106 West 14th Street
Kansas City, Missouri 64105
Telephone: (816) 221-4000
Fax: (816) 480-4617
Sales: $1.02 billion (1999)
Stock Exchanges: American
Ticker Symbol: AEN
NAIC: 512131 Motion Picture Theaters (Except Drive-In); 512132 Drive-In Motion Picture Theaters
Since opening our doors in 1920, AMC Entertainment Inc. has been dedicated to delivering the most entertaining movie-going experience in the world. Along the way, AMC Theatres has changed the way people watch movies by transforming the experience into an adventure. With stadium-style seating, state-of-the-art sound systems, and what is known today as the megaplex. ... Maintaining our values as a positive presence in your community and our mission of delivering the highest quality movie-going experience, AMC Theatres remains focused on being a source of enjoyment and leadership.
AMC Entertainment Inc., through its American Multi-Cinema, Inc. subsidiary, is the largest theatrical exhibition company in the world in terms of revenues and one of the largest motion picture exhibitors in the United States in terms of number of theater screens operated. In 1999, AMC was running 200 theaters with 2,800 screens in 23 states. An industry leader in the development and operation of multi-screen cinemas, AMC generated annual ticket sales of nearly $1,030 million in 2000.
Kansas City Beginnings
AMC was incorporated by Stanley H. Durwood (formerly Dubinsky) in 1968, but the business was actually started by Durwood's father in 1920. The elder Durwood had previously been a struggling actor working for a traveling tent show. In 1920, he bailed out of his acting career and leased a movie theater in downtown Kansas City. Also in 1920, Durwood's wife gave birth to Stanley, who would grow the start-up business into a small theater empire before the end of the century. During the 1920s and 1930s, Durwood was successful enough to open a few more theaters in the Kansas City area. He was also did well enough to help send Stanley to Harvard during the early 1940s.
Stanley Durwood graduated from Harvard in 1943 with a Bachelor of Arts degree. He joined the U.S. Air Force after college and served during World War II, eventually attaining the rank of lieutenant. After the war, Stanley returned to Kansas City and joined the family business--Durwood Theaters. During the 1950s, Stanley, along with his father and younger brother and sister, slowly expanded the business into a chain of ten local movie houses and drive-in theaters. It was during this period that Stanley contrived an ingenious idea for a new kind of cinema--a single complex with multiple theater screens. Although he was never able to realize his vision while his father was in control of the operation, he kept the idea alive in his mind.
Stanley's father died in 1960, and Stanley and his siblings continued to run the business, with Stanley in charge of operations. By the time Stanley took control of the business, the theater industry was rapidly evolving into a regional, and even national, industry. Because they owned only ten theaters, the Durwoods were under pressure from larger operators with more and bigger complexes. The market reach of such operations was often much greater, so they were usually able to lasso the choice releases, leaving the Durwoods to choose from the less popular motion pictures.
'I had to beg and plead for an Abbott and Costello picture,' Durwood recalled in the March 25, 1994 Kansas City Business Journal. When Durwood finally got the comedy from the movie distributors, he hated it, but it was a big-name film, and his theaters were packed. Durwood noted, 'I thought, what a crummy picture. Now if I could get two crummy pictures in here, I could double my gross and the rent would be the same.' Seeking to boost attendance without increasing operating costs, Durwood believed that his multi-screen concept could be the solution.
The Birth of the Multiplex in the 1960s
In 1963, Durwood realized his vision when he built the first multiscreen theater. The concept was unheard of at the time and seemed extravagant; critics wondered why anyone would need two different screens. However, the multiscreen theater, located in a suburban shopping mall, was a success. Durwood quickly began to reconfigure some of his existing facilities into multiple screen, or 'multiplex,' cinemas. In 1965, Durwood bought out his brother's and sister's ownership interests. Then, in 1968, he incorporated the business as American Multi-Cinema Inc. (the name was shortened in 1983 to AMC). At the time of incorporation, AMC consisted of a local chain of 12 theaters with a total of 22 screens. AMC boosted that figure in 1969 when it opened its first six-screen theater.
AMC took advantage of industry gains during the 1970s, but was also able to consistently strengthen its competitive position in relation to its peers. It achieved those market share gains mostly through construction of new multi-screen cinemas, many of which were adjoined to, or located near, shopping malls.
Despite AMC's success, many of the company's competitors sat on the sidelines during the popularization of multiplex theaters, failing to recognize the long-term nature of the trend. A few competitors, particularly General Cinemas, also built some multi-screen theaters. However, Durwood led the charge. The AMC chain included more than 500 screens in theaters scattered mostly around the Midwest by 1981. And AMC's most rampant period of growth was yet to come.
The success of AMC's multi-screen concept was rooted in Durwood's penchant for efficiency. One prominent studio executive even referred to Durwood as the 'father of modern theater exhibition' and the 'inventor of professional theater management.' Despite its novelty, the multiplex philosophy was relatively straightforward. By putting several screens under one roof, AMC was effectively combining several separate theater facilities. The chief benefit was that the theaters were able to share infrastructure and employees, thus spreading costs over a higher revenue base. For example, by staggering starting times of the movies, one (or a few) employees could staff the box office, while twice as many workers would be needed at two separate theaters. Likewise, only one or two concession stands were needed, parking area requirements were minimized, and costs related to air-conditioning, the lobby, and other infrastructure elements were significantly reduced.
A corollary benefit of multi-cinema theaters, which Durwood especially recognized when he began building complexes with more than two or three screens, was increased market reach. By offering different types of movies, one facility could simultaneously appeal to several segments of the movie-going population. In addition, AMC could maximize profits on selected features by extending the run of movies that turned out to be very popular. Finally, multiple screens complemented other AMC technical and marketing innovations during the 1970s and 1980s. For example, the company was credited with introducing automated projection systems. AMC introduced the industry's first cupholder armrest in 1981.
Continued Growth in the 1980s
AMC's biggest growth spurt occurred during the 1980s. Although annual movie attendance throughout the decade remained near the one billion mark, the theater industry in general succeeded in steadily boosting ticket prices faster than inflation, thus increasing margins. More importantly, AMC continued to parlay its multi-screen concept into a competitive advantage and was able to significantly boost its share of box office receipts. During 1982 and 1983, AMC increased its total number of screens by more than 200, to about 700. Still eager to speed up expansion, the 63-year-old Durwood took his company public in 1983. Until that year, the company had been 100 percent owned by Durwood and his family. He reluctantly sold about 12 percent of AMC's stock in 1983 in a bid to raise expansion capital.
By 1986, AMC's total number of theater complexes had bolted past 200 with more than 1,100 screens in the United States. Furthermore, Durwood stepped up expansion in western Europe, Australia, and Singapore. By 1990, he planned to be operating 2,500 screens in the United States and 1,500 more overseas.
AMC's strategy represented a slight departure from, or perhaps an amplification of, the growth tactics it had utilized in the past. Instead of building complexes with five or six screens, most of its new facilities during the early and mid-1980s housed eight to 12 screens. Furthermore, Durwood was targeting smaller cities in sunbelt states, especially Florida, Texas, and California. However, to achieve the stellar growth, Durwood was forced to take on a massive load of debt. He hoped to pay the debt off in the long term from strong profit gains.
As the U.S. theater industry expanded unchecked during the mid- and late 1980s, some critics feared that the market was becoming increasingly overbuilt as theater demand was declining. AMC's holdings, alone, had reached 1,500 screens by 1988, and a lot more construction was on the design boards. Furthermore, several of its competitors were hurriedly adding more screens to their existing complexes in what became a trend to 'add value' to their theaters. In AMC's case, critics also cited a lack of a market presence in key metropolitan areas like New York, Chicago, and Boston. Moreover, some observers felt that AMC, unlike other theater industry leaders, had made a mistake by not diversifying into movie-related industries during the 1980s.
The criticism about AMC's lack of diversification was prompted by the fact that the theater industry had felt increasing pressure from an onslaught of other channels for movie viewing since the 1970s. Indeed, home videos and cable television, particularly, had been vying for consumer entertainment dollars. In response, AMC's competitors had diversified out of the
1920:The company's first theater is leased.
1963:The first multiscreen theater is built.
1968:AMC is incorporated as American Multi-Cinema Inc.
1981:AMC introduces the industry's first cupholder armrest.
1988:AMC's holdings reach 1,500 screens.
1995:The first 'megaplex' is built.
1999:Longtime chairman and CEO Stanley H. Durwood dies.
Despite record sales during the late 1980s, AMC was having financial trouble that intensified during the early 1990s. Notwithstanding a history of extremely sound management of its theaters--Durwood himself was known for always flying coach class, buying his suits off the rack, and driving an economical Honda Civic--AMC had let is operating costs escalate during its rapid expansion. Furthermore, the company's cash flow was being devoured by a crushing debt load. AMC lost money every year between 1988 and 1992, with the exception of one year in which it gleaned $567,000 in earnings from its operations. To combat slumping profits, AMC reined in its growth efforts beginning in the late 1980s and concentrated on whipping existing operations into shape. The company added a string of new theaters in 1988, bringing its total number of screens to nearly 1,700, but then stopped expanding and started slashing costs.
Of its 276 theaters, AMC closed 40 of the least profitable, reducing its total number of screens to about 1,600 by 1994. It also cut its work force by about 1,000. As it scrambled to meet its debt obligations, industry revenues picked up. Although AMC's sales wavered barely above the $400 million mark, its operating costs declined and the company posted a $1.3 million net profit in 1993. Although the company was more than $300 million in debt, analysts were optimistic, and it appeared as though Durwood's long-term strategy might pay off after all.
Having overseen a period of great expansion, Stanley Durwood's son Edward left the presidency of AMC in 1995, and Philip M. Singleton, chief operating officer, moved into the post. A former Marine Corp captain and fighter pilot, Singleton had been with AMC since 1974. He was joined by Peter C. Brown, who was appointed chief financial officer.
The Birth of the Megaplex in the 1990s
In the mid-1990s, founder Stanley Durwood was laying new plans to begin building a string of vast complexes with as many as 24 screens under the same roof. This concept was realized in Dallas in 1995 and quickly duplicated in other major markets. As with the multiplex, megaplexes consolidated operations costs and broadened its reach across more market sectors. Moreover, such tremendous spaces also permitted other revenue-generating efforts to flourish, such as restaurants, videogame parlors, and CD and book sales. Despite the million dollar pricetag for the construction of every megaplex, AMC was generally able to recoup its losses, although at the turn of the century the company did curtail its ambitions slightly, building more 20-plexes than 30-plexes. The comforts ushered in by megaplexes made any venues constructed before the 1990s seem old-fashioned.
Durwood died in 1999 of esophageal cancer, and Brown took over as chief executive officer and president. Meanwhile, AMC was busy going international, with a 13-plex in Fukuoka, Japan, and a 20-plex in Portugal, among other locations in Canada, England, and Spain. A joint venture with the Planet Hollywood theme restaurants, Planet Movie, was also planned, but stalled amidst the restaurant company's ongoing financial troubles. More promising, AMC and Hollywood.com, Inc., a web site for movies and entertainment, joined forces to sell movie tickets over MovieTickets.com in 2000.
Principal Subsidiaries: American Multi-Cinema, Inc.
Principal Competitors: Loews Cineplex Entertainment Corporation; Carmike Cinemas, Inc.; Regal Cinemas, Inc.
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Bacha, Sarah Mills, 'Movie Theater with 24 Screens Part of Project,' Columbus Dispatch, August 10, 1994, p. G1.
Block, A. B., 'What Makes Stanley Borrow? Stan Durwood's AMC Entertainment is Loaded with Debt and Costly Leases. So Why Does the Stock Sell for 27 Times Earnings?,' Forbes, September 22, 1986.
Cardenas, Gina, 'Movie Theater Economics,' New Miami, September 1993, p. 18.
Gold, Howard, 'Screen Gem?,' Forbes, September 10, 1984, p. 194.
Graham, Sandy, 'From Multi to Mega,' Colorado Bizz, January 2000, p. 50.
Grove, Christopher, 'Durwood Legacy Packs 'Em In,' Variety, May 16-22, 1999, p. 42.
Harris, Kathryn, 'AMC Theater Empire Playing Real-Life Drama,' Los Angeles Times, March 27, 1988, Sec. 4, p. 1.
Henderson, Barry, 'AMC Bets on Theater Allure Over Couch,' Kansas City Business Journal, March 25, 1994, p. 3.
Source: International Directory of Company Histories, Vol. 35. St. James Press, 2001.