AMC Entertainment shines when the lights go down. The company, whose inititals once stood for American Multi-Cinema, is the #2 movie theater chain in the US (behind Regal Entertainment). It owns, partially owns, or operates about 350 theaters with 5,000 screens, most of which are in megaplexes (units with more than 14 screens and stadium seating). Nearly all of its theaters are in the US, though it does have a few in Europe. AMC also owns about 25% of MovieTickets.com. The company is itself owned by a group that includes investment firms Apollo Management LP, The Carlyle Group, Bain Capital, JPMorgan, and Spectrum Equity Investors. Chinese investment firm Wanda Group announced plans to acquire AMC in 2012.
AMC in 2012 shelved plans to go public. It had filed an IPO in 2010, its third attempt at a public offering since the mid-2000s. The proposed deal came after new 3D and digital formats brought more audiences to the movies. AMC planned to raise up to $450 million in the offering, and intended to use the proceeds to pay off debt to its private equity shareholders. However, it eventually scrapped those plans out of concern that market conditions weren't good for a stock offering.
In lieu of an IPO, AMC is being acquired by Wanda for about $2.6 billion in one of the biggest moves by a Chinese company to enter a major US market. A conglomerate with considerable entertainment holdings, Wanda is using the deal to further expand its cultural reach across the globe. AMC is planning to use the investment from Wanda to update its cinemas' technological innovations and reduce debt.
AMC generates about 70% of its revenue from ticket sales, while more than 25% comes from the concession stand. The company also sells digitally projected on-screen advertising and pre-show entertainment videos through its National CineMedia joint venture with Regal and Cinemark. It is the largest IMAX exhibitor in the world, with a 45% market share in the US.
The company has theaters in all major US markets. It once had international holdings, but has spent the last several years divesting the majority of its theaters in Japan, Hong Kong, Spain, Portugal, France, Argentina, Brazil, Chile, and Uruguay as part of its strategic focus on the US. In 2012 it sold four of its eight theaters in Canada, and has plans to sell two more.
In fiscal year 2012 AMC generated a net loss of $82 million, an improvement from the $122.9 million loss it reported in 2011. Its revenues, however, grew 6.7% to $2.6 billion. Revenue gains in 2012 were primarily the result of AMC's acquisition of Kerasotes ShowPlace Theatres, as well as a slight increase in attendance and average ticket price. The loss was mainly due to an impairment charge related to the value of its investment in 3D technology-provider RealD, as well as costs associated with its AMC Stubs guest frequency program.
The company expanded its theatrical holdings in 2011 when it acquired 92 theaters and 928 screens from Chicago-based Kerasotes ShowPlace Theatres, the nation's sixth-largest movie chain. A majority of the former Kerasotes properties feature stadium seating, and nearly 90% were built in the years since 1994. To satisfy anti-trust regulators, AMC sold nine theaters to rival Regal Entertainment for about $275 million.
AMC is busy upgrading its technologies that allow theaters to charge higher ticket prices. It is is in the process of converting all of its theaters to digital cinema, and by the end of fiscal year 2012 AMC had 333 digitally-equipped and 3D-enabled theaters (representing more than 95% of its holdings). It has installed 3D systems in its theaters through a partnership with RealD. To make the digital conversion more fiscally palatable, it leases its digital projectors from Digital Cinema Implementation Partners, a joint venture with rivals Cinemark and Regal. In addition, it has introduced a new proprietary large-screen digital format, ETX, at more than 15 locations.