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On Tuesday, AMC Theaters, the world's largest cinema chain, declared that they'll no longer be showing films from Universal Pictures, The Hollywood Reporter reports.
The bold decision came after comments that were made by NBCUniversal CEO Jeff Shell about the future of the industry following the success of Trolls World Tour's on-demand release. Note that this release was, itself, an audible that Universal called after the animated sequel had to shift strategy because movie theaters were shutdown due to the coronavirus.
AMC's CEO, Adam Aron, revealed the ban in a letter that was sent to Universal chairman Donna Langley. In that letter, he wrote that the decision came after Shell gave a quote to The Wall Street Journal about the future of the industry.
In it, Shell stated that the estimated $100 million earned by Trolls World Tour in rental fees over the three weeks since its release "exceeded our expectations and demonstrated the viability" films can have being released directly on-demand. In comparison, the original Trolls brought in $116 million at the domestic box office in the first three weeks it was in theaters in 2016.
Shell's quote reads pretty innocuous, though one might have a different perspective if their livelihood depended on it. But it was what he said after that that reportedly angered Aron. "As soon as theaters reopen," Shell added, "we expect to release movies on both formats."
Cue the drama.
In Aron's letter to Langley, the AMC CEO stated in no uncertain terms that AMC's relationship with Universal was effectively over.
"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 theaters in the United States, Europe or the Middle East," Aron said, according to THR.
"This policy affects any and all Universal movies per se, goes into effect today and as our theaters reopen, and is not some hollow or ill-considered threat," he continued. "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."
Before Tuesday had wrapped up, Universal issued a response in which it said the studio still a big believer in the "theatrical experience," and that the offending comments were misinterpreted.
“We absolutely believe in the theatrical experience and have made no statement to the contrary," Universal's response said. "As we stated earlier, going forward, we expect to release future films directly to theaters, 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 [the National Association of Theater Owners] to confuse our position and our actions.
"Our goal in releasing Trolls: World Tour on PVOD was to deliver entertainment to people who are sheltering at home, while movie theaters and other forms of outside entertainment are unavailable. Based on the enthusiastic response to the film, we believe we made the right move."
THR adds that AMC has been hit especially hard by the economic consequences of the pandemic, on account of the amount of debt it had before closures started taking place. Wall Street analysts have reportedly predicted that the chain will have to file for Chapter 11 bankruptcy after shutting down all their locations in the second-half of March. Those analysts became more optimistic when the company issued a half-billion-dollar debt offering in April.
Aron's letter goes on to state that AMC is "willing to sit down with Universal to discuss different windows strategies and different economic models between your company and ours," while adding that if those discussions don't take place, then (again) the relationship is over.
A day after this public back-and-forth, Regal Entertainment's owner (Cineworld) said they also would not be showing films from "movie suppliers" that "fail to respect the [theatrical] windows" that had been granted to theaters.