Stock in AMC, the biggest movie theater chain in the U.S., rocketed by as much as 56 percent and ended trading up 30 percent Monday after reports that Amazon was considering purchasing the ailing exhibitor. But some analysts wonder if picking up AMC—which owns over 1,000 theaters in the U.S. but was already $4.9 billion in debt before the COVID-19 pandemic shut down theaters worldwide—is worthwhile for the world’s biggest company, no matter how low the price.
“I don’t quite buy that this makes sense for [Amazon],” Bruce Nash, founder of box office and Hollywood data website the Numbers, told The Wrap. “It raises an interesting question as to what the future of Amazon’s distribution strategy is, but at this point, the business for theatrical is just so much in doubt.”
On New York magazine’s Pivot podcast, New York University Stern School of Business professor Scott Galloway pointed out that the deal would represent pocket change for Amazon, since the e-commerce, digital streaming techno-beast has a total trading cap of $1.2 trillion, while AMC’s cap is a mere $480 million.
“In an average business day or average trading day Amazon goes up or down $25 billion,” he said. “So, in sum, Amazon loses or gains 50 AMCs every trading day.”
Galloway added that Amazon could use the theaters in new, exciting ways to draw crowds.
“I think, if Amazon owned AMC, it might release the first four episodes of season three of Jack Ryan in the theater. It might say, ‘All right, we’re doing a Fleabag evening, a girls’ night with drinks in the lobby. And we’re showing the first four episodes or the last four episodes of Fleabag,'” Galloway said. “I think there’s a lot of opportunity to do interesting things with theaters and do away with the shitty food. What if it just becomes part of a Prime membership? I mean, these are essentially gathering places and fantastic real estate, and they need to be reimagined.”
Pivot co-host, technology reporter Kara Swisher, suggested that Amazon’s competition, not to mention the government, might not be fans of the acquisition.
“Nobody in Hollywood wants Amazon to be owning this particular distribution channel, because it’s so well known for strangling distribution,” Swisher said. “Amazon would call it helping grease the skids of distribution. But I think probably media people and lawyers today would probably be like, ‘What the hell?’ And then, of course, Congress will get involved. This wouldn’t be a one-step, quick thing.”
Riley FBR analyst Eric Wold, however, thinks both Hollywood and D.C. would be more tolerant of a deal than one might think. As Market Watch reports, Wold believes that Amazon may have become interested in buying AMC when the Justice Department’s antitrust division announced last November that it would be reviewing 1948’s Paramount Consent Decrees regarding a studio’s ownership of a theater chain.
Wold wrote in a note to clients, “With Amazon not dependent on any other release windows beyond its own subscription service (other than to qualify for industry awards), we would view increased control over the theatrical window through the acquisition of a large exhibitor as providing Amazon both an incremental earnings stream from its own films and an attractive marketing vehicle to drive additional subscribers being exposed to the studio’s films—something that, we believe, other studios would be comfortable with them doing.”