AMC Theatres Refuses to Play Universal Films in Wake of 'Trolls World Tour'
The threat came in the wake of comments made by NBCUniversal CEO Jeff Shell regarding what the on-demand success of the family film means for the future.
AMC Theatres on Tuesday delivered a blistering message to Universal Pictures, saying the world's largest cinema chain will no longer play any of the studio's films in the wake of comments made by NBCUniversal CEO Jeff Shell regarding the on-demand success of Trolls World Tour and what it means for the future of moviegoing post-coronavirus pandemic.
Earlier in the day, Universal revealed that Trolls World Tour racked up an estimated $100 million in premium VOD rentals in its first three weeks in North America, more than enough to put the film on the road to profitability, according to the conglomerate. That's not far behind the $116 million grossed by the original Trolls in its first three weeks at the 2016 domestic box office on its way to topping out at $153.7 million in the U.S. and Canada and nearly $347 million globally, not adjusted for inflation.
Universal sent the animated family film straight to PVOD amid the ongoing coronavirus pandemic and widespread theater closures.
"The results for Trolls World Tour have exceeded our expectations and demonstrated the viability of PVOD,? Shell told The Wall Street Journal, which first reported the numbers. ?As soon as theaters reopen, we expect to release movies on both formats.?
In a strongly worded letter to Universal Filmed Entertainment Group chairman Donna Langley, AMC Theatres chair-CEO Adam Aron said Shell's comments were unacceptable. AMC is the largest circuit in the world.
"It is disappointing to us, but Jeff?s comments as to Universal?s unilateral actions and intentions have left us with no choice. Therefore, effectively immediately AMC will no longer play any Universal movies in any of our theaters in the United States, Europe or the Middle East," Aron wrote.
"This policy affects any and all Universal movies per se, goes into effect today and as our theaters reopen, and is not some hollow or ill-considered threat," he continued. "Incidentally, this policy is not aimed solely at Universal out of pique or to be punitive in any way, it also extends to any movie maker who unilaterally abandons current windowing practices absent good faith negotiations between us, so that they as distributor and we as exhibitor both benefit and neither are hurt from such changes. Currently, with the press comment today, Universal is the only studio contemplating a wholesale change to the status quo. Hence, this immediate communication in response."
Tuesday evening, Universal issued a statement suggesting that Shell's comments were misconstrued, and that it remains committed to moviegoing. (At the same time, the studio took a dig at AMC and the National Association of Theatre Owners for trying to "confuse" matters.)
?We absolutely believe in the theatrical experience and have made no statement to the contrary. As we stated earlier, going forward, we expect to release future films directly to theaters, as well as on PVOD when that distribution outlet makes sense. We look forward to having additional private conversations with our exhibition partners but are disappointed by this seemingly coordinated attempt from AMC and NATO to confuse our position and our actions," Universal said.
"Our goal in releasing Trolls: World Tour on PVOD was to deliver entertainment to people who are sheltering at home, while movie theatres and other forms of outside entertainment are unavailable. Based on the enthusiastic response to the film, we believe we made the right move," the statement added.
AMC has been particularly hard hit because of its debt load heading into the pandemic. Following the closure of all AMC locations in the latter half of March, Wall Street analysts predicted that the circuit would be forced to file for Chapter 11 bankruptcy, but grew more bullish after the company issued a $500 million debt offering earlier this month (Aron himself is among the corporate staff furloughed because of the closures).
Added Aron in his letter to Langley: "Universal?s unilateral pronouncements on this issue are unpalatable to us, as has always been the case, AMC is willing to sit down with Universal to discuss different windows strategies and different economic models between your company and ours. However, in the absence of such discussions, and an acceptable conclusion thereto, our decades of incredibly successful business activity together has sadly come to an end."
Aron's letter capped an afternoon of high drama regarding Shell's remarks. NATO weighed in first, saying that while Universal may be pleased with the PVOD results of Trolls World Tour, this outcome should not be interpreted as a sign of a ?new normal? for Hollywood.
?Universal does not have reason to use unusual circumstances in an unprecedented environment as a springboard to bypass true theatrical releases,? said NATO president and CEO John Fithian. ?Theaters provide a beloved immersive, shared experience that cannot be replicated ? an experience that many of the VOD viewers of this film would have participated in had the world not been sequestered at home, desperate for something new to watch with their families. We are confident that when theaters reopen, studios will continue to benefit from the global theatrical box office, followed by traditional home release."
For the most part, Universal ? like the other major Hollywood studios ? has delayed its event films so that they can have a theatrical release, including 59 and the next Minions.
Trolls World Tour, along with Warner Bros.' Scoob! and Disney's Artemis Fowl, are exceptions.
Cinema owners have said they understand why some movies may need to go straight to home entertainment, but Shell's comments struck a nerve. "Universal has taken the first step toward changing the paradigm," says a studio executive at another company, noting that film distributors have have wanted to test early PVOD for years.
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