AMC stumbles as Hollywood strikes, rising expenses impact results

(Reuters) – AMC Entertainment stock fell more than 10% on Thursday as the movie industry continued to reel from the impact of twin strikes in Hollywood, pushing the theater chain to a larger-than-expected quarterly loss.

The writers’ and actors’ strike has paralyzed much of the industry, resulting in fewer releases after the summer success of “Barbie” and “Oppenheimer.”

The delay in the release of the “Dune” sequel likely contributed to last year’s poor box office.

AMC reported a loss of 83 cents per share during the fourth quarter, while analysts were expecting a loss of 70 cents, according to LSEG data. The impact of strikes is expected to continue this year and impact profits in 2024.

Just as adjusted core earnings in the summer of 2023 returned to more acceptable pre-coronavirus levels, the movie industry was crippled by debilitating strikes, posing a temporary challenge to AMC’s earnings in 2024, CEO Adam Aron said on a post-earnings call.

The strikes and resulting shortage of new content forced studios to try other means such as concert-based films to generate revenue.

“AMC’s deals with Beyoncé and Taylor Swift have gone a long way to healing the wounds and opening up a lucrative revenue stream,” said Danny Hewson, head of financial analysis at AJ Bell.

However, the high distribution costs of Swift and Beyoncé’s concert films have been a drag on their profits.

Domestic box office collections were down 35% in the fourth quarter, compared to pre-pandemic levels in 2019, and 45% in the first two months of the year, compared to 2020 levels.

For 2024, “the impact of a 6-month Hollywood shutdown will likely result in a 7% decline in domestic box office totals,” Roth MKM analyst Eric Handler said.

(Reporting by Samrhitha Arunasalam in Bengaluru; Editing by Anil D’Silva)