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Can Netflix Have It Both Ways With Its Planned Purchase of the Egyptian Theatre?

Netflix is a digital disruptor that’s done more than almost any company to upend the media business, and yet so much recent chatter about the streamer revolves around movie theaters.

Last week’s news that the streaming giant was in negotiations to buy Hollywood’s iconic Egyptian Theatre from the American Cinematheque is Netflix’s latest brush with a theatrical film establishment that views it as tantamount to the plague. That relationship is expected to grow more intertwined: Netflix is inching closer to a grand bargain that could enable some of its movies to play in some of the country’s largest chains, insiders told Variety.

Conversations between Netflix and these exhibition giants are centered on the upcoming release of Martin Scorsese’s “The Irishman.” The director is intent on a splashy theatrical rollout for the crime drama, insiders say, which marks his ninth collaboration with Robert De Niro and his first time working with Al Pacino. Scorsese is unlikely to be satisfied with the three-week theatrical run that Netflix gave Alfonso Cuarón’s “Roma” before debuting it on its streaming service. That deal didn’t persuade major circuits such as AMC Theatres and Regal Entertainment to show the movie. “Roma” played on roughly 100 screens, an insufficient number for Scorsese’s team.

The exhibitors are considering coming down to around 72 days of exclusivity for “The Irishman,” from the 90-day window they traditionally expect, individuals familiar with the conversations said. Seventy-two days is typically when studios begin electronic sell-through, the period where content owners make films available to consumers for purchase (as opposed to rental), one of the insiders noted.

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Should Netflix pull the trigger, the move would fly in the face of the company’s claims that day-and-date releasing is the way of the future. It would also represent something of a compromise on the part of chains like AMC and Regal, which typically demand at least 90 days to play films before they head to platforms like streaming video on demand and rental portals like the iTunes store.

Netflix declined to comment on the matter. The National Assn. of Theatre Owners and reps for AMC, Regal and Cinemark had no comment.

“The theater owners are intrigued by ‘Irishman,’ and word is that it’s of the highest quality,” the source familiar with the ongoing talks said. The insider described Netflix as “very interested” in a wide release for the film, which means the streaming service would show the movie on more than 110 screens — considerably more, if a deal can be reached, said another insider.

While Netflix always intended to provide “The Irishman” with some form of theatrical run, an individual familiar with the company denied any meaningful conversations regarding an expanded release have occurred. Netflix does not have an executive in charge of film distribution, the insider said, and will continue to engage advisers on a release strategy to be determined by late 2019. In the past, the company has turned to former Warner Bros. domestic distribution chief Dan Fellman to help plot out its theatrical rollouts.

The potential compromise could benefit both parties. Auteurs like Scorsese revere the big-screen experience, but they also need backing for their passion projects. With the major studios focused on making tentpole movies and sequels, Netflix is filling a void. At the same time, the company has gone out of its way to give creatives their space, making a point of not inundating them with suggestions and requests for changes. A more robust theatrical component could be important if Netflix wants to keep filmmaking giants such as Scorsese and Cuarón in the fold.

“They need to keep talent happy, especially when across town Amazon has no problem letting the movies languish in theaters for three months,” an executive from a rival studio told Variety, speaking on the condition of anonymity.

Sources inside Netflix’s towering Hollywood headquarters say the streamer plans to use the Egyptian as an event space (think premieres, awards screenings and cocktail receptions), and it will continue to invite the American Cinematheque to program films at the theater. Netflix has long positioned itself as a lover of cinema, whether by pleasing a legend like Scorsese or saving an institution like the Egyptian. Just a year ago, Netflix chief content officer Ted Sarandos wrote a check to button up Orson Welles’ long-unfinished final film “The Other Side of the Wind.”

Netflix provided funding to help filmmakers complete Orson Welles’ unfinished “The Other Side of the Wind,” starring John Huston and shot in the early ’70s.
Courtesy of Netflix

“It’s a stunt, but it’s a good one,” a top movie agent observed. “At the end of the day [Sarandos is] helping out a theater, but it positions Netflix in a certain way. There is certainly a mutual benefit there.”

Netflix would be wise to take its wins where it can get them, considering how antagonizing the company has been in recent months. A vague threat from Steven Spielberg in March to revisit Netflix’s eligibility for Oscars resulted in a weeks-long scandal. It ensnared Academy voters, media moguls like Jeffrey Katzenberg, and the Department of Justice, which threatened antitrust action if the Academy moved to block Netflix from collecting gold statuettes. The company also dominated the conversation at this year’s CinemaCon, the annual Las Vegas convention of global theater owners.

The polarizing film ambitions of Netflix were perhaps most clearly expressed by actress Helen Mirren, who appeared at the confab to talk up her new Warner Bros. film “The Good Liar.”

“I love Netflix,” she confessed to hundreds of theater owners huddled in the dark of the Colosseum theater at Caesars Palace.

“But f— Netflix,” she added to massive applause.

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