M&E Connections

AMC Entertainment CFO: Stubs A-List Continues to Give Company an Edge Over Rivals

The AMC Stubs A-List subscription movie service that AMC Entertainment launched in 2018 continues to give the company an edge over rivals in the film exhibition sector, according to Craig Ramsey, its CFO.

Overall, 2019 offered its share of positives and negatives for his company, he said Jan. 7 at the Citi 2020 Global TMT West Conference in Las Vegas.

“On the positive side,” although box office performance was a “disappointment,” it was the “third highest box office on record,” he told attendees. One challenge that the company and the industry in general faced was that 2018 was an especially strong year, he noted, conceding, “we had some expectations” for 2019 that “we didn’t quite meet.”

But the company continues to “outperform” rivals due to factors that include AMC Stubs A-List and he expects that to continue in the future, he said.

It was only a relatively short while ago that everybody was talking about a major “disruptor” to the industry that introduced the concept of theatrical movie ticket subscriptions, he pointed out, joking: “I can’t remember their name.”

He was clearly taking a jab at the now-deceased MoviePass subscription service, which started off strong, but managed to quickly alienate a huge chunk of its subscriber base by significantly changing the terms of its service to offer a much inferior service than what it initially offered.

Some predicted that disruptor would “totally wreak havoc with exhibitors,” Ramsey recalled. However, it “didn’t actually work out so well” for that company, Ramsey noted, without once naming MoviePass.

AMC Entertainment, on the other hand, was “more patient” and “thoughtful” about the subscription concept, he said, telling attendees A-List was designed to be “sustainable,” was “structured properly,” offers a “good value” and is “good for our industry partners on the studio side because we’re driving attendance and moviegoing” also.

AMC Entertainment has now “lapped the year of ramp-up” with A-List, he said, noting, “there’s always some drag on operating results when you launch a significant program.” But “that’s behind us” now and “we are more heavily engaged digitally with our guests than we ever have been,” he said, adding, A-List is a “big part of that.”

At this point, the company is “about a year ahead of schedule on incrementality” with A-List, which has “outperformed” the company’s expectations, he told attendees. It “will contribute to” earnings before interest, taxes, depreciation and amortization (EBITDA) “results accretively in 2019 and even more so into 2020,” he predicted.

There’s also room for more A-List growth, he said, adding: “There are different features that we can add and grow the membership even more than the 900,000” current subscribers it had at the last official count disclosed by the company. One option for the future is the addition of a family subscription plan, he noted.

That strong subscription base of members paying each month “stabilizes the numbers a little bit and makes us less susceptible to box office fluctuations,” he pointed out.

Meanwhile, AMC Entertainment’s international business is “starting to gain traction,” he told attendees.

The theatrical window continues to be under pressure and if it were to, for instance, drop to only 45 days of exclusivity between a film is released theatrically and distributed more widely, it would “have to be a package deal” of some sort that “makes economic sense” for theaters, he said. As for the window itself, if it shrinks further, there would at least have to be some lack of predictability for consumers in exactly when they could expect at least certain movies to be made available widely after theatrical release, he noted.

Also attending the conference presentation was Sean Goodman, who joined AMC Entertainment Dec. 2 as EVP of finance and will be replacing Ramsey, who’s retiring Feb. 28 after 25 years in leadership roles at the company, as CFO.

The company also announced Jan. 7 that Mark McDonald, EVP of development & international, will retire at the end of February after 41 years at AMC Theatres, and be replaced by Dan Ellis, currently head of domestic development at AMC.