AMC CEO Acknowledges Chain Is Talking to Studios About Offering Movies in Homes Early

Rogue One: A Star Wars Story
Courtesy of Disney/Lucasfilm

UPDATED: AMC Entertainment CEO Adam Aron acknowledged that his company is in discussions with movie studios to potentially offer films early in the home for a higher price.

“If we do this right, this is a chance to expand the reach of the domestic box office …and we could be paid handsomely in the process,” Aron told analysts shortly after his company reported its quarterly earnings.

Aron noted that one scenario being proposed would have AMC get a cut of home entertainment revenues in return for allowing films to appear on premium on-demand services within weeks of their theatrical debuts.

“We would enjoy a revenue stream if somebody watched in the theater or at home,” he said.

Aron said he has been in discussions with studios for fourteen months, but he is not sure if a deal is imminent or if another year will pass without progress.

He was adamant about one point. It needs to be an industry-wide effort, not a series of one-off pacts between one studio and one exhibitor.

“A consensus is going to need to emerge,” said Aron.

As Variety has previously reported, five of the six major studios are talking with exhibitors. Though different studios are exploring different scenarios, the plan that has gathered the most steam would involve offering up movies for $50 a rental some 17 days after their theatrical opening. Those rentals would be available for 48 hours. Typically films are in theaters for roughly 90 days before hitting home entertainment platforms.

It was a strong quarter for AMC.  The company shattered records during the final three months of 2016, propelled by a series of showy acquisitions that made it the world’s largest exhibition chain. The company recently bought Carmike and Odeon & UCI Cinemas, deals that saw AMC eclipse the global reach of Regal Entertainment Group.

Revenues for the theater chain jumped 18.1% to $926.1 million, up from $783.9 million for the prior-year quarter. Net earnings decreased 20.1% to $33.2 million, compared to $41.6 million in the year-ago period. The company said there were $22.8 million of after-tax merger and acquisition expenses, as well as a $19 million tax benefit related to its purchases. The company’s earnings per share were 33 cents.

Revenues topped Wall Street’s estimates — analysts expected $914.4 million. However, profits came in a penny short of projections. Looking down the balance sheet, admissions revenues rose 18.1% to $588.9 million while food and beverage sales increased 16.6% to 282.5 million. AMC has invested heavily in outfitting its theaters with reclining seats and has expanded its menu options to include alcoholic beverages in some locations. The strong results coincided with the Thanksgiving and Christmas holidays, two busy periods for moviegoing that fielded hits such as “Rogue One: A Star Wars Story” and “Sing.”