AMC CEO Adam Aron is a rock star to a very specific group of people.
Those people, of course, are the 4 million non-professional investors who sent the company’s stock price soaring and currently own 80% of the movie theater chain. The new shareholders, who rescued the beleaguered chain from bankruptcy during the pandemic, call themselves the “Apes.” (The name is a reference to “The Planet of the Apes,” a movie in which primates overthrow humans.) And to them, Aron is the King Silverback.
There’s perhaps nobody better to embrace the chaos than Aron, a Harvard Business School graduate with a flair for showmanship. He communicates with Apes directly on social media and embraces their ideas, like accepting bitcoin and other crypto payments for tickets and concessions.
“There were some pros on Wall Street who looked down on them,” Aron says. “They own our company, so we don’t look down on them. We look up to them.”
Internet frenzy may have saved AMC from impending doom, but there are several challenges that linger, such as stagnant attendance levels and the battle to sell tickets for movies that don’t involve superheroes. There are signs that’s all starting to improve, like the recent box office successes of “The Lost City” and “Everything Everywhere All at Once.” But Hollywood and theater operators alike need those trends to improve drastically as original ideas from Jordan Peele (“Nope”), Olivia Wilde (“Don’t Worry Darling”), Damien Chazelle (“Babylon”) and Billy Eichner (“Bros”) gear up to hit the big screen alongside would-be blockbusters like “Thor: Love and Thunder,” “Jurassic World: Dominion” and “Avatar: The Way of Water.”
Last week at CinemaCon, the industry’s annual gathering of movie theater owners, Aron spoke to Variety about those obstacles, as well as hiking ticket prices for upcoming blockbusters, and the company’s reality as a “meme stock.”
Last time we spoke, vaccinations were newly being rolled out and theatrical blockbusters were few and far between. What’s your stance now on the state of exhibition?
If you’d asked me that question in April of 2020, when every single one of our theaters was closed the world over, I would have said it was a difficult time. If you would have asked me that question in December of 2021, knowing that the box office was down 90% in Q1, down 70% in Q2, down 50% in Q3, and then 25% in Q4, I would have said we’re in a glide path to recovery. But we have a long way to go. When you look at the movies coming from May to December, it’s one giant movie after another. And whether it’s “Doctor Strange” or “Top Gun: Maverick” or “Jurassic World Dominion” — all the way to “Avatar” at Christmas — there are enormous number of big movies coming over the next seven months. And that makes us at AMC quite encouraged. If we learned anything from “Spider Man: No Way Home,” the third-biggest movie of all time, released at the absolute height of the omicron virus… if Hollywood releases movies that people want to see, people are going to come out to theaters in big numbers. And Hollywood is about to release a lot of movies that people will want to see.
For the last two years, we’ve been putting an asterisks — “good, for COVID times” — on box office ticket sales. Given “Spider-Man: No Way Home” and “The Batman,” are blockbusters able to start earning the potential that they might have in pre-pandemic times?
We are about to find out. In 2022, we got off to such a slow start, not because people didn’t want to go to theaters but because there just weren’t a lot of movies released. The box office this year should be around double the 2021 number [$4.4 billion]. An $8 or $9 billion dollar box office is still less than where it was [pre-[pandemic] at $10 million or more. Clearly we are not going to hit $11 billion in 2022. My sense is it’s going be a stronger box office in 2023 than 2022. What year are we back to perfectly normal pre-pandemic levels? It’s somewhere between the second half of 2022, and all of 2024.
If studios release less movies in theaters, does that hurt movie theaters?
Hypothetically, if studios released less movies, that could translate to less dollars at theaters. One option for us is to encourage studios to issue more movies. And you can be sure we’re having those conversations. Another maybe to look at our new programming. We’ve experimented in the past year with sports and concerts. There’s also the Holy Grail. There are three major studios out there — Apple, Amazon and Netflix — who don’t release movies theatrically. Maybe we could convince some of those streamers to take some of their movies and put them in theaters first.
For “The Batman,” AMC charged customers about $1 to $2 more per ticket compared to other movies playing at the same time. How did that benefit the company?
It was a big success. We look at our marketshare on “The Batman,” and we clearly did better by charging that dollar premium. And it was only $1. It’s not like we charged double the price. There was so much demand that people were willing to pay.
AMC’s competitors, particularly Regal Cinemas and Cinemark Theatres, had quietly boosted prices for “Spider-Man: No Way Home” prior to “The Batman.” Was there a reason that AMC wanted to be vocal about the price increase?
It’s pretty simple. We’re a publicly traded company on the New York Stock Exchange. And when you do important things, there’s a duty to talk about it publicly. As a company, we believe in transparency. We don’t want to hide what we’re doing. We don’t want to brag about what we’re doing… but we don’t want to hide what we’re doing. Why they didn’t talk about it, you’d have to ask them.
Should consumers expect to see a similar increase for “Doctor Strange in the Multiverse of Madness”?
The good news is that I love following the law. And laws of the United States do not allow me to talk about pricing in advance. I’m only allowed to talk about pricing activity retrospectively. I can’t make any public comment. Tickets will go on sale, and people will know what we are charging.
Alternatively, will AMC explore options to make arthouse films, or movies that have been in theaters for several weeks, less expensive?
Same answer to a similar question. It’s illegal for me to talk about pricing going forward. I can’t speculate. If you go back to the laws of supply and demand, which is the first thing that they teach you in an economics class, it does say that when demand is high prices rise, and when demand is low prices fall.
Do ticket prices have an impact on attendance in a substantial way?
All I can say is that on “The Batman,” we know that we’re better off from having charged a $1 premium. We have plenty of discount programs that we’ve actively had been embracing: Discount Tuesdays; we rejigged all of our matinee pricing strategies last year; and A-list, our subscription program.
The company has taken bold steps by investing in Hycroft Mining and expanding popcorn in malls. How has that paid off for AMC?
Popcorn is still in the works. We’re going to give Orville Redenbacher a run for Orville’s money. But that won’t happen until the end of 2022. In terms of the investment in Hycroft Mining, a gold and silver miner in northeastern Nevada, look… we knew you wouldn’t think the core competency of a movie theater company is solar mining. But getting through the pandemic, we were very skillful financial engineers. We raised a lot of money on Wall Street. To get AMC through the pandemic, we had identified a company that had a severe liquidity challenge. And its stock was priced at near bankruptcy levels. And we knew that if we could help them raise some money, their stock would rise. In the span of two weeks, we helped them raise $195 million. And their stock instantly rose. So the investment thesis of why we did it has turned out to be true. And we’re way ahead at the moment.
Speaking of Wall Street, how are you balancing keeping the very passionate retail investors happy while also being realistic about the fundamentals of the company?
It’s quite the phenomenon. Approximately 4 million retail investors have descended on our company. They own the majority of our stock. I don’t work for them [but] they’re my bosses, and they’re avid and enthusiastic and passionate about our company. We communicate with them often as a company. Every week, I host screenings for shareholders in New York City and L.A. I’m going to do more of that in 2022 around the United States.
We’ve paid them the proper respect. There were some pros on Wall Street who looked down on them. They own our company, so we don’t look down on them. We look up to them. They understand that AMC, as a company, and I, as its CEO, genuinely appreciate their passion for our company. Having said that, I am the CEO of a public company. I’m always realistic in what I say publicly. It’s not my job to sugarcoat things. I celebrate our successes. And I speak soberly about the challenges that we still need to surmount.
I heard some stories about investors going to theaters dressed in ape costumes and demanding popcorn. What do you make of that?
I smile, and I laugh.