AMC AMC Entertainment Holdings Inc

By Erich Schwartzel 

LOS ANGELES -- Universal Pictures' plan to experiment with the theatrical distribution model has sparked all-out war with the world's largest movie-theater chain.

AMC Entertainment Holdings Inc. Chief Executive Adam Aron said his chain would refuse to book any of the Comcast Corp.-owned studio's movies in his theaters following a Wall Street Journal report on the studio's plan to release forthcoming titles in theaters and on digital platforms.

In an open letter Tuesday evening addressed to Universal Chairman Donna Langley, Mr. Aron accused the studio of reneging on years of conversations between the studio and theater chain about preserving the exhibitors' right to an exclusive engagement.

"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," Mr. Aron wrote. "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," he added.

A Universal spokesman said, "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 [premium-video-on-demand] when that distribution outlet makes sense."

With the nation's theaters closed, Universal decided to make its April 10 theatrical release "Trolls World Tour" available for digital rentals at $19.99.

The Journal reported Tuesday that the studio had realized $77 million in revenue from nearly five million rentals in its first three weeks of release. In a statement, Jeff Shell, the head of NBCUniversal, said the studio was encouraged by the results and would "expect to release movies on both formats" once theaters reopen.

Universal has said it will continue to release major movies like the latest "Fast & Furious" installment, and has shuffled the release dates of such films to ensure they receive a wide theatrical release. Mr. Aron's letter implies his chain won't book any Universal titles regardless of distribution plans for the specific movie.

In his letter, Mr. Aron says he and Mr. Shell have spoken about the theatrical window for years. When Universal executives told AMC of their plan to release "Trolls" digitally because theaters were closed, "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" simultaneously, Mr. Aron wrote.

Mr. Aron's letter represents the most aggressive public rhetoric yet amid years of tension between exhibitors and studios over when a movie can leave theaters and head to home-entertainment options.

Studios, especially Universal, have advocated numerous times for shortening the exclusivity window held by theaters, and theaters have responded by refusing to screen any movie that didn't meet their terms. The nationwide closure of theaters, brought on by the novel coronavirus pandemic, hastened the decision by Universal and other studios to move movies once intended for the big screen to digital platforms.

Other studios such as AT&T Inc.'s Warner Bros. and Walt Disney Co. have made similar moves since theaters closed, though only Universal has indicated it wants to keep pursuing some of those practices even after the theaters reopen.

Mr. Aron said his company's new policy "also extends to any movie maker who unilaterally abandons current windowing practices absent good faith negotiations between us."

A Universal spokesman fired back at AMC and the National Association of Theatre Owners, a trade association group that had criticized the studio's decision earlier in the day.

"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," the spokesman said.

Write to Erich Schwartzel at erich.schwartzel@wsj.com

(END) Dow Jones Newswires

April 28, 2020 21:55 ET (01:55 GMT)

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