Movie Theater’s Going Broke? From China’s AMC To Russian Majors, A Global

If you’re looking for whether or not to buy AMC or Cinemark, this isn’t the story. This is a big picture look at what the international movie theater industry is suffering through due to the COVID-19 pandemic, from Russian state banks taking a hammer to the country’s biggest movie theater chain, to China trying to stage a comeback.

The best news to come out of the movie theater industry of late is the fact that the Chinese are now going to movies again, and ticket sales are up like blockbuster level.

China’s Global Times bragged about it in February.

Still, AMC Theaters, now a household names because of the WallStreetBets vs Citadel (and other hedge funds) short squeeze trade, once owned by China’s Wanda Group, is cutting its losses. You wouldn’t know it looking at it share price.

The Wanda Group sold its majority position in AMC Entertainment, owners of the theater chain, according to a filing with the Securities and Exchange Commission recently. They made out well.

Wanda owns 9.8% of common stock in the cinema major and retains two seats on the board as of March 3, after it reduced its stake to 23.1% of AMC’s outstanding common stock and 47.4% of combined voting power of common stock by December 31 last year.

They have been thinking about filing for bankruptcy since October, Bloomberg reported, which is around the time the market went short.

This is not an AMC stock recommendation. For that you can read FinTwit and WallStreetBets. But, given the fact that America’s biggest city is finally opening its movie theaters, the medium term view for AMC is bullish.

For others, it may be too late.

Two smaller U.S. owned chains went belly up in the fall: Studio Movie Grill Holdings has gone bust and on March 3, Alamo Draft House, which owns 40 theaters nationwide, filed for bankruptcy.

Big chains throughout Latin America, where Cinemark is king, seem to be holding on for dear life. On March 4, they issued $405 million in short term senior notes, something for the institutional fixed income crowd, that pays 400 basis points over the 10-year treasury, or around 5.12%.

In Russia, companies are taking advantage of the crash and beating the living daylights out of each other. Bank Trust, a state-owned bank created to take the over toxic assets of private lenders, which procedure is not clear and not transparent, is making it nearly impossible for that country’s version of AMC and Cinemark to come back to life as Russia recovers from the pandemic.

Their theaters have been opened now for months.

Their big chains are known as Formula Kino and Cinema Park (Kinoseti is the corporate owner) and together they own over 70 movie theaters spread out over 30 cities, with around 25 million visitors a year. They’re the A-list in Russia.

Kinoseti and AMC are two global chains struggling through the pandemic; one Russian owned, the other Chinese. But only the Russian owned one is on the cusp of bankruptcy thanks to a dispute with Bank Trust.

Kick ‘Em When They’re Down

“A few years ago, we had Bruce Willis trying to save the reputation of Bank Trust. Trust is more and more like a collection agency instead of respected banking firm nowadays,” says Alexey Martynov, a political scientist and director of the…