AMC Entertainment CFO: Studios Won’t Take “Nuclear Option” With PVOD

AMC Theatres

Not so fast on the talk about premium video-on-demand, AMC Entertainment CFO Craig Ramsey told investors today.

The world’s biggest exhibition chain — owned by China’s Wanda Group — is talking to studios about a plan to offer movies to home viewers within the 90-day period when theaters typically have exclusive rights.

But “we’re not seeing a lot of movement … it would be a stretch to say we’re negotiating around a solution,” he told the annual Goldman Sachs Communacopia Conference. So far Ramsey hasn’t seen “a proposal we’re willing to sign up for.”

He said he doesn’t fear that some studios will decide unilaterally to offer PVOD, possibly leading theaters to respond by refusing to show their movies.

“I haven’t heard a lot of conversation about the nuclear option,” Ramsey says. “No one wins in that kind of a nuclear scenario. … The loser there is our guest, the consumer.”

Earlier today Fox Executive Chairman Lachlan Murdoch told the gathering that the status quo “will change sooner rather than later” — at least within the next 12 months.

Studios are eager to change, Murdoch said, because their films become exhausted at theaters after 45 days, leaving another 45 when “the consumer can’t access that content anywhere no matter what they’re willing to pay or do. … A lot of piracy happens in that 45 days.”

Asked about this year’s weaker-than-expected Q2 and summer box office sales, the AMC CFO said that’s probably just a temporary blip.

“We’ve seen it before,” Ramsey said. “Moviegoing goes through some cycles” that pick up after studios release a few hits.

He forecasts that domestic box office this year will be flat to down as much as 2%. The performance of December’s Star Wars: The Last Jedi “will be a big factor.”

Theater company stocks have been hammered during the past few months as investors became fearful of PVOD and the weak box office. “We think the equity is undervalued, seriously,” Ramsey told the conference.

Earlier today Cinemark CEO Mark Zoradi encouraged investors by telling the Goldman Sachs confab that the U.S. box office will be “flat” this year.

AMC closed up 7%, with Imax +3.2%, Cinemark +2.7% and Regal +1.6%.

Ramsey reiterated AMC’s opposition to MoviePass, which offers its subscribers who pay about $10 a month the ability to go a movie a day.

“We’re very supportive of subscription” and “at some point we’ll be there on our own,” he said.

But $10 is “not sustainable,” he added, and will lead to “a day of reckoning that disappoints the guest.”

AMC didn’t suffer badly from Hurricanes Harvey and Irma.

“All but one or two of our theaters in South Texas are back online,” Ramsey says.

And in areas affected by Irma, “all but six of our theaters are back online, and the ones that are offline are because of power. No physical damage.”

There might even be a silver lining for AMC, based on its experience after Hurricane Katrina hit New Orleans in 2005.

“We were able to offer people an escape,” he says. “What we found after Katrina is that our business was very strong.”

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