No, Disney Should Not Buy AMC — They Should Cherry Pick Theater Locations

Empty theater seats are breaking major theater chains financially

Motley Fool is posing the question: Should Disney Buy AMC?

It’s linked in the quote below for full context. I’ve seen estimates that AMC is losing double digit millions per month. At that negative cash burn rate — assuming these are accurate figures — no sane business should or would buy them. Even a company as large as Disney.

And here to think Motley Fool is an investment website? The second part of their name applies to anybody at Disney seriously considering this deal.

More after the jump.

Certainly Paramount or Universal, or even Netflix and Amazon, as was rumored earlier this year, could also benefit from buying the theater operator. But Disney’s size, scope, and branding potential would make acquiring AMC Entertainment a blockbuster event.

Should Disney Buy AMC?

I’m on record suggesting that streaming channels should buy some theaters. They just need to wait until AMC goes into fire sale mode or full on liquidation, swoop in and buy up prime locations in key cities and states. Boom, now they’re in the theater exhibiting business, but on their own terms. They buy AMC in the shape its in now, it’s like buying a house that’s already on fire. Who does that?

As for Amazon and Netflix? You bet they should get in on the same deal. I think this is where the future of cinema is headed with studio-branded theaters. Paramount+ Theater, Amazon Theater, Netflix Theater and so on. It’s a great path to giving moviegoers the best of both worlds. They can day and date release whatever they want without a theatrical window. Burn that obsolete window down — except for the biggest of big budget films. In those cases, exclusively show them in theaters for a short window (see: Collapsing Theatrical Windows Are Not The End Of Cinema Life As We Know It)

My opinion is admittedly unpopular with business insiders. Some might even say my recommendations are a little crazy. Like a fox! This is a crazy world in the pandemic and a new theater model will need to emerge. I can see all kinds of reasons that Motley Fool lays out and more for studios to buy up theaters. The main caveat is buy at the optimal price. Not now, not when the assets are seriously distressed. A little patience for your shareholders.

They’ve already pushed off most of the major movies to 2021, which should all but seal AMC’s fate, unless they can get some more cash help. I don’t wish AMC to fail, but don’t see any way that makes sense for Disney, Amazon, Netflix, etc buy into AMC right now.

What do you think?