New Visions In Liquidation. AMC Wants Their Theatres Back

[Martin McCaffery]

Seems like nothing cuts through anti-trust law like a good pandemic:
https://www.hollywoodreporter.com/th...ovid-19-crisis

UGUST 28, 2020 6:23am PT by Eriq Gardner
AMC Moves to Take Over Theaters Impacted by COVID-19 Crisis

The cinema giant asks a judge to modify terms of an antitrust judgment so that it may reacquire theaters.Four years ago, AMC became North America's largest cinema circuit with a $1.2 billion deal to acquire U.S. rival Carmike. To win regulatory approval, the merged company agreed to divest theaters in 15 markets. Now, as COVID-19 ravages the exhibition industry, AMC is taking steps to again own what it previously was forced to sell off.

Ten theaters, operating in nine states, are the subject of an unusual motion in D.C. federal court in an antitrust case that has been asleep for more than three years. Those theaters were being run by New Visions Cinema LLC, which was set up by a private equity firm in 2017 to take on theaters that AMC/Carmike had to divest to satisfy competition regulators and complete the megadeal. But now, New Vision has commenced liquidation proceedings in Georgia state court, and landlords are in the midst of terminating leases for the movie houses. AMC, which has been the subject of bankruptcy and acquisition rumors for months, is instead primed to grow larger. The company, whose major shareholder is Chinese conglomerate Dalian Wanda Group, is asking for permission to modify final judgment in the government's antitrust suit so as to be able to reacquire these theaters with the government's approval.

"The degree of economic hardship currently being experienced by AMC, New Vision, and the entire theatre exhibition industry is a unique changed circumstance that could not have been anticipated at the time the Final Judgment was entered," states the motion, which briefly argues that allowing AMC to negotiate leases and operate theaters is in the public interest.

AMC's motion is unopposed, which basically signals that the Department of Justice is on board this plan. It's perhaps evidence of how the ongoing health crisis will mean the toleration of more consolidation.

[Martin McCaffery]

Updates and more detail from Variety:
https://variety.com/2020/film/news/a...rs-1234752346/

AMC Gets Court Permission to Take Over 10 Theaters

by Gene Maddaus

UPDATED: A court allowed AMC Theatres on Friday to reacquire 10 theaters it had divested as part of the Carmike Cinemas merger, after the new operator was forced to liquidate due to the COVID-19 pandemic.

U.S. District Judge Randolph D. Moss granted the theater chain’s unopposed motion one day after it was filed.

“The COVID-19 pandemic has caused extreme economic hardship in the movie theater industry, and the proposed amendments are necessary to ameliorate additional harm to the industry,” Moss wrote.

Three years ago, AMC agreed to divest 15 theaters in nine states in order to win Department of Justice approval for the merger, which made it the largest chain in North America. AMC and Carmike were the two major competitors in those 15 markets, and the DOJ feared that without a divestiture, AMC would hold a monopoly that would harm consumers.

The cinemas were acquired by New Vision Theatres, a firm that launched in 2017 with the backing of Beekman Investment Partners, a private equity firm.

But New Vision, like every other cinema operator, was forced to shutter its theaters in the spring due to the pandemic. On July 6, the firm filed a notice with the Muscogee County, Ga., recorder’s office that it would liquidate.

AMC filed a motion in the federal antitrust case on Thursday, asking for permission to reacquire 10 of the theaters provided that the DOJ also approves.

According to the motion, AMC remains financially liable to the landlords of those theaters, and is looking to mitigate the damage.

At the time of the divestiture in 2017, the landlords either refused to release AMC from its lease obligations, or required AMC to guarantee payment in the event that New Vision defaulted. Now that New Vision is liquidating, seven of the 10 landlords have either sued AMC or indicated they will seek recovery from AMC for unpaid rent.

In the motion, AMC argued that allowing it to take over those theaters would increase the likelihood that they can remain in business, which it argues would be in the public’s interest.

“Absent such modification, many of the divested theatres might remain shuttered permanently,” the motion states. “Because the proposed modifications allow AMC to reacquire only certain theatres that otherwise would likely exit the market, the proposed modifications will not adversely impact competition.”

Moss agreed that the amended terms were narrowly circumscribed, noting that AMC is only seeking to take over theaters where it is on the hook because New Vision has defaulted.

“The Court determines that entry of the amended final judgment is in the public interest,” Moss wrote.

The 10 theaters include six former Carmike locations, in Oakdale, Minn., Mounds View, Minn., Miramar Beach, Fla., Fleming Island, Fla., Montgomery, Ala., and Sparta Township, N.J. It also includes four former AMC locations in Allentown, Pa., Lawton, Okla., Pekin, Ill., and Fitchburg, Wis.

[Bobby Henderson]

I'm interested to see what AMC ultimately chooses to do with the New Vision Theaters location in Lawton: a 12-plex in Central Mall that Dickinson Theaters opened 19 years ago.

Even when the Central Mall theater was new it was a compromised design. It was built within existing tenant space of a single story 1970's era mall building. Most of the auditoriums are tiny and the ceilings are low. The stadium seating in each room is about as minimal as it gets. Other than the switch to digital projection very few upgrades have taken place. The theater has changed hands multiple times (Dickinson, Wallace, Hollywood) before AMC acquired it. Then AMC had to divest it (to New Vision) when taking over Carmike.

The outdated, tiny theater is really a lesser problem. The far bigger issue is the future prospects of Central Mall itself. The mall had 3 large anchor tenants: Sears, Dillards and JCPenney. Sears closed years ago and its former space remains empty. Dillards shut down its Central Mall location July 31 this year. That leaves JCPenney as the lone anchor. And JCPenney is in dire straits, trying to negotiate a rescue plan with various mall owners and other investors. JCPenney plans to close another 149 stores (after closing hundreds of other locations). It would not surprise me if the Lawton location wound up on that list. Many smaller tenants have left Central Mall due to lack of foot traffic and being price-gouged for rent by mall ownership (who, as best as I can tell, is some out of town entity that never visits Lawton).

If it was up to me, I'd close Central Mall, demolish that structure and restore the 12 blocks of downtown Lawton street grid the mall erased back in the mid 1970's. 2nd Street would once again be a "thru" main street for downtown. Replace the mall with an outdoor "town center" setup. Southlake, TX (north of Fort Worth) has a good example of this shopping concept.

I'll be surprised if AMC keeps that old 12-plex in Central Mall open for any significant amount of time. They may just take it over to close it so the AMC Patriot 13 theater (another former Carmike) on the West side of Lawton will have no competition. Downtown Lawton needs a good movie theater. But with no other competition I can't expect AMC to build a nice new theater downtown.

[Martin McCaffery]

The strange thing about the New Vision theatre in Montgomery is that it is the newest theatre. I had expected AMC to hold on to it and dump the (former) RAVE theatre they bought as a foothold in Alabama. Once they bought Carmike, they had plenty of footholds in AL.
If New Visions has been sitting closed with no AC and no one running the projectors all Summer (which is what it looks like from outside), AMC is going to have a major clean-up on their hands to get it running again.

[Martin Brooks]

This is quite strange IMO unless these are particularly high performing theaters. In 2019, before the pandemic, AMC averaged ticket sales of only 92 seats per day, per screen. One would think they'd want to be getting rid of their low-performing theaters, not acquiring more of them. Between 2015 and 2019, AMC lost $282 million. In the first two quarters of 2020, AMC has lost an additional $563 million. Unless most of their landlords give them major concessions or if the Chinese government steps in (they're owned by Dalian Wanda) and provides them with financing or stimulus, I don't see how they survive, but what do I know?

[Martin McCaffery]

The other strange thing about our AMC. It is a discount house that runs first run features.
They perform well enough for the distribs to let then show The Avengers et all day and date with the theatres charging twice as much, but most of their houses are pretty empty, outside of the one or two tenpole movies. Now, of course, they are gross at the whole plex in a week what a moderate first run hit would do in a day.