×
Back to IndieWire

AMC Goes to War With Universal: Could Everyone Just Calm Down?

NBC Universal chairman Jeff Shell's pro-VOD comments were perceived by the struggling theater chain as just the studio's latest broadside against theatrical.

AMC Theatres vs Universal

The exhibitor launched a broadside against the distributor on April 28.

If studios and major exhibitors are going to survive, let alone thrive, after theaters reopen, both sides are going to have to communicate a little better than yesterday’s display by NBC Universal Chairman Jeff Shell and AMC Entertainment CEO Adam Aron.

After Shell broadly communicated his company’s interest in keeping VOD as a first-run initial option as part of going forward with their release schedule (“As soon as theaters reopen, we expect to release movies on both formats” was the quote in the Wall Street Journal), Aron released a letter sent to Universal chairman Donna Langley stating “Effective immediately, we will no longer play any Universal movies in any of our theaters.”

AMC is the world’s biggest exhibitor, both in the U.S. and worldwide, including locations in Europe and the Middle East. In reality, neither company can operate without the other, so figure that this is a broadside to get both Universal’s attention and other distributors as they consider their future options.

Some background:

— Universal on March 16 announced, with no advance word to theaters, that three current in theater films — “Invisible Man,” “Emma,” and “The Hunt,” would go to premium VOD the following Friday. The timing is crucial — the three major circuits including AMC had not yet announced they were closing, and all were playing these films. They also announced “Trolls World Tour” would go premium VOD. That actually was the lesser issue, since by then there weren’t indoor theaters to play. The brutality of the Universal action at the time was noted.

— All distributors have been pushing exhibitors to shorten acceptable windows for VOD. This has been at a standstill for years, and there is a feeling among exhibitors that all studios could use the closures to take advantage for their position. In many ways, studios seem happy to show their enhanced position to theaters; the distributors have alternatives to keep cashflow going and longer-terms outlets for their business.

— Shell didn’t say Universal would release all films as VOD, or pronounce any other fait accompli. His quote was indelicate, however. By not saying that all discussions about individual films would include theater input and discussion, the quote became — at best — high-handed.

— The Universal plan is more aggressive, but it’s not unprecedented. More than any other top company, Lionsgate frequently releases VOD titles that play day-and-date in theaters. And over the years, unique among the top three exhibitors, AMC has actually played some of these.

— The soft underbelly for Universal here might be “No Time to Die,” the latest Bond film, now rescheduled for November. The studio is contracted by the producers to release the film in foreign territories. Any announcement by AMC that it won’t play Universal would get their attention and have their lawyers review their contract, which likely includes provisions that the studio can deliver key theaters. Their other films they control outright.

— The sheer number of theaters AMC controls — over 1,000 complexes worldwide — gives them real weight. Key locations throw off huge numbers that make them irreplaceable, including the Upper West Side of Manhattan, Century City in Los Angeles, and downtown Chicago.

— AMC itself is challenged financially, with a very low bond rating and fending off rumors about bankruptcy. Difficult circumstances sometimes can provoke more pointed reactions (as of now, neither Regal nor Cinemark have publicly reacted).

— Comments from AT&T CEO John Stankey last week about changes ahead in the theatrical model led to quick clarification. But this happening twice in under a week from two of the most powerful studios (AT&T owns WarnerMedia) was guaranteed to get a reaction.

— In past decades, top execs like Shell and Aron would have come from a movie-business background and it was easier to solve these disputes. They share Harvard degrees, but Shell comes out of cable and television, Aron out of ski resorts and cruise lines.

Assuming AMC works out its issues and reopens (that’s a bet to take), figure this will get worked out. Again, both sides need each other. But expect the way this went down to leave a mark on both sides.

Sign Up: Stay on top of the latest breaking film and TV news! Sign up for our Email Newsletters here.

This Article is related to: Film and tagged , , ,