AMC Entertainment Inc., the second-largest theater chain in the U.S., is to be taken public by its parent company Marquee Holdings Inc. They are planning to file an initial public offering of common stock. No details of price, amount of stock or date have been announced.
The company currently operates 411 theaters with 5,635 screens in the U.S. and 10 other countries.
Private investors purchased the company in 2004 for $2 billion; including J.P. Morgan partners and Apollo management.
AMC evidently was taken private because it couldn't compete with its major competitor Regal, although its said in other terms like "it was trading at a discount t
o Regal."
A couple of things they've done since going private was to purchase Loews Cineplex Entertainment Corp., which added 198 theaters and 2,235 screens to their inventory. They've also eliminated poorly performing theaters by 260.
Other than making money for the private investors, I don't see the value in this. For example, last month their quarterly reports showed a $10.7 million loss, about the same as last year. In other words there is absolutely no growth in profits. And that's with revenue growing by 56% to $422.5 million for the quarter. For the year there was a loss of $189.7 million on $2.4 billion in revenue.
Somehow they've even gotten a few analysts to spin this as something positive.
What's the bottom line for investors though? Why buy something like this? There are plenty of things out there that have a much better health and outlook than the diminishing theater business. No matter how you spin it, this will continue. Long-term anything in this space is a lemon. The industry will be shaking out for years, and nothing consistent could be counted on.
Buying more of the same thing through acquiring Loews adds nothing to show any value, other than more money-losing buildings. If I were them I'd keep this private until they add real value to the company, not some window-dressing they've added just to get a return back on their money. In reality I think media companies in this time of disruption are much better off being private than public. I don't see why they even would want to do this; it makes no sense at all.
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