Adam Aron has been head of AMC Entertainment for less than four months, but in that short time he’s already orchestrated one of the most significant deals in the country’s history. In February, AMC announced that it has an agreement to buy Carmike, propelling it from being the second-biggest exhibitor in the country to the world’s top movie theater chain.
Aron has a diverse resume, having been head of Starwood Hotels and Resorts, CEO and co-owner of the Philadelphia 76ers basketball team, chairman and CEO of Vail Resorts and president and CEO of Norwegian Cruise Line. But in an industry dominated by lifers, he is a newcomer to the exhibition space.
That’s giving him a willingness to experiment. He’s pushing to expand AMC’s food options, bolster its loyalty program and market more aggressively. Some moves may ruffle feathers. In a bid to attract younger, smartphone savvy consumers, Aron said he was open to making some theaters texting and mobile device-friendly.
That may make him unpopular. When Regal Entertainment CEO Amy Miles mused in 2012 that theaters should consider experimenting with relaxing cellphone bans, the blowback was intense.
Aron sat down with Variety during CinemaCon, the annual exhibition trade show unfolding this week in Las Vegas, to discuss the planned merger with Carmike, ticketing advances and Screening Room, the controversial start-up that wants to debut movies in the home the same day they hit theaters.
You’ve worked in a number of different industries, but you’re new to exhibition. What perspective do you bring?
Coming in fresh, it seems like there’s lots of opportunity to propel revenues or to give consumers better experiences. AMC has been a leader in that regard for a few years now, but I think we will pick up even more of a reputation for that going forward. Already, having been here a couple of months, I know we can step up our marketing activity in a big way. The food that we serve in our theaters can be much more exciting than the current stable of chicken tenders, hot dogs, pizza, in addition to the standard soda and popcorn and candy. A lot of change is possible in this industry for the betterment of our shareholders and our customers.
Marketing costs money. Why do you think it’s worth the expense?
Next year, assuming the Carmike acquisition is consummated, AMC is going to have in the neighborhood of $4 billion worth of revenue. It’s almost irresponsible for a company with $4 billion worth of revenue on the line not to aggressively market. That’s one of the things that can ensure that the $4 billion comes in, and that’s one of the things that can ensure that more than $4 billion comes in. We wouldn’t be spending for additional marketing if we didn’t think we’d be driving big revenue gains.
Are there particular demographics that you plan to target with your marketing?
We ought to be looking at three things. People who are already interested in movies and maybe in a big way, where if we up our game, we could get them to come to more movies. That’s one of the reasons to have a better loyalty program with bigger, broader participation, because loyalty programs work. We can convince people who think they are seeing the most movies they can possibly see to go to more movies.
The second is market share we can take from our competitors if we market AMC better than they market their theaters.
And third, there does seem to be a consensus that there are pockets of consumers who do not see as many movies as other segments of the population and that we can be doing more to attract those people. Millennials come to mind. We need to reshape our product in some concrete ways so that millennials go to movie theaters with the same degree of intensity as baby boomers went to movie theaters throughout their lives.
Would appealing to millennials involve allowing texting or cellphone use?
Yes. When you tell a 22-year-old to turn off the phone, don’t ruin the movie, they hear please cut off your left arm above the elbow. You can’t tell a 22-year-old to turn off their cellphone. That’s not how they live their life.
At the same time, though, we’re going to have to figure out a way to do it that doesn’t disturb today’s audiences. There’s a reason there are ads up there saying turn off your phone, because today’s moviegoer doesn’t want somebody sitting next to them texting or having their phone on.
Would you have a certain section for texting?
That’s one possibility. What may be more likely is we take specific auditoriums and make them more texting friendly.
There are reports that you have signed a letter of intent to partner with Screening Room. What is your position on the company?
I’m not commenting publicly on Screening Room. I know it’s a topic of hot debate amongst my brethren and sister-en, and I prefer to keep our counsel private right now. Until such time as Screening Room is real, we don’t have to spend a lot of time talking about it publicly.
How open are you to different distribution strategies that might modify the theatrical window?
For all the talk of the Paramount test a year ago [Editor’s note: AMC signed a deal that allowed the studio to debut two films on home entertainment early] and all the talk of Screening Room now, you may be surprised to hear that I think windows are very important. There’s a lot of evidence that shorter windows put theatrical exhibitors at risk. Studios themselves benefit from posting big global box office numbers, which comes from theatrical distribution.
So I start from a general premise that I’m a big fan of windows. Having said that, I’m also a big fan of experimenting and testing on everything that we do to see if there aren’t alternative ways of doing business. I generally look at our 385 theaters as laboratories where we can test lots of different concepts without being afraid that there’s going to be a cataclysmic, sky’s falling in, if we do. I believe in innovation and being imaginative and forward thinking. There are some bedrock principles though.
What are those bedrock principles?
I have two bedrock principles and only two bedrock principles. One is that it’s our burden as managers of the company that runs movie theaters to make sure that the moviegoing experience is as wonderful and spectacular as it possibly can be. The surest way to grow our business and protect it against erosion is to make sure that going to an AMC theater is a pleasing and memorable experience.
The second is the consumer is king. Giving the consumer more choices, more amenities and price points. If we put ourselves in the head of our customer and design our theatrical experience and marketing activity to make their lives better, we’ll have a successful company. Other than that we’ll be flexible and willing to experiment.
Where are you in terms of closing the Carmike acquisition?
There are really only two hurdles to go through. Carmike’s shareholders have to vote to approve the transaction. I expect that’s going to be some time in June. I don’t think they’ve set a date.
We need to get through the Justice Department approval, but we’re optimistic that we will get through both of these hurdles. The contract we have with Carmike requires that we get through this a year from the date of the merger transaction, so early in the first quarter of 2017. It would be nice if we could get it done before that.
What does the merger do for AMC?
By putting together the No. 2 and No. 4 players in the industry, we create a new No. 1 player. There’s extraordinary amounts of research that say that No. 1 players in industries are often the most successful players in their industries. If that turns out to be true, I’d rather be the No. 1 player than the No. 2 player.
Why did you recently sign a deal with ticketing app, Atom Tickets?
They’ve got a great social media platform where when you buy a ticket for a Wednesday night at 7:00 show, it sends a text message to all your friends asking if they want to go to the theater and sit next to you. They click a couple of buttons and your friend can buy a ticket at the same theater and showtime in a reserved seat. That’s a great concept and that’s one of the ways that we can make it easier for Millennials — who live on social media — to meet up with their friends in movie theaters.
Megan Fox delivered a pizza to your seat during Paramount’s CinemaCon presentation this week. What was that experience like?
They took the pizza away as quickly as they delivered it. It was warm, and I could smell it, but we didn’t get to eat it. I can’t tell you how it tasted, but in terms of who and how it was delivered, I can tell you that’s the best pizza delivery I’ve ever had.