And now, our feature presentation
$AMC Entertainment(AMC.US$ There's a fair amount of theater patrons who enjoy movie trailers ahead of the screenings they pay to see, but few will argue in favor of the long ad breaks that precede them. This is National CineMedia's turf, as it distributes video ads running as part of its America's Movie Network to AMC, Regal, Cinemark Holdings $Cinemark(CNK.US$ , and other exhibitors.
National CineMedia itself was consistently profitable through 2019, but it's eyeing its third consecutive year of losses in 2022. Analysts see a return to profitability for National CineMedia by next year, and that's important since it surprisingly pays a small quarterly dividend despite its run of deficits and the near-term obstacles its recovery is facing.
The big concern for AMC and Cinemark would be the conditions that would make National CineMedia creditors push for reorganization, as that would suggest a bigger shortfall for the multiplex industry in general.
For now, AMC is biding its time. It knows bigger movies are going to woo bigger crowds as we head into the holiday season. Unlike a third-party ad network, AMC and other financially viable movie theater stocks are making the most of the lighter audiences with an increase in high-margin food and beverage sales per customer. The levers are still there for AMC. National CineMedia is the only one potentially running out of options.
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