AMC Theaters Will Not Screen Any Universal Movies After CEO Says They Will Offer a VOD Option and Universal Responds

As reported yesterday, Universal Pictures boasted about how their film Trolls World Tour has in three weeks generated more revenue for Universal than the original Trolls movie did during its five month theatrical run. Universal CEO Jeff Shell was so happy with the success that he said, “As soon as theaters reopen, we expect to release movies on both formats.”

This statement did not make AMC boss Adam Aron very happy, and he fired off a letter to Universal Studios Chairman Donna Langley in response to Shell’s statements in the Wall Street Journal. He was so upset that he says that AMC Theaters will no longer screen any film from Universal.

That means unless AMC and Universal can work things out, films like Fast 9, Jurassic World: Dominion, Halloween Kills, and more won’t be shown on the big screen at AMC Theaters. Aron’s direct quote reads:

“Going forward, AMC will not license any Universal movies in any of our 1,000 theatres globally on these terms.”

Now, Universal isn’t the only studio releasing films on VOD. Disney is doing this with Artemis Fowl and Warner Bros. with Scoob!. But, Aron explains, so far “Universal is the only studio contemplating a wholesale change to the status quo. Hence, this immediate communication in response.”

The future of how movies will be distributed in the future is certainly getting interesting, but in the end, without theaters, I seriously doubt we’ll see any movies break the billion-dollar box office mark again.

Universal did respond to AMC saying that they “absolutely believe in the theatrical experience and made no statement to the contrary.” Then added, “As we stated earlier, going forward, we expect to release future films directly to theatres, as well as on PVOD when that distribution outlet makes sense.”

You can read Aron’s full letter to Langley below. Read it over and tell us what you think about how this is all playing out.

Donna Langley
Chairman
Universal Studios

Dear Donna,

At this time of national emergency and the coronavirus wreaking havoc on the entire world, I hope that you and your loved ones are healthy and safe. I worry – and I wish the best for – the health of all of our industry colleagues. Never in our lifetimes has there been a more challenging time.

Amidst a global pandemic as a backdrop, I wish we were spared from also having to address a different issue that arises from Universal actions currently underway.

For 100 years, AMC Theatres has served as a strategically critical and highly profitable distribution platform for movie makers, and for all that time the exclusivity of the theatrical release has been fundamental. When a movie is “Only in Theaters,” consumers perceive it to be higher quality entertainment. Countless filmmakers and moviegoers believe that their creative works are best enjoyed by consumers on the big screen. And we all know that those theatrical releases indeed boost publicity, positive word-of-mouth, critical acclaim and downstream revenues.

For much of the past four and a half years, I have been in direct dialogue with Jeff Shell and Peter Levinsohn of Universal about the importance of a robust theatrical window to the viability of the motion picture exhibition industry. Throughout that time, AMC has expressed a willingness to consider alternatives to the current windowing strategy common in our industry, where the aim of such alternatives is to improve both studio profitability and theater operator profitability.

Universal stated it only pursued a direct-to-home entertainment release for “Trolls World Tour” because theaters were closed and Universal was committed to a lucrative toy licensing deal. We had our doubts that this was wholly Universal’s motivations, as it has been a longstanding desire by Universal to go to the home day and date. Nonetheless, we accepted this action as an exception to our longstanding business practices in these unprecedented times.

In today’s Wall Street Journal, Jeff Shell is quoted as saying that:

“The results for ‘Trolls World Tour’ have exceeded our expectations and demonstrated the viability of PVOD,” Mr. Shell said. “As soon as theaters reopen, we expect to release movies on both formats.”

This radical change by Universal to the business model that currently exists between our two companies represents nothing but downside for us and is categorically unacceptable to AMC Entertainment, the worlds largest collection of movie theatres.

Going forward, AMC will not license any Universal movies in any of our 1,000 theatres globally on these terms.

Accordingly, we want to be absolutely clear, so that there is no ambiguity of any kind. AMC believes that with this proposed action to go to the home and theatres simultaneously, Universal is breaking the business model and dealings between our two companies. It assumes that we will meekly accept a reshaped view of how studios and exhibitors should interact, with zero concern on Universal’s part as to how its actions affect us. It also presumes that Universal in fact can have its cake and eat it too, that Universal film product can be released to the home and theatres at the same time, without modification to the current economic arrangements between us.

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 theatres in the United States, Europe or the Middle East. This policy affects any and all Universal movies per se, goes into effect today and as our theatres reopen, and is not some hollow or ill-considered threat. 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.

AMC has invested significant time and energy with Universal executives over the past few years trying to figure out a new windows model that would be beneficial both for your studio and for our theatre operations. While 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.

Sincerely,

Adam Aron
CEO and President
AMC Entertainment

Here’s Universal’s full response to AMC:

“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. In fact, given the choice of not releasing Trolls: World Tour, which would not only have prevented consumers from experiencing the movie but also negatively impacted our partners and employees, the decision was clear. Our desire has always been to efficiently deliver entertainment to as wide an audience as possible. 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 theatres, 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.”

Source: Deadline