Movie-theater chain AMC (AMC) - Get Report will no longer screen films made by Comcast (CMCSA) - Get Report-owned Universal Pictures after Universal opted to bypass theaters and release its “Trolls: World Tour” animated movie directly to consumers amid the coronavirus pandemic and global lockdown.
AMC CEO Adam Aron announced the ban in a letter to Universal Chairman Donna Langley, telling her that the decision was triggered by a quote NBCUniversal CEO Jeff Shell gave to The Wall Street Journal about the strong digital success of “Trolls: World Tour.”
Universal Pictures is owned by Comcast through the NBCUniversal film and entertainment division of NBCUniversal.
AMC has a deal with Universal to show movies in theaters first before the studios make them available to stream and download online. However, with the pandemic physically shutting movie theaters, and with no expectations that movie-goers will be flocking back to the big screen anytime soon, Universal launched the movie on-demand.
The move paid off big-time for Universal; the studio said it has earned nearly $100 million in rental fees since its digital release April 10. Shell told the Journal that the movie "exceeded our expectations and demonstrated the viability" of on-demand video.
That was enough to prompt AMC to ban playing Universal movies in any of its U.S. or international theaters.
"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, adding that the policy is "not some hollow or ill-considered threat."
AMC does have a deal with Universal and other studios to "window" its movies in advance of their broader release. However, the pandemic has raised not only issues about whether studios can and should bypass those agreements and release content directly to consumers, but whether the movie-release rollout process overall should be re-examined.
For its part, AMC said the ban applies 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."
In response, a Universal spokesperson said the studio's objective "... was to deliver entertainment to people who are sheltering at home, while movie theaters and other forms of outside entertainment are unavailable."
Shares of AMC were up 0.79% at $4.93 in trading on Wednesday. Shares of Comcast were up 0.67% at $38.75.