AMC Theaters is the largest movie theater chain in the U.S. with 600 locations nationwide. With the spread of COVID-19, the chain has closed its locations going dark with the escapist reality that’s now being consumed in people’s homes.

While AMC CEO Adam Aron is optimistic that the chain will open its doors in mid-June others aren’t as positive about that reality.

S&P has downgraded AMC’s credit rating expecting the movie theater chain to not recover.

We do not believe AMC has sufficient sources of liquidity to cover its expected negative cash flows past mid-summer.

-S&P analysts

The change in credit rating moves the company into “default imminent” due to “little prospect for recovery.”

While some have projected that the COVID-19 pandemic will peak between June and August S&P expects it to continue well beyond leaving the company without the needed summer blockbusters and closure for 6 months or more. That will make the company unable to pay its debt. The company reported a $5 billion-plus deficit at the end of 2019 and losses of $149 million for the year. They had a $110 million profit in 2018.

The company has cut executive pay and bonuses for three years in exchange for stock and furloughed 600 corporate employees.

The closure of so many theaters and the loss of screens will be a massive blow to the industry, not just in its recovery but the future as a whole as consolidation has lead to stricter screening deals that have resulted in further market dominance by a few. A shift to digital releases during the crisis has also created a murkier future. While that sort of release has been attempted in the past, it’s never been done on such a large scale. High profile films are skipping theatrical runs altogether while others have compressed the time of release from the theater to digital release. It’s unknown how much that will continue once the crisis has abated.

Businesses are scrambling to deal with the outbreak of the COVID-19 and many are updating customers as to how they’re exactly dealing with the situation. AMC sent out an email to those subscribed to their email list with their updates.

While the update featured the standard increases in cleaning and a greater focus on ill employees that many are taking, the email also announced a drastic cut in capacity for seating.

From the email:

To give you more empty space around you within our theatres, we are capping ticket availability to 50% of the normal seating capacity for every showtime in every auditorium at all AMC theatres nationwide. Once we hit 50% of an auditorium’s capacity, movie screenings will show as being Sold Out, even though by definition there will be a large number of unfilled seats. This will begin Saturday, March 14, and for now, will continue until April 30.

For those AMC auditoriums with more than 500 seats, we will further reduce bookings to a maximum of 250 people in any case.

That’s a massive reduction in seating and potential tickets being sold. Its impact on movie releases are unknown and numerous studios have shifted releases from their original release date. There’s a good chance more movies will shift opening dates due to this policy as well.

Expect a very rocky year for entertainment as a whole. Production is being shut down for films and television shows and now studios will be contending with a diminished capacity for release as well as customers with the unease of leaving their home if they’re even allowed. The ripple effects will be felt for months if not years to come.