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How Amazon's Pending AMC Theatres Acquisition Would Change Movie Theaters

It's no secret that movie theaters have had a rough few years. The industry was already in a precarious position prior to the pandemic, with Deadline releasing an article in January 2020 (just two months before lockdowns went into effect) about how 2019 ranked as one of the worst years for ticket buying since 1995. Theaters may have tried to offset such declines with increasing ticket prices and costs of concessions, but the pandemic was a genuine death blow.

Even though most lockdown restrictions are dismantled, movie theaters are still having a tough time, which is likely why the stock price for AMC theaters rose significantly on the news that Amazon.com may be interested in acquiring it. The online retail hub has already proven its interest in the entertainment space by closing an $8.5 billion deal for MGM in 2022. A Nasdaq report states that Amazon is interested in AMC's 600 theaters to use as "'marketing weigh stations' to promote Amazon Prime movies, for cross-selling opportunities and to serve as local distribution hubs. More importantly, Amazon would be able to collect data from the 200 million movie goers who sit in AMC's seats."

An Amazon acquisition could be the safety net AMC Entertainment needs, with the company reporting $5.2 billion in debt for 2022's fourth fiscal quarter. But neither AMC nor movie fans should get their hopes up just quite yet.

Some analysts say it's 'extremely unlikely' the deal will go through

Amazon acquiring AMC theaters is still purely speculation; neither company has commented on the reports yet. And depending on who you ask in the financial sphere, the deal may have a hard time coming to fruition, even if Amazon is genuinely interested. Forbes reported on comments made by Wedbush analysts Alicia Reese and Michael Pachter on how the acquisition is "extremely unlikely" to happen, particularly seeing how the theater chain holds over $5 billion in debt. Wedbush went on to state how Amazon would do better to acquire something cheaper like Regal Cinemas if the company was interested in expanding its physical world presence.

For the sake of argument, let's say Amazon does acquire AMC. It's safe to say there would be a greater emphasis on AMC theaters playing movies Amazon directly owns, meaning other studios would need to play nice to get their films on those screens. However, it's the data collection part of the Nasdaq article that's really intriguing. Amazon could create profiles of users showcasing the types of movies they like and even what food they purchase at concessions. If you thought targeted ads were already oddly specific, just wait until Amazon knows your viewing habits outside its streaming service.

Without a firm statement that Amazon.com is even interested in buying the movie theater chain, it's premature to start planning for anything in the future. However, it's clear movie theaters need something to stay relevant in a post-pandemic era where streaming and improved home theater set-ups keep plenty of people at their houses. Suffice it to say, we don't want movie theaters to die, and hopefully, every theater, whether it's independently owned or from a massive chain, will thrive in the years to come.