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Writers and Studios Reach Tentative Labor Agreement, Boosting Movie Theatre Shares

Shares of movie theater companies, including AMC, Cinemark, and IMAX, experienced a boost following news of a tentative labor deal between the Writers Guild of America (WGA) and the Alliance of Motion Picture and Television Producers (AMPTP). AMC CEO Adam Aron welcomed the news, expressing optimism on social media.

AMC’s stock saw a roughly 7% increase on Monday, reaching as high as $8.50 per share. Cinemark and IMAX also saw gains of 2.7% and 1.5%, respectively.

However, shares of major studio owners, such as Disney, Comcast, and Warner Bros. Discovery, were mostly down or remained relatively stable. Warner Bros. Discovery experienced a nearly 4% decline.

While the potential resolution of the writers’ strike is seen as positive for the entertainment industry, there are still steps to be taken. The WGA-AMPTP deal needs to be ratified by union members, and another critical labor agreement with the Screen Actors Guild – American Federation of Television and Radio Artists (SAG-AFTRA) remains unresolved.

An agreement with SAG-AFTRA is essential for movie theater companies, as several key films, including “Dune: Part Two” and “Kraven the Hunter,” have been delayed to 2024 due to the strikes. Industry experts are concerned that more films could be pushed further along the release calendar if contracts with the two guilds are not finalized this year.

Despite the labor disputes, movie theaters have seen solid box office returns in 2023, with a 19% year-over-year increase during the summer season, driven in part by the success of films like “Barbie” and “Oppenheimer.”

The length of the writers’ strikes has presented an opportunity for streaming platforms like Netflix, which have extensive content libraries. Shares of Netflix also saw a modest 1% increase on Monday.

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