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In mid-August, analysts at financial market site Seeking Alpha declared AMC’s bankruptcy “virtually certain.”
AMC was hit with a class action lawsuit challenging its stock conversion plan, which involved a 10-1 reverse split. The company had more than $5 billion in debt, mainly because the company suffered a drop in revenue in 2020 and 2021 due to government lockdowns during the pandemic.
Coupled with a violent strike by Hollywood writers, and movie releases likely to be delayed, it seemed likely that AMC would soon become the latest victim of the pandemic. That’s why the company’s already bruised stock price has fallen from $41 per share to just over $7 per share in the span of three weeks.
Popular Los Angeles shopping center closed for Taylor Swift movie ‘Ellas Tour’ premiere
A month later, things seem to have changed drastically for AMC. This is largely thanks to Taylor Swift and her followers, known as “Swifties.”
Taylor Swift will release her new re-recorded album “1989 (Taylor’s Version.)” on October 27th. (John Shearer)
On September 1, AMC announced that it is partnering with the popular pop music star to bring Swift’s Ellas Tour to movie theaters across North America. The film reached $26 million in advance ticket sales within 24 hours, breaking AMC’s single-day record.
At first, few people took notice of the deal, and AMC’s stock price continued to fall. However, it has since been announced that the movie version of Elas is expected to gross between $150 million and $200 million. And analysts are paying attention, too.
“AMC Coup”
Even before signing with AMC, some observed that Taylor Swift seemed to have the Midas touch, meaning that everything she touched seemed to turn to gold.
AMC’s results are not yet clear, but debt remains an issue, but quarterly sales have returned to pre-pandemic levels and the stock has risen 50% from its September lows. Additionally, the story of how the AMC deal unfolded suggests that more seismic changes may be afoot, which could have implications far beyond AMC’s viability. There is a gender.
Swift’s deal with AMC reportedly stemmed from her dissatisfaction with the terms offered by Hollywood studios. According to Pac reporter Matthew Belloni, this prompted the pop singer’s father, Scott Swift, to contact AMC CEO Adam Aaron directly.
Would Aaron be interested in bypassing the studio and showing Ella’s movie directly to AMC theaters?
Aaron certainly was, and reports say the camps have agreed to a split that benefits all parties. The theater will keep 43% of the gross revenue, with the remaining 57% being split 50-50 between Swift and AMC (“Swift will receive the majority of it,” according to Fortune).
But that’s not all. Media reported that the film would be “exclusively shown” in AMC theaters for at least 13 weeks (much longer than a typical movie), but this is not entirely true.
Taylor Swift’s deal with AMC could bring people back to theaters for a whole new entertainment experience. (Lisa Lake/TAS23/Getty Images for TAS)
The deal gives distribution rights to AMC, which, as some are aware, means the company can license the film to theaters other than AMC. Aaron called the deal a “coup for AMC” on social media.
It seems he’s right.
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One industry expert said studios typically account for a staggering percentage of ticket sales for new films, “80% to 100%” in the first few weeks. By cutting back on studios, Swift, AMC and movie theaters will get even better deals.
A new distribution model?
Swift’s deal with AMC is certainly a lifeline for the struggling company, but it’s important to understand that it’s about more than Swifties’ financial strength.
We are witnessing in real time a kind of Schumpeterian creative destruction and the dynamism of free market capitalism.
Swift’s deal with AMC reportedly stemmed from her dissatisfaction with the terms offered by Hollywood studios. According to Pac reporter Matthew Belloni, this prompted the pop singer’s father, Scott Swift, to contact AMC CEO Adam Aaron directly.
that sclerotic film studios are exhausted, out of ideas, disadvantaged by unions, but sidelined by artists and theaters who don’t want their interference and no longer need them for distribution; I am aware of this. Following the deal with Swift, AMC has also announced that it will be working with superstar Beyoncé to screen films from her Renaissance World Tour.
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The concert film model could eventually be replicated by independent filmmakers, especially if they can partner with influencers with huge followings.
This could be a devastating blow to Hollywood’s already beleaguered studios and writers’ unions, which have just emerged from a bitter labor dispute. But it could be a new golden age for content creators, movie theaters and audiences looking for fresh, original content.
