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Oct. 19, 2019, 7:31 a.m. EDT

AMC Theatres launches streaming service in latest blow to Netflix

AMC is the first cinema chain to launch a streaming service, adding to a wave of new competition from Disney, Apple and others

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By Ciara Linnane, MarketWatch

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“In general, more services tacked on to loyalty programs in price elastic businesses tend to, more often than not, foster more loyalty,” Miller wrote in a note to clients. “That has been the case over the years in the airline industry as airline loyalty programs have grown more sophisticated.”

Miller said his initial reaction to the news was negative, as the company seemed to be taking a step that would encourage its customers to stay at home to watch films, the exact opposite of what cinemas are trying to persuade them to do. But he changed his view on seeing the positive market response and realizing that the company is using its loyalty program as a distribution network for the first time.

“’AMC Theaters on Demand’ now has the opportunity not only to promote various trailers for upcoming films in the theater, but also to promote new theater/re-seating renovations and/or MacGuffins Wine Bar features at select locations,” he wrote. Miller is sticking with his outperform rating on the stock and $21 price target.

AMC said late Monday that it had hired Sean Goodman, currently chief financial officer of Asbury Automotive Group /zigman2/quotes/207159575/composite ABG +7.33%  , as its CFO, replacing Craig Ramsey, who is retiring on Feb. 28, in a long-expected move. Goodman has also done stints at Home Depot /zigman2/quotes/208081807/composite HD +0.74%  , Morgan Stanley /zigman2/quotes/209104354/composite MS +2.99% and Deloitte & Touche in South Africa.

See: Why no streaming company will be able to dethrone Netflix

Benchmark analyst Mike Hickey, who rates AMC a buy, said the U.S. box office has exceeded his expectations in the third quarter and expects it to benefit AMC when its reports its third-quarter earnings in early November.

See also: Martin Scorsese says for cinema streaming is ‘an even bigger revolution than sound’

Related: Netflix drops teaser trailer for ‘The Irishman’ offering glimpse of ‘de-aging’ technology

Box office rose 2.8% in the period, buoyed by releases including “Spider-Man,” “The Lion King,” “Hobbs & Shaw,” “Angel has Fallen” and “It: Chapter 2.”

The analyst is expecting 5% growth in the fourth quarter, buoyed by releases including “Joker,” “Gemini Man,” “Maleficent: Mistress of Evil,” “Terminator: Dark Fate,” “Doctor Sleep,” “Charlie’s Angels,” “Frozen 2,” “Knives Out,” “Jumanji: The Next Level” and “Star Wars: The Rise of Skywalker.”

Netflix shares were recently down 0.4%, off their early-session lows.

AMC shares have fallen 15% in 2019, while the S&P 500 /zigman2/quotes/210599714/realtime SPX +0.78% has gained 19% and the Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA +0.68% has gained about 16%.

Read now: Meet the Mexican-American cultural consultant who helps Disney and Nickelodeon avoid lazy stereotypes

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Volume: 437,723
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Market Cap
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Rev. per Employee
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$ 249.17
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P/E Ratio
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/zigman2/quotes/209104354/composite
US : U.S.: NYSE
$ 48.91
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US : Dow Jones Global
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Ciara Linnane is MarketWatch's investing- and corporate-news editor. She is based in New York.

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