Theater Stocks Tumble After Report That Disney Will Take Big Slice of 'Last Jedi' Sales

Regal Entertainment Popcorn - One Time Use Only - Getty - H 2017
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Regal Entertainment shares dropped 3.7 percent to $15.74 and are now off 21 percent on the year.

Wall Street punished movie theater chains for the umpteenth time this year on Wednesday, the catalyst this time perhaps being the revelation that Walt Disney will be taking a bigger chunk of the ticket revenue for Star Wars: The Last Jedi than any studio has ever taken for any film before.

The Wall Street Journal reported early Wednesday that Disney is demanding theater owners give 65 percent of the ticket money to the studio, and that if they do not show the film in their biggest auditoriums for at least four weeks, then Disney's share jumps to 70 percent.

Disney's 5 percent penalty is on par with what the studio assessed for the last Star Wars film, and its 65 percent of the ticket sales is just 1 percentage point higher, according to insiders, but Wall Street was selling exhibition stocks, regardless, as the group vastly underperformed the slight gains made by the broader markets on Wednesday.

Coinciding with the news, for example, AMC Entertainment, the largest theater chain, saw its shares sink 3.2 percent to $13.45. After Wednesday's drop, the stock is off 59 percent so far this year as the box office has lagged in 2017 compared to 2016.

Also on Wednesday, Regal Entertainment shares dropped 3.7 percent to $15.74 and are now off 21 percent on the year; Cinemark Holdings fell 2.6 percent $35.40 and are off 6 percent on the year; and the Marcus Corp. saw its shares decline 1.3 percent to $26.80 and are down 14 percent this year.

While some observers worry that The Last Jedi represents evidence that theaters may be losing leverage when negotiating for the right to show the highest-profile movies on their screens, exhibition executives aren't complaining much — at least not publicly.

"We're very pleased," Regal CEO Amy Miles told analysts last week when she was asked about advanced ticket sales for The Last Jedi. "We're excited for Dec. 15 to get here, I will put it that way."