A major spat over film rental terms for “Cliffhanger” between its distributor Columbia and the Hoyts Theaters chain is sending shock waves through the exhibition sector and could change the dynamics of the business Down Under.
Local branches of the major Hollywood distribs have claimed for some time that terms need to improve in Oz, which they say has one of the lowest film rental levels in the world. The average rental split is 30%-35% for the distributor, though in Europe it reportedly can be as high as 47%.
“Terms here are slightly out of whack,” says Mike Selwyn, UIP’s managing director in Oz, who previously worked in Europe.
Local Aussie exhibs counter that their investment of millions of dollars in multiplex development has doubled the Aussie B.O. over the past five years, boosting revenue for distributors accordingly. Exhibs say there aren’t the margins to sustain significant increases in terms.
However, Col is using the muscle of “Cliffhanger” to push for an increase at Hoyts; that exhib has front-rank status on all Columbia firstrun product, meaning it is the first exhib Col deals with.
Columbia wants to hike Hoyts’ “minimum floor” terms — the percentage the distributor gets after a set number of weeks — from 25% to 30%; the 25% level has been in place for a decade or so.
It’s understood this isn’t a one-time request, but even if it is, other distribs say it creates a precedent they will follow. “Columbia is driving the wedge in to create a norm,” says one major distrib. “If I learned about the (new) terms I would certainly want them as well.”
Adds an exhib: “These are precedent-setting terms that will lead to a new set of terms across the board.” And, notes another, “‘Cliffhanger’ isn’t a precedent-setting film like ‘Jurassic Park,’ which is much more warranted to get special terms.”
Exhibs assert that a 5% hike will jeopardize profits after the first few weeks — exhibs look for most of their profits then because distribs skim off more in the opening weeks — and that margins are already squeezed because of high operating costs.
Hoyts’ major rivals Greater Union and Village are also unlikely to agree to the new terms, if approached. “If that’s the deal Columbia is proposing, I can understand Hoyts objecting to it; given the same terms we would feel the same way,” says an exec from one of the circuits.
Columbia pulled “Cliffhanger” a fortnight prior to its skedded June 17 opening (Variety, June 21). Hoyts chairman Leon Fink and CEO Peter Ivany at press time were in the U.S. trying to reach a compromise with Columbia.
With the opening of “Jurassic Park” skedded for August, the industry is alarmed that business has been snatched away from them at such short notice. The prospect of a standoff is even more frightening.
As for UIP, managing director Mike Selwyn maintains Columbia’s arrangements with Hoyts are confidential and don’t affect UIP’s own negotiations. “Naturally we’re anticipating good terms for ‘Jurassic Park,’ ” he says.
At press time, neither Hoyts nor Columbia was prepared to comment, and no release date for “Cliffhanger” was being put forward.