AMC tumbles as Hollywood strikes, higher expenses hit results
Reuters
Published Feb 29, 2024 07:54AM ET
Updated Feb 29, 2024 10:10AM ET
(Reuters) - AMC Entertainment (NYSE:AMC) slumped nearly 8% on Thursday as the movie industry continued to reel from the impact of twin Hollywood strikes, driving the theater chain to post a larger-than-expected quarterly loss.
The writers and actors' strikes have crippled much of the industry, leading to fewer releases following the blockbuster summer successes of "Barbie" and "Oppenheimer."
The delay in the release of the "Dune" sequel likely contributed to the box-office weakness last year.
AMC reported a loss of 83 cents per share for the fourth quarter, while analysts were expecting a loss of 70 cents, according to LSEG data. The impact of the strikes is expected to linger this year and weigh on earnings in 2024.
Just as adjusted core earnings in the summer of 2023 were returning to more acceptable pre-COVID levels, the movie industry was paralyzed by debilitating strikes, temporarily challenging AMC earnings in 2024, CEO Adam Aron said on a post-earnings call.
The strikes and the resulting lack of new content forced studios to try other means such as concert-based movies to pull in revenue.
"AMC's deals with Beyoncé and Taylor Swift went a long way in staunching the wounds and have opened up a lucrative revenue stream," said Danni Hewson, head of financial analysis at AJ Bell.
However, higher distribution costs for Swift and Beyonce's concert movies were a drag on its earnings.
Domestic box-office collection was down 35% for the fourth quarter, compared with pre-pandemic levels in 2019, and 45% for the first two months of the year, compared with 2020 levels.
For 2024, "the impact from the 6-month Hollywood work stoppage is likely to cause the overall domestic box office to decrease 7%," Roth MKM analyst Eric Handler said.
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Written By: Reuters
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