Downsizing in the troubled movie theater industry accelerated this week with two announcements that 975 more movie screens will go dark.
AMC Entertainment announced yesterday that it will close about 300 screens, or about 75 screens a year, through 2005. And Loews Cineplex Entertainment said earlier this week that it will shutter 112 theaters with 675 screens.
AMC had already closed 35 theaters with 226 screens this year, while the largest U.S. chain, Regal Cinemas, has closed 40 with 300 screens.
The wave of closings is expected to go on. Theater executives say many more perhaps as many as 15,000 of the 36,448 U.S. screens must go dark before their troubled industry regains financial stability.
Much of the distress was self-inflicted. In recent years, the chains competed feverishly to build flashy new megaplexes. But leases forced them to also keep open smaller and now less-profitable older theaters.
Meanwhile, movie attendance is flat. Although final figures arent out, industry analyst Paul Dergarabedian of Exhibitor Relations estimates ticket sales last year were about 1.46 billion, down slightly from 1.47 billion in 1999.
"Virtually everybody is hurting. They have to close more screens before the world sees them turning a profit," said Prescott Crocker, portfolio manager at Evergreen Funds, former bondholder of Carmike Cinemas.
In 19 months, six major chains have sought Bankruptcy Court protection. Analyst John Helms of Tejas Securities said both Loews and Regal could be forced to do the same. Of the big national chains, only National Amusements, tied to media giant Viacom, has good financial health.
AMCs decision to close 11 percent of its 2,774 screens comes as it reported a quarterly loss of $8.2 million. Loews announcement that it would shutter 23 percent of its 2,965 screens worldwide came with news of a net loss of $185.9 million in the quarter ending Nov. 30.
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