Exhibitor Cinemark Speaks out on Premium VOD
CEO Alan Stock says films available in homes less than 90 days after their theatrical launch require his team to reevaluate how to promote and exhibit them, but says he is "confident that there is a viable solution."
NEW YORK - Cinemark Holdings on Thursday became the latest film exhibitor to use its quarterly earnings conference call to update investors on its thoughts on studios' premium VOD trials in some pay TV homes for $29.99 just 60 days after the theatrical launch of movies.
"Although it is not the intention of the studios to negatively impact the theatrical performance of their movies, we view a shortening of the current theatrical window as a change to our business relationship," CEO Alan Stock said on the call after acknowledging that studios have stated that they recognize the importance of the theatrical window. "Our position is that such a change requires us to reevaluate the terms and conditions under which we promote, market and exhibit these films."
Expressing concern with early in-home availability of movies less than 90 days after their theatrical launch, he also said that the company, the third-largest U.S. exhibitor, is in discussions with studios "to understand their perspective and express our concerns." Cinemark is "confident that there is a viable solution to their goals without negatively affecting theatrical economics," he said.
But he also emphasized: "We feel the full economic opportunities of a film are best realized by maintaining the existing established theatrical window."
The comments echoed similar statements from Regal Entertainment Group CEO Amy Miles on her company's recent earnings call as exhibitors have made clear they want to ensure there is no infringement on their traditional business.
Four of the major film studios last month finalized a deal to test the premium VOD window with satellite TV giant DirecTV.
Cinemark on Thursday also reported lower first-quarter earnings and revenue amid the industry's weaker results for the opening quarter of the year, but observers said it outperformed competitors.
Quarterly profit of $25.0 million was down from $35.1 million in the year-ago period as revenue dropped from $516.6 million to $483.1 million.
Cinemark shares hit a 52-week high of $21.72 in early trading. As of 10:15am ET, the stock was up 6.1 percent to $21.19.
The current theatrical window "maximizes the opportunities for patrons to experience the film in the environment that was intended by the creative community," Stock also said on Thursday in discussing his views on premium VOD. "Theatres establish the film's brand, which is the most important ingredient in maximizing revenue opportunities for the studios."
In a question-and-answer session, the Cinemark CEO said there is mutual respect between studios and exhibitors, but talks are confidential. So, he didn't detail how the discussions may shake out beyond saying trailers and various other parts of the business relationship may be affected.
The National Association of Theatre Owners on Wednesday called on studios to share performance data on premium VOD releases to gauge the business effect.