(Bloomberg) -- Cineworld Group Plc, the second-largest cinema-chain operator in the world, slammed a landmark pact between its larger competitor AMC Entertainment Holdings Inc. and Universal Pictures that shortens the time theaters can exclusively show new movies.
The agreement, which gives Universal the right to make its movies available online a mere 17 days after they debut in AMC theaters, is “the wrong move at the wrong time,” Cineworld said Wednesday in a statement. The London-based chain said it won’t show movies that go to home video that quickly.
Cineworld’s statement shows Universal has successfully driven a wedge between the major chains. The industry is already under pressure from the increasing popularity of streaming and a pandemic that’s slashed box-office sales, and AMC’s agreement with Universal adds another complication. By reducing the period Universal has to wait to put its movies onto premium video on-demand platforms -- known as PVOD -- other cinemas will effectively have to either follow suit or boycott films from the studio.
“The announcement does not disclose the full details of the agreement, but at present the rationale behind such a partnership is unclear,” Cineworld said. “In the meantime we intend to maintain our position of not showing any releases that do not respect the established theatrical window.”
AMC and Comcast Corp.’s Universal struck the agreement Tuesday following a major public blowup in April, when the No. 1 theater chain said it would boycott all films from the studio. The April pronouncement was in response to Universal executives saying they want to debut more movies online -- rather than strictly in theaters -- denying cinemas some future revenue. As part of the new agreement, AMC gets a cut of Universal’s premium on-demand sales, though it didn’t say how much.
Other large chains, including Cineworld-owned Regal and Cinemark, require Universal to show its new movies exclusively in theaters for about 60 days after they are released. If Universal opts to put the films online after 17 days, or three weekends, the chains can choose not to show the movies at all, or accept that the window has been curtailed.
Waiting Game
Cineworld also noted that there are no major Universal films scheduled to come out until next year. The studio’s next large-budget film will be Fast & Furious franchise installment “F9,” expected in April 2021.
Cineworld shares plunged as much as 19% in London on Wednesday, before recovering somewhat. The company has lost 81% of its since the start of the year and renegotiated lending covenants with banks after revenue was completely choked off by lockdowns.
Universal may share its on-demand revenue with more than one chain, but it didn’t make that clear. Managed correctly, the new arrangement could be a “win-win,” said Shawn Robbins, chief analyst at BoxOffice Media LLC.
“The ability for a major theater chain to reap some benefits from PVOD releases could offset some of the loss of a long theatrical window,” he said. “Conversely, if a film underperforms theatrically, the studio now has some leeway to push it across multiple platforms without the dead space between theaters dropping it after two weekends.”
©2020 Bloomberg L.P.
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