AMC Entertainment CEO Adam Aron says that he’s intrigued by studio efforts to offer new movies to home viewers within the first 90 days of release because it provides “the opportunity to grow and increase AMC revenues.”
“What has not been reported, or at least not widely, is that in all cases the entities that have been considering those windows changes have been talking about sharing home rental revenue with theaters,” he told analysts in a call to discuss Q4 earnings.
Many theater owners are wary about the possibility of losing their ability to offer new movies exclusively in their venues for the first three months. Studios want a change, to supplement that with premium VOD sales, in order to maximize revenues for films while they’re still hot.
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“Others have portrayed this as a big risk or a grave risk, and we think it’s just the opposite,” says Aron. AMC and others could be “paid handsomely” since “we would enjoy a revenue stream if somebody watches a movie in our theater, or if they watch at home.”
But there are still a lot of different proposals being floated.
“A consensus is going to need to emerge for this not to be a one-company/one-studio deal, but more of an industry-wide effort,” Aron says.
“I can see something happening months from now. And I can see us going 14 more months and making no more progress than we made in the last 14 months. So we’ll see how the discussions unfold.”
AMC’s view is important: The Wanda Group controlled company is the world’s largest exhibition chain.
In addition to these comments, Aron says that AMC will become a three-brand company following the acquisitions of Carmike Cinemas and Odeon and UCI Cinemas.
It will keep AMC, but retire the Carmike name and call smaller theaters “AMC Classic.” In addition, those with restaurants will be called “AMC Dine-In.”
AMC Classic venues will have lower prices and be managed differently. “It’s important to maintain the cost structure and operating discipline,” he says. But Aron says that “each of the two brands will stand for quality and have innovations in it so that people going to AMC Classic will be glad that AMC bought their theater.”
For example, he says, all of the recently acquired Carmike theaters soon will be equipped with Coca-Cola Freestyle machines that offer more than 100 flavors.
More than 50 theaters now have what he calls “full blown” restaurants.
AMC is “a stronger brand than the Carmike brand,” he adds. And since AMC and AMC Classic customers will use the company’s Stubs loyalty program, the change “will help us in growing our customer database and help us in growing our consumer information.”
Aron talked up his plans to overhaul concession offerings adding products that range “from indulgent to healthy.”
Between May and August offerings will include four different types of popcorn, five different hot dogs, stone fired flat bread pizzas, and gluten-free snacks.
The CEO says that he plans to spend $420 million to upgrade its venues this year. He’s targeting 122 theaters with 1,560 screens to get plush recliner seats in 2017 and 2018.
Aron told analysts that he personally purchased $1 million worth of AMC stock.
“This is the third time in a year that I have bought AMC shares using personal funds,” he says. “My belief in the future prospects for AMC extends to my right back hand pocket where I keep my wallet.”
He also vowed to “do a better job talking to you all” now that AMC has increased the number of shares, making it easier for ordinary investors to buy in. The effort will include at least four Investor Day presentations this year in different parts of the country.
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