According to the media, Amazon is considering that AMC's nearly 600 cinemas can help promote Amazon Prime movies that compete for awards, provide cross-selling services, and act as a local distribution center. Amazon can also collect important data from AMC's 200 million movie viewers every year.
The news of Amazon's intention to buy instantly ignited investors' enthusiasm for theatrical company AMC Entertainment (AMC).
During the midday trading session of US stocks on Tuesday, March 28 EST, AMC stock prices rose intraday. In just 20 minutes, the intraday increase expanded from less than 3.8% to more than 18%. Since then, the increase has further expanded. At one point, it rose to 5.50 US dollars, a new intraday high since March 14, with an intraday increase of close to 21%.
Entering the end of the session, the intraday increase narrowed to around 10%, and finally closed up about 13.2% to 5.15 US dollars, a new closing high since last Monday, March 13.
Prior to the rise in AMC's stock price, news had just come out in the media that Amazon founder Bezos had sent his investment advisors and top managers in the entertainment industry to study plans to acquire AMC.
An Amazon insider said that Amazon is considering using AMC's nearly 600 cinemas across North America, Europe and the Middle East as “marketing weighing stations”. They can help Amazon Prime members competing for awards watch movies and promote them, provide cross-selling services such as delivery of daily necessities, and act as local distribution centers. Moreover, AMC has 200 million movie viewers every year, and Amazon can also collect their important data.
Earlier, the media said that Amazon plans to release 10 to 15 theatrical movies every year. If the news of the acquisition of AMC is true, AMC's theaters should probably be used as a screening platform for these films on Amazon.
On Tuesday, the media said that Amazon's internal discussions are uncertain, and it is impossible to determine that in the end, Amazon will make a takeover offer. According to some insiders, Bezos may wait for AMC's stock price to continue to fall, and may even wait for AMC to declare bankruptcy before taking steps to buy AMC's assets. The latter operation is reminiscent of the acquisition of bankrupt Lehman Brothers by British banking giant Barclays in 2008.
AMC CEO Adam Aron said earlier this week that we are not responding to rumours and speculations. Amazon declined to comment on the news.
According to the media mentioned above, what is certain is that there are discussions within Amazon. According to a former Amazon executive, Amazon has been considering acquisitions in the cinema sector since it launched the member subscription video streaming service Amazon Prime Video in 2006.
An analyst at a major investment bank covering AMC called AMC a “bad asset” and thought “buying this kind of marketing property is a good idea.”
Prior to news of a possible acquisition of AMC, Amazon and Apple, which also entered streaming services, were actively entering the movie market. Recently, the media said that both Apple and Amazon will invest 1 billion US dollars a year to produce movies that will be screened in theaters. These two tech giants will compete with strong rivals like Netflix and Disney. Since no consumer data has been disclosed, the progress of their streaming service is currently unknown.
Editor/phoebe