Unconfirmed reports that Amazon is weighing up a takeover bid for US cinema chain and one-time GOAT of the great meme stock rally AMC have sent chins wagging and AMC shares soaring.
Theory goes that Amazon could use AMC’s 10,000-odd screens across the US, Europe and UK as “local distribution hubs” for its growing library of homegrown content.
The prospect of watching Premier League games in an AMC-owned ODEON Cinema in the UK is surely a tantalising prospect for football fans too.
But the acquisition would come with a huge price tag. AMC’s weighted average market value plus its US$4.6bn debt obligations put a ballpark enterprise value on AMC of US$8bn, ignoring any discount (or premium?) applied to a takeover bid.
Wedbush analysts Alicia Reese and Michael Pachter have scoffed at the prospect of buying AMC’s 10,000 screens at US$800,000 per screen, when a bid for Cineworld’s US contingent, which is currently under Chapter 11 bankruptcy protection, could bag 1,000 screens at US$200,000 a pop.
A reduced footprint obviously, yet “is plenty” enough to sate Amazon’s thirst for theatrical exhibition spaces, reckon Reese and Pachter.
What analysts seem to be missing is that Amazon overlord Jess Bezos has no qualms about splashing billions on flights of fancy.
Take Amazon’s acquisition of the Lord of the Rings’ IP rights and subsequent development of LOTR prequel The Rings of Power. This purportedly cost US$1bn (a mere 1/1000th of the trillion-dollar company’s market valuation, but a lot of zeroes regardless).
Rings of Power’s reception has been mixed to put it lightly, with criticisms being levelled at handing the franchise’s keys to an inexperienced crew, while viewership numbers have been a matter of contention.
To that end, it would be interesting to see Amazon put its money where its mouth is and theatrically release its content- ticket sales would undoubtedly be closely scrutinised.
“Amazon doesn’t comment on rumors or speculation,” a spokesperson told Proactive in response to confirmation of The Intersect’s original story.
Which in all honesty is all this is right now.