After months of uncertainty and bankruptcy worries, AMC Theatres stock ($AMC) is on the ever-so-slight rebound — and for a pretty major reason, at that. Over the weekend, news surfaced suggesting Amazon was interested in purchasing the faltering theatre chain, the largest of its kind in the United States. The news comes from an unconfirmed report from the Daily Mail, it's said the two companies have at least had initial talks about a takeover, though it's unclear if the talks are still active and will actually lead to a takeover.
Regardless, $AMC traded particularly well on Monday as a result of the news. Though it opened the day trading at $6.41 a share, the stock circled the $5.20 mark in after-hours trading. Even at the $5.20 per share mark, it's the highest the stock's traded since early March. Amidst growing bankruptcy in April, the stock bottomed out around $2 per share, the lowest the stock's ever been.
Not only would an Amazon takeover provide much-needed stability for the country's largest theatre chain, but it would also upset long-standing regulations that prevented studios from owning movie theatres. Last November, the Trump administration announced plans to repeal the decisions handed down in 1948's United States v. Paramount Pictures, Inc., a move that would pave the way for movie studios to legally own movie theatres again.
In a near-unanimous decision (7-1) the Paramount Pictures case of the 1940s forbid movie studios from owning theatres, effectively preventing companies from turning cinemas into single-studio stops. While Amazon (through its subsidiary Amazon Studios) doesn't necessarily have the output of a Disney or Universal, the move could launch a domino effect where Hollywood's major studios start searching out their own chains to snatch up.
At a speaking engagement in November, Department of Justice Assistant Attorney General Makan Delrahim said the antiquated laws needed to change with the times, especially in the advent of streaming video and the OTT industry. “As the movie industry goes through more changes with technological innovation, with new streaming businesses and new business models, it is our hope that the termination of the Paramount decrees clears the way for consumer-friendly innovation,” the official said.
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