Disney Backs Down on 'Avengers' Matinee Rule in Wake of Theater Complaints

AP Images/Invision
Bob Iger

The studio, home of 'Avengers: Age of Ultron' and 'Star Wars: Episode VII — The Force Awakens,' had wanted discounted pricing to end at 5 p.m. rather than 6 p.m.

About two months ago, as Avengers: Age of Ultron prepared to open, Disney sent a note to theater owners reiterating the terms of its master licensing agreement, which governs the terms by which an exhibitor can play a film. Looking to get even more back from the box office, the studio wanted discounted matinees to end at 5 p.m., rather than 6 p.m., the traditional cutoff time.

The directive prompted an emboldened response from National Association of Theatre Owners' John Fithian, who wrote a letter to Disney four weeks later stating that he had received "an avalanche of complaints, concerns and fears" from his members.

Those concerns also addressed Disney's intention to use NATO's average ticket price (currently $8.12) as the minimum mark for splitting box-office revenue, even though ticket prices could be lower in smaller cities and towns. If cinema operators discount tickets below whatever a studio minimum is, they must chip in the difference to the overall pool. All studios have a minimum, but they fluctuate from market to market.

Though Disney itself didn't get barraged with individual complaints, the studio has decided to abandon the idea of cutting matinees off at 5 p.m. The studio also will revisit using the average ticket price across all markets, even though it never has invoked the directive, which has been on the books for more than a year, along the matinee clause.

For years, Disney wasn't as aggressive as other studios when it came to revenue splits with theaters. But two years ago, just before Iron Man 3 opened, the studio renegotiated its terms, and now it is getting as much as 60 percent back on its big tentpoles, like Avengers: Age of Ultron. That's in line with other big-event pics from rival studios.

"We have obviously, with our film strategy, created and will continue to create huge value for the theater owners here in the United States and around the world," said Disney chairman/CEO Bob Iger when asked about the revenue split during an earnings call Tuesday morning. "And clearly, with the hand that we have got — Disney and Pixar and Marvel and Star Wars — our discussions in terms of the rates that we get paid, or the splits, have factored in the films that we release."

Iger said he would not discuss specifics but added, "I want to emphasize, again, the investment this company has made in its motion pictures, and the results are evident in terms of the value ... to the theater owners."

The Wall Street Journal first reported the dispute.

May 8, 7:30 a.m. An earlier version of this story incorrectly stated that the matinee rule was new. THR regrets the error.