Can Godzilla vs. Kong beat the box office doldrums at last? Image courtesy Warner Bros
COVID-19 pulled the rug out from under the film industry, with lockdowns and social distancing restrictions keeping people home and leaving most movie theatres empty.
What does it take to get cinemas back on their feet? Big budget blockbusters could definitely go a long way. Case in point: Godzilla vs. Kong. The US movie box office is showing early signs of a recovery after its most challenging year to date, lifted in late March by the release of this big budget slugfest.
Week 14 of 2021 saw US ticket sales climb to US$49 million. This is down 74.5% on the same week in 2019 but there wasn’t a pandemic to contend with back then—and there has been a marked improvement ever since the gargantuan kaiju and Skull Island’s favorite giant ape returned to duke it out on the big screen.
Investors are watching
AMC Entertainment, the largest cinema chain in the US, and Cinemark, which holds third position by total screen numbers, are taking full advantage of this market recovery.
AMC is considering issuing up to 500 million new shares, an item that will be voted on at its next shareholder meeting on May 4, 2021. If this dilutive measure is agreed, it would allow the company to buy back its debt at a discount and meet deferred theatre lease costs. Whether shareholders agree with the plan is another matter.
Cinemark, meanwhile, has jumped at the chance to refinance its outstanding debts. The company issued US$405 million in senior secured notes due in 2026 with a 5.875% coupon to cover the looming maturity of its existing notes, due in 2022.
Anticipation, not speculation
AMC has been on a wild ride in recent weeks. Along with GameStop, the company was unwittingly swept up in the short squeeze mania that gripped retail markets towards the end of January. This frenzy sent the cinema chain's stock up by around 900% from circa US$2 in the space of a month.
Currently trading at US$8.84, market sentiment seems to be anticipating a return of the movie buff. Godzilla vs. Kong took US$48.5 million in its first five days while Godzilla: King of the Monsters opened to US$47.8 million back in May 2019 with no theatre restrictions—giving everyone good reason to expect a continued rebound with consumers flocking to the cinema as soon as things start opening up.
AMC, Cinemark and others are no doubt hoping that big budget films like Marvel's Eternals (due out in November) and Spider-Man: No Way Home (due for release in December) will have fans lining up round the block.