AMC Theatres CEO Says 'Acquisitions Are Paused' to Reduce Debt

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AMC Entertainment, the parent of AMC Theatres, made three billion-dollar deals last year, acquiring Carmike Cinemas and European chains Odeon & UCI and Nordic Cinema. But after a disastrous second quarter weighed down by a box office slump — and plenty of debt to reduce — the company won’t be making any major purchases in a while.

“Acquisitions are paused,” AMC President and CEO Adam Aron said on a Friday morning conference call following the company’s earnings release. “To acquire anything else of size right now requires us taking on more debt, which conflicts with our need and desire to de-lever.” Aron added that given AMC’s low share price — the company is trading at more than $16 through mid-morning trading even after a 9 percent jump, close to its 52-week low of $14.80 a share.

Aron spent much of the call providing an extensive explanation for AMC’s rough earnings report, which he largely attributed to a surprisingly and profoundly weak summer movie slate. He also said that while AMC’s legacy theaters held up better than the average cinema — the Carmike theaters decidedly did not.

Also Read: AMC Entertainment Reports Brutal Q2 Earnings As Summer Box Office Slumps

“Our legacy AMC theaters were stars, outperforming the indnstry, but our acquired Carmike theaters were not stars,” Aron said. “Admissions revenues at legacy AMC theaters were down 3.1 percent (compared with the industry as a whole being down 4.4 percent). By contrast, the newly acquired Carmike theaters had a revenue decline of 11.3 percent.”

Aron also addressed AMC Entertainment’s Chinese parent Dalian Wanda Group, which has recently sold off its theme park business and 77 hotels to deal with debt issues of its own.

“Our major shareholder, Wanda, has over the past five years been an extraordinarily smart and supportive investor in AMC,” Aron said, also reinforcing a statement the company gave earlier that Wanda funding was not used in any of AMC’s acquisitions.

Also Read: AMC Theatres Slashes Costs to Deal With Box Office Slump, Stock Plunges 25 Percent

Later in the call, Aron fielded a question about premium video on demand, as studios look to deliver new films to an audience that increasingly doesn’t want to wait for content without waiting for the traditional theatrical window. But despite plenty of conversations, Aron doesn’t think a resolution is coming anytime soon.

“I don’t think you’ll see PVOD in the United States in 2017,” he said.

12 Chinese-Owned Media Companies, From Dick Clark Productions to AMC (Photos)

A firehose of Chinese investment has been flowing into Hollywood for the last few years, as Middle Kingdom firms have scooped up production companies and theater chains by the billion. And while D.C. has finally taken notice -- and is asking the government to take a closer look at foreign ownership of American content companies -- Chinese firms have already accumulated a substantial portfolio of media and entertainment-related companies often at healthy premiums. And Hollywood isn’t ready to look that gift horse in the mouth.
AMC/Carmike/Legendary/Getty Images
AMC THEATRES
Owner: Dalian Wanda Group

Wanda, a real estate and entertainment conglomerate owned by China’s richest man, Wang Jianlin, made its first Hollywood splash in 2012 when the company paid $2.6 billion for AMC Entertainment, the parent of AMC Theatres, the second-largest theater chain in the U.S.
AMC Theatres
Carmike Cinemas
Owner: Dalian Wanda Group

Wanda-owned AMC paid $1.2 billion to acquire Carmike Cinemas in a deal that just closed in November. The combined chain will be America’s largest theatrical exhibitor, passing former No. 1 Regal Entertainment.
Mike Kalasnik
Legendary Entertainment
Owner: Dalian Wanda Group

Wanda paid $3.5 billion for the “Jurassic World” production company in January, even though Legendary lost $500 million last year, according to a Chinese regulatory filing. However, plenty of Legendary’s high-octane action and fantasy flicks have been bigger hits in China than the U.S., such as “Warcraft.”
Getty Images
Dick Clark Productions
Owner: Dalian Wanda Group

Wanda spent $1 billion to acquire the producer of the Golden Globes, American Music Awards and “New Year’s Rockin’ Eve.” The deal marks Wanda’s first foray into television after spending billions on the big screen.
Dick Clark Productions
Voltage Pictures
Owner: Anhui Xinke New Materials

Anhui Xinke, a copper processing company, bought an 80 percent stake in Voltage parent Midnight Entertainment for $351 million. Voltage is the production company behind Oscar-winning films including “The Hurt Locker” and “Dallas Buyers Club.”
Voltage
STX Entertainment
Owner: Hony Capital, Tencent

Independent distributor STX was founded with investments from private equity giant TPG and Chinese firm Hony Capital. The company also has a co-financing deal with China’s Huayi Bros. Media, and this year secured a strategic investment from Tencent to expand into digital content, music and virtual reality.
Getty Images
World Triathlon Corporation
Owner: Dalian Wanda Group

Wanda paid $650 million last year for the company that organizes the Ironman Triathlon races, folding it into its new Wanda Sports division.
Getty Images
IM Global
Owner: Tang Media Partners

Tang Media Partners, which has offices in Shanghai and L.A., acquired a controlling stake in Stuart Ford’s film finance firm from Indian conglomerate Reliance in June. IM Global has financed or produced more than 30 Hollywood films, including Mel Gibson’s “Hacksaw Ridge.”
IM Global
Studio8
Owner: Fosun Group

Chinese conglomerate Fosun is the largest shareholder in former Warner Bros. chief Jeff Robinov’s production company, having invested $200 million in Studio8.
Getty Images
Dichotomy Creative Group
Owner: LeEco

Consumer tech company LeEco’s subsidiary Le Vision Pictures opened an L.A. office this year and hired former Paramount Pictures President Adam Goodman to run it and oversee a slate of English-language films. As part of the deal, LeEco acquired Goodman’s production company, Dichotomy.
Adam Goodman
Cirque du Soleil
Owner: Fosun Group

It’s a Canadian circus, not a movie or TV studio, but Cirque du Soleil operates six Vegas shows, several tours and earned $845 million in revenue in 2014. Last year, TPG and Fosun acquired a majority stake in Cirque du Soleil for $1.5 billion.
Getty Images
Riot Games
Owner: Tencent

Tencent acquired a 93 percent stake in the video game publisher for $400 million in 2011 and acquired the remainder last December. Riot’s “League of Legends” is the most played PC game in the world.
Getty Images

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Firms from China have been scooping up production companies and theater chains by the billion in recent years

A firehose of Chinese investment has been flowing into Hollywood for the last few years, as Middle Kingdom firms have scooped up production companies and theater chains by the billion. And while D.C. has finally taken notice -- and is asking the government to take a closer look at foreign ownership of American content companies -- Chinese firms have already accumulated a substantial portfolio of media and entertainment-related companies often at healthy premiums. And Hollywood isn’t ready to look that gift horse in the mouth.

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12 Chinese-Owned Media Companies, From Dick Clark Productions to AMC (Photos)

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