AMC CEO: Retaining cinemas open is “the correct resolution” even when the rival is closing shelf screens
Adam Aron, CEO of AMC Entertainment, on Thursday defended the company's decision to keep its cinemas open during the coronavirus pandemic, even if one of its top competitors chose to temporarily darken its screens.
"We think it is the right decision to stay open," said Aron on CNBC's Closing Bell. "We have had millions of people come … to our theaters in the US and certainly in Europe since we reopened this summer."
Aron pointed to the historic deal AMC struck with Universal Pictures in July as a reason the company is able to keep its theaters open. The agreement cut the time it took for Universal's films to be shown in AMC theaters before switching to on-demand streaming from 90 days to 17 days.
"We're getting a cut in both theater and home revenues. It's an agreement that AMC has made," said Aron. "Our competitors have not yet reached this agreement."
The lack of blockbuster films was a major reason Regal Cinemas' parent company, Cineworld, ceased operations in US and UK theaters. Its CEO, Mooky Greidinger, told CNBC on Monday that it had "become a kind of grocery store with no groceries to sell".
Aron acknowledged that the lack of new blockbusters is a challenge to get people going to the theater and compared AMC to a dealership with no new vehicles.
Even so, Aron said his deal with Universal will include upcoming releases like "The Croods: A New Age" due out the day before Thanksgiving.
"Five Universal films that AMC can show under this agreement will be released by Christmas Day," said Aron.
AMC is executing further reopening plans, including in Washington, after the state received approval to resume operations. By mid-October, more than 80% of the roughly 600 theaters will be open – although New York's key market is still closed.
Aron defended AMC's coronavirus safety protocols, including improved cleaning and restrictions to maintain social distancing. He also said there is a need for movie theaters in the pandemic.
"We have made it our business to amuse and entertain people. If there was ever a time when people had to be amused and entertained in order to escape the stress of everyday life, then it is right now that Corona has made this country very tough meets. "he said.
AMC stock closed 2.48% on Thursday to $ 4.14 apiece. The stock is down 42.8% in 2020.
Disclosure: NBCUniversal is the parent company of Universal Studios and CNBC.