AMC Entertainment, owner of the world’s largest cinema chain, appears to be closing in on key Los Angeles-area Pacific Theatres locations, according to a person familiar with the matter who was not authorized to comment.
However, the fate of Pacific’s defunct sister chain, ArcLight Cinemas, including its flagship Hollywood theater and the historic Cinerama Dome, remains unclear.
In an apparent snafu, two Pacific movie houses at Caruso shopping complexes — the Grove in Los Angeles and the Americana at Brand in Glendale — were prematurely listed Tuesday as AMC locations on the larger exhibitor’s app and ticketing website. The theaters were later removed from the site.
Both the Grove and Americana are Rick Caruso properties.
Representatives for AMC and Pacific Theatres declined to comment.
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The potential deal comes two weeks after AMC Chief Executive Adam Aron said the company was kicking the tires on leases for ArcLight and Pacific locations. Aron indicated the Leawood, Kan.-based company would pursue acquisitions after an agreement to raise $230.5 million in cash by selling equity to investment firm Mudrick Capital Management.
“With our increased liquidity, an increasingly vaccinated population and the imminent release of blockbuster new movie titles, it is time for AMC to go on the offense again,” said Aron, sounding a confident note after the firm narrowly avoided bankruptcy during the pandemic.
Pacific Theatres announced in a terse April statement that it would not reopen its cinemas, including the landmark Cinerama Dome on Sunset Boulevard.
The Cinerama Dome, which made an appearance in “Once Upon a Time in Hollywood,” was not among the locations that showed up on AMC’s website. Whereas the bulk of ArcLight locations are leased, parent company Decurion Corp. owns the Cinerama Dome, which was built in 1963.
Taking over the two Pacific locations would add to AMC’s portfolio in Los Angeles, where its theaters include AMC Century City 15, AMC Burbank 16 and the AMC Sunset 5 in West Hollywood.
Aron’s acquisitive mood reflects a boost in confidence after retail investors, some of whom were inspired by investment forums on Reddit, piled into AMC’s stock, sending the share price soaring. The company raised hundreds of millions of dollars amid the buying spree.
AMC’s stock rose $2.04, or 3.6%, to $59.04 on Tuesday. The shares have increased nearly 2,700% so far this year, giving AMC a market capitalization of about $29 billion. For comparison, media giant Viacom has a $28-billion market value, while Live Nation is valued at about $19 billion.
Not everyone thinks AMC’s expansion plans are a good idea. MKM Partners analyst Eric Handler wrote in a recent note to clients that “AMC would be best served by using its newly raised capital to reduce its sizable $5.5bn debt load rather than pursue acquisitions.”
AMC’s leadership, Handler added, “has been gifted an unforeseen opportunity from the recent wave of (fanatical) retail investor momentum, which has pushed the shares far above historical valuation levels.”
The possible deal comes as California reopens its economy by lifting restrictions on businesses meant to stop the spread of COVID-19. Theaters previously hobbled by capacity restrictions can now admit as many patrons as they have seats.