Rick Frazier

Moviegoers are finding out that Regal Cinemas is a chain in deep financial trouble. Are things not as great as many thought this summer and can competitor AMC hold on?

Major movie theater chain, Regal Cinemas, watched as its stock crashed hard on Friday, only partially recovering to a 60% loss by the end of trading. The cause was simple but devastating: a declaration by its owner that the company may have to file for Chapter Eleven bankruptcy in the United States.

British company Cineworld Group said in a statement that a “voluntary Chapter 11 filing in the United States” was one of the options it was reviewing in an attempt to reduce its debt burden.

Meanwhile, Cineworld and Regal theaters were open for “business as usual,” it added, and would remain so.

“Cineworld would expect to maintain its operations in the ordinary course until and following any filing and ultimately to continue its business over the longer term with no significant impact upon its employees,” the company said in the statement issued in response to reports last week.

— Mark Thompson, CNN Business

Although it has been a busy summer for theaters with hits like Top Gun: Maverick and Minions: The Rise of Gru, overall attendance is not as great as the financial numbers might portend. Movie ticket prices have stayed ahead of the inflation rate for most goods and services — an impressive feat considering how high inflation is with its oft-record-breaking pace. So although movies are doing quite well in regards to the numbers they pull with dollar signs, the jury is still out when it comes to how many seats are being filled. Even more difficult for theaters is the problem of rising wages and difficulty to fill positions just to keep the lights on and sticky residue cleaned off of theater flooring.

The shockwave from such a major announcement, and stock impact, had rippling effects throughout the market. AMC stocks dropped 25% off of the news even though AMC seems to be at a healthy place.

One reason we might be witnessing Regal Cinemas making the announcement at this time has to do with the graveyard season of movies coming up. One look at the slate of upcoming films shows that it is going to be a very sparse field of candidates to drive customers back to the big screens. It seems that many studios aimed all their pandemic-produced films for the summer and now there’s just not much left in a portfolio that was greatly slowed by rules and regulations over the last two years. There’s simply not a big enough inventory to sustain a full year of films now, even if the summer was pretty great.

For those wondering, we are still open and still welcoming guests to our theatres :)

— Regal (@RegalMovies) August 19, 2022

Can theater chains hold on until film production stabilizes? Let’s all cross our fingers that such is the case. If not, those big screen theaters are likely to be bought by another company that may not be as responsive to audience needs. AMC’s rise at the ringing of the bell today gives us some hope.

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Author: Rick Frazier

Co-Founder of That Park Place Engineer, nuclear power plant contractor, owner of a little site called That Park Place. Opinions are my own... always. Go Vols!