AMC Theatres CEO Adam Aron on Thursday said the nation’s largest movie theater chain had begun “urgent” talks to renegotiate terms with Warner Bros. following the studio’s announcement that it will release all of its 2021 films on HBO Max at the same time as theaters.
“These coronavirus-impacted times are uncharted waters for all of us, which is why AMC signed on to an HBO Max exception to customary practices for one film only, ‘Wonder Woman 1984,’ being released by Warner Brothers at Christmas when the pandemic appears that it will be at its height,” Aron said in a statement. “However, Warner now hopes to do this for all their 2021 theatrical movies, despite the likelihood that with vaccines right around the corner the theatre business is expected to recover.”
However, Aron indicated that the company was blindsided by Warner’s plans to release its 2021 slate of 17 films on its streaming service on the same day as its theatrical release — which has prompted AMC to renegotiate with the studio. “We will aggressively pursue economic terms that preserve our business,” Aron said. “We have already commenced an immediate and urgent dialogue with the leadership of Warner on this subject.”
Aron also took a dig at whether the studio’s move would produce anywhere near the revenue of a traditional theatrical release. “Clearly, Warner Media intends to sacrifice a considerable portion of the profitability of its movie studio division, and that of its production partners and filmmakers, to subsidize its HBO Max start up,” he said. “As for AMC, we will do all in our power to ensure that Warner does not do so at our expense.”
Warner Bros. year-long day-and-date strategy comes after AMC Theatres and other chains made an agreement with Universal to allow that studio to release films on demand at home as early as three weekends after they opened in theaters. Cinemark, which signed on to the deal last month, added the condition that films with an opening weekend of over $50 million will be guaranteed five weekends of theatrical exclusivity. Aron has hailed the deal as one that can protect movie theaters while adjusting to the new normal that streaming and the pandemic have forced on the industry.
But news of the HBO Max deal hit AMC’s stocks hard, as they fell nearly 16% from $4.14 per share to $3.63. Fellow national theater chain Cinemark, which has not grappled with the debt issues that AMC faces, fell nearly 22% from $17.04 per share at opening on Thursday to $13.30. Cinemark said on Thursday that Warner “has not provided any details for the hybrid distribution model of their 2021 films.”
Insiders at Warner Bros. told TheWrap that a major factor for the move was uncertainty over the pace at which theaters will reopen next year as COVID-19 vaccination efforts get underway. Health experts like Dr. Anthony Fauci have estimated that the U.S. could reach herd immunity by mid-summer, but many areas of the country are still working to build the infrastructure needed to distribute the vaccine, including deep freeze storage units. It is also unclear how quickly theaters will be given clearance by state officials to reopen and how long those theaters will have to maintain social distancing and audience capacity limits.
Aron said that AMC is “encouraged that vaccines protecting society at large against the coronavirus are very much at hand” and that the chain expects that moviegoers “will be able once again to delight in coming to our theatres without any worry.”