NATO Chief Says Theaters Open to Screening Netflix Movies, While Blasting Studio Day-and-Date Strategy

LAS VEGAS — National Association of Theatre Owners (NATO) president and CEO John Fithian extended an olive branch to Netflix, which theater owners for years have considered an enemy due to its investment in original content and stepped-up original movie slate.

Speaking April 26 in the Caesars Palace Colosseum, he said the theatrical “door is always open for bigger, broader play of Netflix movies if that is a path they want to go down. They’re movie fans, like we’re movie fans.”

He also praised co-CEO Ted Sarandos, who once ran video rental stores, saying, “Ted Sarandos knows movies and TV better than anyone in Hollywood.”

Earlier in his speech, Fithian blasted the same-day theatrical and home release strategy that emerged during the pandemic, telling CinemaCon attendees that “simultaneous release is dead as a serious business model, and piracy is what killed it.”

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He cited MUSO research that showed a big increase in piracy when high-profile new movies are released digitally at the same time as they open theatrically. MUSO said global film piracy increased by more than 33% during the lockdown.

When theaters were shuttered in the early days of the COVID-19 pandemic, studios shifted toward a digital release, generally at a premium price. Throughout the spring and summer of 2020, films that would have been major theatrical releases — including Disney’s live-action Mulan, Universal/DreamWorks Animation’s Trolls World Tour and Warner Bros. Scoob! — hit PVOD first before moving on to other windows.

The theatrical business didn’t begin to really recover until the spring of 2021. In the meantime, then-WarnerMedia chief Jason Kilar had made the stunning announcement that Warner Bros.’ entire theatrical slate of 17 major movies would be released simultaneously to whatever theaters were open and the HBO Max streaming service.

The theatrical exhibition business has come roaring back, despite periodic surges in COVID-19, but studios continue to tinker with same-day releases, particularly on smaller films. And the traditional 90-day theatrical window appears to have been permanently shattered. Warner Bros. is sending most of its films to HBO Max 45 days after their theatrical launch, while Universal Pictures is doing the same with its streaming service Peacock. The studio distributes select theatrical titles into the PVOD channel after 17 days if the box office is below $50 million.

Paramount Pictures is releasing most of its films to Paramount+ 45 days later, as well, although some, most notably Clifford the Big Red Dog and Paw Patrol: The Movie, are being sent to the studio’s streaming service on the same day that they hit the big screen.

Fithian implied theater owners can live with shorter windows but maintained day-and-date has got to go. He told CinemaCon attendees that if a film many people want to see is released immediately to the home market, it is much more vulnerable to piracy because of the greater profit potential for pirates.

Cinepolis CEO Alejandro Ramírez Magaña had essentially the same message during his International Day keynote address. He cited TorrentFreak data that showed nine out of the 10 most-pirated films in their respective launch weeks were day-and-date releases.

Hollywood Sends Letter to Congress Asking for Theatrical Fiscal Relief

A movie theater group, the Motion Picture Association of America, Directors Guild of America and dozens of filmmakers have sent a joint letter to leaders of the U.S. Senate and House of Representatives asking for leftover fiscal assistance from the CARES Act be redirected to exhibitors.

In the letter addressed to Sen. Mitch McConnell (R-KY) and House Speaker Nancy Pelosi (D-CA), among others, the National Association of Theatre Owners said more than 280 million people went to the movie theater in 2019. With the coronavirus shuttering theaters worldwide in mid-March, NATO said 93% of movie theaters suffered 75% fiscal losses in the second quarter of 2020.

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Exhibitors had hoped that Warner Bros.’ Labor Day theatrical release, Tenet, would bring moviegoers back. And the movie has — internationally. But domestically, the film has sputtered since its $20.2 million opening weekend.

NATO said that if the theater closures continue, 69% of small and mid-sized movie theater companies will be forced to file for bankruptcy or to close permanently, and 66% of theater jobs will be lost.

“Our country cannot afford to lose the social, economic, and cultural value that theaters provide,” read the letter. “Movie theaters are in dire straits,  and we urge you to redirect unallocated funds from the CARES Act to proposals that help businesses that  have suffered the steepest revenue drops due to the pandemic, or to enact new proposals such as the RESTART Act (S. 3814/H.R. 7481).”

The trade group said that absent a fiscal solution, theaters may not survive the impact of the pandemic.

“Please fight for our country’s beloved and essential cinemas by including relief for them in any forthcoming COVID-19 legislation,” read the letter.

Theater Group Sues New Jersey to Re-Open Screens

The National Association of Theatre Owners (NATO), including AMC Theatres, Cinemark and Regal Cinemas, has filed a lawsuit against New Jersey Gov. Philip Murphy and Judith Persichilli, acting commissioner of health of New Jersey, for their legal mandates keeping movie theaters shuttered due to the coronavirus pandemic.

The suit, filed July 6 in U.S. District Court for the Court of New Jersey, alleges the state and Murphy are acting “unconstitutional and unlawful” by allowing certain businesses and places of public assembly to reopen, while requiring movie theatres to remain closed.

“COVID-19 represents a serious public health risk, and plaintiffs support fair and reasonable actions by the government to address that risk,” read the complaint. “However, the government-mandated total closure of movie theatres is neither fair nor reasonable, and is instead a violation of plaintiffs’ First Amendment rights of freedom of speech and freedom of expression, equal protection of the laws, due process under the law, and is a ‘taking of property’ without just compensation.”

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NATO contends movie theaters have been unfairly shutout of the government-mandated business re-openings, which include churches, museums and libraries, which are allowed no more than 100 people or 25% of capacity.

“Shopping can be done outdoors or virtually … [but] shopping malls have been allowed to reopen,” read the complaint.

NATO claims there is no “rational basis” for the distinction Gov. Murphy has drawn between places of worship and movie theaters, both places of public assembly.

“In fact, many churches lacking a building of their own, or lacking the capability to safely host religious services during this period, hold their religious services in movie theatres,” NATO said.

The trade group said operators nationwide are spending millions of dollars incorporating sanitization protocols, ticketless admissions, no-contact concessions and air purifiers for planned re-opening by the end of the month. New Jersey is one of the few states that has not yet allowed theaters to re-open.

The suit seeks unspecified financial damages (besides legal fees), asking that NATO’s members be treated in the same manner as comparable entities under the governor’s orders, and be permitted to reopen as other comparable places of public assembly have been allowed to.

NATO: 90% of Theaters Worldwide to Re-Open by July 17

The National Association of Theatre Owners (NATO) reportedly expects upwards of 90% of movie screens in the world to re-open by July 17 — the launch date for Warner Bros.’ international espionage thriller Tenet from director Christopher Nolan. Disney’s live-action Mulan is slated to debut July 24.

The trade group, which represents 68,000 screens in 99 countries, is pushing the optimistic date as global economies get back on line and coronavirus infections slow. No theatrical chain has officially announced a re-opening date in the United States. NATO is hoping to throw a lifeline to publicly-held exhibitors such as AMC Theatres, Regal Cinema and Cinemark, which have been shuttered since mid-March. AMC, the world’s largest exhibitor, recently disclosed it would not rule out bankruptcy if the situation didn’t improve.

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The chains say they will implement social distancing in theaters upon re-opening, with Cinemark recommending, but not enforcing, facial masks for moviegoers.

“95% of this bullishness is aimed at their investors,” an industry source told Business Insider, which first reported the news.

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Wedbush Securities media analyst Michael Pachter remains bearish on the sector, contending consumer demand for theatrical releases will remain compromised without a virus vaccine.

“People may be eager to visit the theaters once they feel safe doing so, but we think it is unlikely crowds will return to any semblance of normal before a vaccine is widely distributed, particularly in urban and suburban markets,” Pachter wrote in a June 3 note.

He estimates the domestic industry box office will end the current fiscal quarter down 97.8% from 2019, with most domestic screens likely remaining closed beyond the end of the quarter.

“Theatrical exhibition is in the middle of a perfect storm,” Pachter wrote. “Theater closures not only deplete cash reserves and sources of liquidity, but may alter consumer behavior indefinitely.”

NBCUniversal’s Jeff Shell: ‘Not Realistic’ to Ignore PVOD

After setting off an industry firestorm saying Universal Pictures would pursue a movie-release strategy combining theatrical and premium video-on-demand, NBCUniversal CEO Jeff Shell doubled down on his previous comments to The Wall Street Journal after Universal Pictures animated feature film, Trolls World Tour, generated $100 million in PVOD sales.

Speaking April 29 on the Comcast fiscal call, Shell said PVOD would continue as a “complementary offer” to consumers when theaters re-open to the public — and consumers attend.

He said the Trolls had been primed and marketed for a March 20 theatrical bow, and when the coronavirus shut down theaters, going direct-to-consumer on April 10 with a “desperately” needed children’s title during the pandemic was the only option.

“The majority of our movies, whether we like it or not, are being consumed at home,” Shell said. “It’s not realistic to assume that we’re not going to change, that this part of the business isn’t going to change like all parts of the business are going to change.”

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The executive said it remains to be seen what the distribution model will look like post-COVID-19. While he expects a gradual return to the cineplex, which he said Universal would be part of, he also expects PVOD to be a part of the business model.

“[PVOD is] not a replacement,” Shell said. “We’re just going to have to see how long [a return to theatrical] takes and where it takes us.”

AMC Theatres, trade group National Association of Theatre Owners and Regal Cinemas have blasted Universal for pledging to bypass the traditional 90-day theatrical window. Both exhibitors have said they would not distribute any Universal — or other studio — title earmarked for simultaneous in-home digital release.

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With the exception of Georgia and Texas, movie theaters in most states remain shuttered due to the coronavirus. The industry and studios are projected to lose billions in box office revenue to the shutdowns.

Comcast CFO Michael Cavanagh said future PVOD releases would be determined on a “title-by-title” basis.

Theater Trade Group Questions Early Re-Openings

With the state of Georgia allowing movie theaters to re-open on April 27 — provided they adhere to CDC social distancing guidelines — a trade group representing exhibitors says the practice would largely result in screening catalog titles.

The National Association of Theatre Owners in an April 22 statement said exhibitors should remain united in regards to re-opening screens in order to deliver confidence to consumer and stock new-release titles.

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“Until the majority of markets in the U.S. are open, and major markets in particular, new wide release movies are unlikely to be available,” NATO said. “As a result, some theaters in some areas that are authorized to open may be able economically to reopen with repertory product; however, many theaters will not be able to feasibly open.”

With most national chains laying off or furloughing employees and executives, scrambling together requisite staff to run theaters remains a challenge. Adam Aron, CEO of AMC Theatres, has publicly stated he hopes theaters could be operational by July.

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John Stankey, COO of AT&T, parent to WarnerMedia Entertainment, doubts theaters can “snap back” quickly with ongoing consumer uncertainty about the status of COVID-19 infections, inadequate supplies of face masks to businesses and virus screenings.

Indeed, Georgia Gov. Brian Kemp admitted earlier this month that he hadn’t been aware the virus could be spread by asymptomatic people, or those not exhibiting signs of an infection.

Georgia, along with many other red states, has felt internal pressure from some residents and political activists arguing for a return to normalized small business operations and consumer access. Many of the businesses, which face permanent closure and bankruptcy, have been unsuccessful securing federal relief funds.

NATO Says Shorter Theatrical Window Leads to Lower Home Video Revenue

Shorter theatrical windows could lead to lower home video revenues, the National Association of Theatre Owners (NATO) warns.

The trade group in an April 15 news release cited data from an Ernst & Young study it commissioned that examines the effect of the length of the theatrical window on revenues in the home, in theaters, and overall.

The study found that a 1% longer window between a film’s theatrical opening and its availability for home viewing could boost home video sales by $56,000.

The study comes as studios have been accelerating the home release of films to counter movie theater closures due to the coronavirus pandemic. The most pronounced example was Trolls World Tour, which was released digitally at a premium “rental” price of $19.99 the same day it was supposed to open in theaters.

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NATO warned that such early release patterns should be temporary, until the pandemic subsides and theaters reopen, lest studios leave money on the table.

“With movie theaters shut down due to the COVID-19 pandemic, studios have accelerated home release for some titles that were already in theatrical release when the industry shut down,” NATO said in the press release. “Without theaters available, the release window was temporarily irrelevant for those movies. These unique circumstances, however, do not signal a change to the theatrical release model.”

NATO noted that three films unreleased at the time of the shutdown were released digitally, directly to home audiences. “Yet the vast majority of theatrical releases scheduled from March through June have been rescheduled for theatrical release — 37 of them, with six more delayed with no set release date — rather than rushed to the home,” NATO said. “Studios clearly believe it is in their financial interest to have exclusive theatrical releases.”

NATO said the findings of the new Ernst & Young study “are significant, as shrinking revenues in the home have put pressure on distributors to find a way to boost the fortunes of a home segment in secular decline. Shrinking the length of the theatrical release window has been the mechanism most often cited as a means to that end. This study finds that shorter release windows not only damage theatrical revenues — as expected — they damage home revenues as well.”

NATO said the study also finds that “without controlling for the influence of other variables, the length of theatrical run is more highly correlated to home sales than to box office sales.”

Total home video transactional revenue slipped 30% between 2012 and 2017, the period of the study, NATO said, citing DEG: The Digital Entertainment Group numbers. “The study finds the average percentage of transactional home revenue to total combined home and theatrical revenue per movie has declined even more — 32% — from 40% to 27% over the same period,” NATO said.

Lionsgate Teams With Fandango and YouTube on Free Streamed Movies Benefit

Lionsgate is presenting “Lionsgate Live! A Night at the Movies,” a program of four Fridays of free movies streaming live on YouTube hosted by Jamie Lee Curtis, to help benefit theater employees furloughed by the COVID-19 crisis.

The studio is mounting the campaign to “honor the communal experience of watching movies in movie theaters and support the people who make those places great with a special program that reminds everyone how much we love going to the cinema,” according to a Lionsgate press release.

Beginning Friday, April 17, and continuing every Friday spanning four consecutive weeks, the studio will team with Fandango and YouTube to livestream four of Lionsgate’s most popular library titles — The Hunger Games, Dirty Dancing, La La Land and John Wick — on Lionsgate’s YouTube page and Fandango’s Movieclips YouTube page.

Host Curtis will share her own movie memories as she is joined by special guest celebrities and YouTube personalities, according to the release. Each week’s night at the movies will feature programming and interactive opportunities for fans, such as real-time fan chats via YouTube Live, live tweeting @Lionsgate and partners, and shared fan engagement opportunities in-show, including movie trivia and movie-themed challenges.

Lionsgate’s initial donation as well as audience and partner donations throughout the event will benefit the Will Rogers Motion Picture Pioneers Foundation, an organization dedicated to helping workers throughout the motion picture industry. The event will link to the Foundation’s charitable page so that viewers can donate. The Will Rogers Foundation is currently providing financial assistance to theater employees furloughed by the COVID-19 crisis.

The schedule of free movies that will livestream Fridays at 6 p.m. PST/9 p.m. EST is as follows: The Hunger Games April 17, Dirty Dancing April 24, La La Land May 1 and John Wick (age registration required) May 8.

To present the live movie event, in addition to Fandango Lionsgate is joining with exhibition partners such as the National Association of Theatre Owners, AMC Theatres, Regal and Cinemark Theatres, among other regional circuits.

Popcornopolis, purveyors of gourmet popcorn, will support the event with a consumer movie night offer, with 10% of sales donated to the Will Rogers Motion Picture Pioneers Foundation. SnackNation will curate a movie-themed snack box with a special price and free shipping.

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“There’s nothing that will replace the magic of seeing a movie together with your fellow moviegoers in a theater on a big screen, but this is a chance for America to come together to recreate the experience,” said Joe Drake, chairman, Lionsgate Motion Picture Group, in a statement. “This is a great chance to show the country’s theatrical employees how much we miss going to their theaters and how much we support them. Jamie Lee Curtis — a woman who literally grew up with the movies and movie theaters — is one of the world’s biggest movie fans, so it’s a real thrill that she’ll be our host for this event. Let’s have some fun watching some classic movies together at home while celebrating moviegoing!”

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“Throughout the 125-year history of the cinema, this is the first time that movie theaters have been shut down across the country,” said John Fithian, president and CEO, National Association of Theatre Owners, in a statement. “Whether it was the Depression, wars, disasters, or local calamities, movie theaters have always been a gathering place where audiences can come together to laugh and be moved, reacting as one, to put their troubles behind them or forget about their hard week at work, and just get lost in the amazing stories on the big screen. Until we can gather again in our nation’s theaters, we’re grateful to Lionsgate for honoring the theatrical moviegoing experience and we are thrilled to join together with them over these next four Fridays, not only to see four classic movies for free, but also to allow fans and celebrities to share their own moviegoing memories. We love that so many people will be talking about what makes going to the movies so unique and memorable.”

NATO Applauds $2 Trillion Stimulus Agreement

While passage of the $2 trillion stimulus bill in the U.S. Senate remains caught up in partisan bickering, the National Association of Theatre Owners March 25 said it applauded the bipartisan agreement announced earlier today.

“We applaud the agreement … to provide relief to movie theaters their employees and so many other public-facing industries that have had to close their doors due to the COVID-19 pandemic,” the trade group said in a statement. “With this agreement, movie theaters can look forward with confidence to re-opening and once again serving their communities when this crisis has passed.”

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Details in unemployment benefits, which some GOP lawmakers say could incentivize workers to stay unemployed, remain a key obstacle in the bill getting through the Senate. If passed, it would have to be approved by the House and then signed by President Trump.

Regardless, NATO said the stimulus would provide a $454 billion loan guarantee fund providing access to capital and enabling movie theaters and other businesses to pay their fixed costs while they are unable to generate revenue through normal operations.

The bill would expand Small Business Administration programs enabling small businesses — or the majority of theater companies — to deduct several categories of expenses for loan forgiveness.

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It would also afford deferral of payroll taxes, expanded opportunity for loss carrybacks for businesses, and technical corrections regarding qualified improvement property. Employee retention tax credit for businesses that keep people on the payroll despite closures or that see large sales losses. And up to four months of direct aid to workers through extended and expanded unemployment insurance, including increases in the weekly dollar amount and eligibility for part-time employees. It would also advance tax deductions to workers payable now.

“With this aid, movie theaters can get through this crisis confident in being able to re-open, knowing their vital, trained workforce is able to weather this pandemic and have jobs waiting for them when it is safe to reopen,” NATO said in a statement. “We look forward to its quick passage in the House and signature by the President.”

AMC Theatres Furloughs 600 Corporate Employees, Including CEO Adam Aron

Facing a disastrous business climate, AMC Theatres March 25 announced it was furloughing 600 employees at its corporate office in Leawood, Kan., including CEO Adam Aron.

The move is to save available cash, which the world’s largest movie exhibitor is hemorrhaging as its screens remain dark due to the global threat of the coronavirus.

“At this time, AMC is not terminating any of its corporate employees, however, we were forced under the circumstances to implement a furlough plan, which is absolutely necessary to preserve cash and to ensure that AMC can reopen our doors once this health crisis has dissipated,” AMC said in a statement.

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In a previous interview, Aron said AMC doesn’t want bailout money. Instead he said the chain wants loans that banks are unwilling to give due to the current uncertainty of the theatrical business model.

AMC rival Regal Cinemas, which operates more than 7,000 screens,  has reportedly furloughed about 90% of its workforce.

With a formal vote in the U.S. Senate ratifying a $2 trillion stimulus bill that would give families, small and large businesses, and some industries a fiscal lifeline still to come, AMC, Regal and other exhibitors have their backs to the wall trying to reduce overhead.

“The furlough plan calls for reduced working hours at reduced pay, or no working hours at no pay, for the hopefully short period of time when AMC’s theaters are all closed,” read the statement. “This action impacts every corporate AMC employee, including all those at the highest executive levels and including AMC’s chief executive officer.”

The National Association of Theater Owners, an industry trade/lobbying group, contends the theatrical business qualifies as a “distressed industry,” thus qualifying for federal assistance.