You can now listen to Fox News articles! In mid-August, analysts at the financial markets site Seeking Alpha declared that bankruptcy of AMC was “almost certain.” AMC had been hit with a class action lawsuit opposed to its stock-conversion plan — which included a reverse 1-for-10 stock split. The firm had amassed more than $5 billion in debt, largely because the company suffered a collapse in revenues in 2020 and 2021 because of government lockdowns during the pandemic. Throw in a heated Hollywood writers strike, which was likely to delay film releases, and it appeared likely that AMC would soon become yet another pandemic casualty — which is why the company’s already bruised stock fell from $41 a share to just over $7 in the span of three weeks.
A month later, things look a whole lot different for AMC — thanks in large part to Taylor Swift and her followers known as “Swifties.” Taylor Swift will release her new, re-recorded album on Oct. 27, “1989 (Taylor’s Version.)” On September 1, AMC announced it was partnering with the popular pop music star to present Swift’s “Eras Tour” in film form in cinemas across North America. Within 24 hours, the film had generated $26 million in advanced ticket sales, breaking AMC’s single day record. At first, few took notice of the deal, and AMC’s stock continued to slide. Since then, however, projections were released showing the movie version of Eras is expecting a $150-200 million opening. And analysts are taking notice.
‘A Coup for AMC’
Even prior to the AMC deal, some observed that Taylor Swift seems to have the Midas Touch — everything she touches seems to turn to gold. AMC is not yet in the clear — its debt remains an issue — but quarterly revenues have returned to pre-pandemic levels and its stock has bounced 50% from its September low. What’s more, the story of how the AMC deal unfolded suggests a more tectonic-like shift could be taking place, one that could have an effect that goes well beyond AMC’s viability.
Swift’s deal with AMC reportedly emerged from the pop singer’s dissatisfaction with the terms offered by Hollywood studios. According to Puck reporter Matthew Belloni, this led Scott Swift, the pop singer’s father, to reach out directly to AMC CEO Adam Aron. Would Aron be interested in bypassing studios and putting the Eras film directly in AMC theaters? Aron naturally was, and reports say the camps agreed to a split that benefited all parties: theaters keep 43% of gross revenues, while the remaining 57% is split between Swift and AMC (“with the lion’s share of that going to Swift,” per Fortune). That’s not all, however. Though media have reported that the film “will play exclusively” in AMC theaters for no less than 13 weeks — a much longer length than films typically receive — this isn’t quite true. The agreement gives AMC distribution rights, which means — as some have noticed — the company can license the movie to non-AMC theaters. On social media, Aron called the deal “a coup for AMC.” He appears to be right.
Studios generally take a stunning percentage of ticket sales for new movies — “between 80% to 100%” in the first couple of weeks, according to one industry expert. By cutting out the studios, Swift, AMC, and cinemas are receiving a much better deal.
A New Model of Distribution?
Swift’s deal with AMC is indeed a lifeline to the struggling company, but it’s important to understand that this is about more than the economic power of Swifties. We’re witnessing in real time a kind of Schumpeter-style creative destruction and the dynamism of free-market capitalism. Swift’s deal with AMC reportedly emerged from the pop singer’s dissatisfaction with the terms offered by Hollywood studios. According to Puck reporter Matthew Belloni, this led Scott Swift, the pop singer’s father, to reach out directly to AMC CEO Adam Aron. Sclerotic movie studios, tired and out of ideas and handicapped by unions, are finding themselves sidelined by artists and cinemas who don’t want their meddling and no longer need them for distribution. On the heels of its deal with Swift, AMC announced it was also working with superstar Beyoncé to show a film of her Renaissance World Tour.
The concert movie model could eventually be replicated by independent filmmakers, especially if they’re able to team up with influencers with huge followings. This could become a devastating blow to already-struggling Hollywood studios and the writers guild, fresh off their bitter labor dispute. But it could turn into a new golden age for content creators and cinemas — and audiences hungry for fresh and original content. Jon Miltimore is editor-at-Large of the Foundation for Economic Education. He formerly served in the George W. Bush White House in the speech writing department.
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