Cinemark Not Game for AMC-Universal Film Window Deal, CEO Says

Mark Zoradi - Getty - H 2020
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"An overly aggressive shortened theatrical window could have an adverse impact on the mid-to-tail end of a film's life," Mark Zoradi told analysts.

Cinema giant Cinemark is not game for the reduced 17-day theatrical window that fellow exhibitor AMC Theatres and Universal Pictures recently struck an agreement for, CEO Mark Zoradi said Tuesday. 

"We believe an exclusive theatrical window is critically important," he said. "While we have publicly stated we're willing to have conversations with our studio partners to evolve with them, we are mindful that an overly aggressive shortened theatrical window could have an adverse impact on the mid-to tail-end of a film's life," Zoradi told analysts Tuesday about the window-crashing deal after the company released its second-quarter earnings.

The Cinemark boss said he would negotiate with the major studios about shortening the theatrical window. "We will be very careful and methodical about how we approach any change to the theatrical windows. We continue to carefully analyze and research this matter. And we will endeavor to ensure any modifications are in the best interests of the overall industry, our company and our shareholders."

At the same time, Zoradi would not be specific about how many days would not constitute an "overly aggressive shortened" theatrical window that he warned against, adding he would leave that discussion to direct talks with studios.

Zoradi added the major studios weren't suddenly ramping up negotiations to collapse the theatrical window. "I wouldn't say there's been any aggressive new discussions that we're in the middle of. I would characterize it as ongoing," he told analysts.

But he again gave little away on the nature of the talks. "We are open and active with discussions, but relative to negotiations, I would stop there," Zoradi said.

The historic Universal-AMC agreement will allow the studio's movies to be made available on premium video-on-demand after just 17 days of play in cinemas, including three weekends. That shatters the traditional theatrical window of nearly three months before studios can make movies available in the home.

It initially covers AMC's U.S. locations, but the two partners will also discuss a potential international rollout. AMC, the world's largest theater chain, will share in the revenue from PVOD, but the two sides haven't disclosed financial details.

NBCUniversal CEO Jeff Shell last week called the AMC partnership "groundbreaking," reiterating PVOD was a "complement rather than a replacement for a robust theatrical release." He commended AMC and CEO Adam Aron for their vision that "together we can build a new, more attractive business model for us both." Shell also signaled that Universal was hoping to reach similar deals with other exhibitors.  

Wall Street has been debating the impact of the AMC-Universal agreement on studios and cinema chains. MofffettNathanson analyst Michael Nathanson called the development "a groundbreaking moment for the film industry." But he also said: "We worry that the near-term impact on attendance can be more substantial, and consumers in the long run will continue to opt to watch more non-blockbuster films in their homes going forward. Of course, the lower box office attendance will also negatively impact high-margin per cap spending on food and beverages."