AMC, which is the parent of AMC and Carmike theater chains in the U.S including Odeon cinemas has been hammered by covid-19 impact causing many theaters to shut down globally.Speculations were rife after shares of financially devastated AMC theaters grown by as much as 56%, to $6.41, after a report spread rampantly on the internet that Amazon was eyeing a potential takeover of the beleaguered theater chain.
Bloomberg Intelligence media expert Amine Ben stated in a note that film featuring is probably not going to regain its normalcy post-Covid-19 world and may pose threat for an acquirer. “AMC’s raised debt load and unavoidable fixed costs implies the organization’s near term monetary adaptability will be seriously tested.” he added.
UK news reported that it was hazy if the discussions were as yet probable or on the off chance that they would clinch the deal. Neither AMC nor Amazon reacted to Fortune’s solicitation for takeover, and Amazon asserted that it doesn’t remark on rumors.
Analyst Eric Wold assumed that buying AMC would trigger strategic benefits for Amazon. He was cynical whether there would be a likely development if the Amazon doesn’t buy AMC as the theatre’s chain’s liquidity was economically low.
A general trade rule is that the movie theater chains often need a three month exclusivity window for movies to be screened in their locations, which means a film distributor can not permit consumers to stream or rent it’s content unless three months have completed. For the very reason Amazon has given lesser priority to theatrical releases and opted rather for a direct-to- consumer streaming rights on it’s platform.
If Amazon supposedly takes over AMC Entertainment, there would be lesser burden to wait till 3 months and consumers would apparently get to see new movie releases simultaneously streaming at home and playing in theaters.
Keeping aside the report’s veracity, the effect on AMC’s stock surely indicates a likely advancement for the world’s biggest cinema chain owing to its recent rise in the finances. This could be a major shift from theatrical releases to streaming services yet the distributors and producers could only be in profits if proper deals are offered by Amazon.