AMC to drop Carmike brand, add AMC Classic brand for smaller, less-visited theaters

AMC Entertainment reported higher revenues but lower profits in its first months after two blockbuster mergers.
AMC Entertainment reported higher revenues but lower profits in its first months after two blockbuster mergers.

AMC Entertainment plans to scrap the Carmike brand as it merges the nation’s No. 4 theater chain into its own, CEO Adam Aron said Tuesday.

The Leawood-based theater chain will operate with two U.S.-based brands, AMC and AMC Classic. Aron said the AMC Classic theaters will be those in smaller markets and “less-visited” complexes that have to operate on a tighter budget.

“We can better marry guest experiences with the experience that we can afford to deliver,” Aron said. “Over time, consumers will know what to expect at an AMC theater and what to expect at an AMC Classic theater.”

Aron said consumers will be happy at both, and there will be a lot of interplay between Carmike and AMC sites for which brand they end up with. Smaller AMC sites will become AMC Classic, and some larger Carmike theaters will carry the AMC brand.

The AMC theaters with kitchens will be additionally branded as AMC Dine In, he said.

“Ironically, many of the Carmike Theaters were not even branded Carmike,” Aron said, during a conference call with investors and analysts. Some were called Cinema Six or retained brands from purchased theaters.

Aron spoke after Leawood-based AMC Entertainment Holdings Inc. reported higher revenues but lower profits in the final months of 2016.

Revenues reached $926.1 million in October, November and December, up more than 18 percent from a year earlier. The total includes AMC’s ownership of European chain Odeon starting Nov. 30, and U.S.-based Carmike Cinemas starting Dec. 21.

The deals ballooned AMC’s theater count to 906 and its screen total to 10,558. AMC added 125 employees at its headquarters ahead of the acquisitions.

Aron said the company would have reached record revenues even without the two mergers that began to add to its revenue totals late in the quarter.

Earnings fell by 20 percent to $33.2 million, or 33 cents a share, the company’s announcement said. A year ago, AMC earned $41.6 million, or 42 cents a share, in the fourth quarter.

AMC’s earnings were dampened, it said, by $22.8 million in merger expenses in the quarter. But that was offset partly by $19 million in tax benefits from earlier acquisitions. It also included $10 million in bonuses for about two dozen executives tied to completing the acquisitions, Aron said.

Each of its blockbuster acquisitions cost more than $1 billion, and AMC raised $618 million through a stock offering to cover some of the merger costs.

AMC continues buying theater chains. It is awaiting regulatory approval for a $929 million purchase of Nordic Cinema Group, which it announced in late January. Based in Stockholm, Sweden, the company operates 68 theaters.

For all of 2016, AMC earned $115.9 million on revenues of $3.2 billion.

Mark Davis: 816-234-4372, @mdkcstar