With AMC’s dismal Q1 earnings-and their recently announced turn around plan-fresh on everyone’s minds, analysts can be forgiven for being concerned over the perceived stand off between AMC and Universal studios. After all, Universal is currently handling the overseas distribution of MGM’s 007 film, No Time to Die, due to open in the US on November 25th,and possibly earlier internationally. We can’t blame them, either. After all, it wasn’t that hard to find the statement buried deep on page 3 of the AMC earnings report: “While we are inactive dialogue with Universal, no movies made by Universal Studios are currently on our docket.” BLAKE & WANG P.A take a closer look at the current state of relations, and where the future may take us.
The source of the poor relations between AMC and Universal
These developments come about a month after a very public note from the AMC CEO announcing a ‘public ban’ of Universal titles from AMC theatres. The cause of this angry letter?
The PVOD release of Trolls World Tour from DreamWorks Animation.
It’s tempting at first to laugh about a children’s movie being the cause of drama, but if we take a closer look at the economics, it does make sense. Universal earned $100 million from that release, deep in the heart of the lockdown. They have stated that they will do a theatrical day-and-date VOD for the film as well once theatres full reopen-but the chances of a wary public biting seem slim. Why not stay at home, socially distant, instead? There’s areal revenue loss for AMC in the move, and maybe the hurt feelings aren’t so irrational.
Smoothing ruffled feathers
In a statement made earlier in the week, however, the AMC CEO paints a rosier picture:
“So, look, relations are warm with Universal. They have always been warm, and I’m using that as a good word. There’s nothing personal about this issue with Universal. I have great respect for Universal’s executives. It’s just an issue about money. We are in active dialogue with Universal.”
Universal has yet to respond, but given that the statement was very recent, that doesn’t really indicate much at all.
Warner Bros’ play for screens
While it is quite worrying-and possibly shortsighted-to see a theater chain that needs every draw card possible engage in a spat with one of the major studios, it may not be as big a deal as you’d expect overall. Warner Bros is currently looking to monopolize every possible screen for the projected July 17th premiere of Tenet. Likewise, most reopening theaters, including AMC theaters, are banking on the film to make that date, and for the screenings to actually happen. That’s not 100% guaranteed at this moment, especially with the pandemic only corralled for now, not defeated outright.
Add to that the fact that Disney has yet to recall it’s furloughed distribution ops to handle the projected July 24th release for Mulan, and there’s rather bigger fish to fry for AMC currently. Universal has nothing on the cards until the late August release of Let Him Go.
Will the dispute have been resolved by then? No one can say. It’s also a little early to tell if AMC has the bargaining power they clearly believe they do, given the hit the lockdown theater closures have had on their baseline earnings. Can they pressure Universal to dance to their tune? Or will it all slide under the table, forgotten? It will be interesting to see how things develop over the next few months.
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