Last week on the CJ Cinema Summit we were joined by Tony Chambers, Executive Vice President and Head of Theatrical Distribution at The Walt Disney Studios Company as well as Dimitrios Mitsinikos, CEO of Gower Street Analytics. The conversation was incredibly informative. You can watch it on-demand here.
On Thursday 14 November the CJ Cinema Summit will take a look at the current state of independent film distribution and art house movies with some of the leading executives in the business. Our guests include Lisa Bunnel of Focus Features, Elisa Federoff of NEON, Sarah Timlick of Elevation Pictures and Nicole Weis of IFC Films. You can register to attend for free here.
Now…
We would tend to agree with those that feel there is very little a cinema trade publication could add to the plethora of political punditry the world has been exposed to over the past week after Donald Trump won the U.S. Presidential Election, defeating Vice President Kamala Harris. To weigh in on how another four years with Trump as president might affect the motion picture business seems a little silly when there are bigger, more global issues to contend with, such as climate change and world peace.
Even so, though Trump returning as president might be the one sequel Hollywood would not have green lit, the reality is his second term may indirectly impact cinema operators and film distributors all over the world. The key word here is “indirectly,” for Trump isn’t going to sit in the Oval Office writing executive orders specific to movie theatres or movies. Rather it will be the policies his administration puts in place relating to associated and interconnected markets that could have repercussions in the cinema industry, not just in the U.S., but globally.
The most obvious of these is what would happen if Trump raises trade tariffs for Chinese goods and to retaliate China decides it will no longer allow the release of American films (i.e. those made by Hollywood studios). Thankfully, studios stopped counting on Chinese box office long ago and factored that into their production budgets, thus it may not be all that detrimental.
However, in a world where a declining number of major studios are owned by large media conglomerates generating income from numerous revenue streams in multiple markets, policy that negatively affects any one of these revenue sources will have a ripple affect across an entire organization. This will surely include any theatrical motion picture division. Just look at how the downturn in linear television revenue has influenced decision making, staffing, production and more at studios such as Paramount and Warner Bros. (to name just two).
This fear was on full display when the editorial boards of the Los Angeles Times and Washington Post were told by their billionaire entrepreneur owners not to endorse a candidate for president. With that in mind, remember that Paramount owns CBS News, a news media outlet Trump is currently suing, Disney owns ABC News, NBCUniversal owns NBC News, MSNBC and CNBC, and Warner Bros. Discovery owns CNN. Sony is the only studio without a news organization.
During his first term as president, Trump, who had long criticized CNN for how it covered him and his administration, had the Department of Justice block AT&T’s acquisition of Time Warner (parent company of Warner Bros. Pictures), delaying the deal by at least 18 months and crippling WarnerMedia from the start. Meanwhile, when longtime Trump friend Rupert Murdoch wanted to sell Twentieth Century Fox to The Walt Disney Company in 2017, the government did not stand in the way.
This might be why, when asked during an earnings call about the election results and Trump’s second term, Warner Bros. Discovery CEO David Zaslav said, “We have an upcoming new administration. It’s too early to tell, but it may offer a pace of change and an opportunity for consolidation that may be quite different, that would provide a real positive and accelerated impact on this industry that’s needed.”
Talk about a “for sale” sign! What Zaslav is referencing is there are too many streaming services competing for subscribers and cord-cutting has kneecapped linear television revenue for legacy media companies. We currently have five major Hollywood studios, down from six just five years ago. Don’t be surprised if in the next five years the number of studios is down to four. The same thing happened in the U.S. in both the music industry (which is down to three major record labels) and book publishing (which dropped from six big publishers to five in 2013).
As the global film industry saw when Twentieth Century Fox disappeared, fewer Hollywood movie studios also means fewer movie releases.
In the short term, expect to see Skydance’s acquisition of Paramount Global close by the end of the first quarter of 2025 (or very soon thereafter). Both Shari Redstone, Paramount’s current owner, and Larry Ellison, the billionaire tech mogul who is funding the purchase, are Trump acquaintances. By the way, in last week’s proxy filing providing background on the deal, it turns out Comcast was meeting with Paramount from January through the end of March of this year hashing out a purchase agreement. Redstone preferred the Skydance deal.
There is also a lot of talk about tech companies coming into Hollywood and gobbling up a studio. But Netflix really doesn’t need one right now, Amazon already bought one (MGM) and the largest acquisition Apple has ever made was for Beats headphones at a cost of USD $3 billion. Besides, why would Apple want the headache of buying a media company with declining linear television assets?
As for any “Trump Bump” media companies with news organizations may receive, as they did during Trump’s first term, don’t count on it. Like box office for Hollywood sequels of old, expect diminishing interest in following the every move of President Trump 2.0.
Finally, lest anyone wonder how certain political candidates manage to prevail despite a history that one might think disqualifies them, it is actually quite simple; the system is set up so that to continue positively functioning within it there is no choice but to enable them. Case in point, two days after the election the Motion Picture Association (along with countless other trade groups), rightly congratulated the incoming President of the United States. The statement could have been written weeks ahead of time with only the name left blank:
“The Motion Picture Association congratulates President-elect Donald Trump and the incoming 119th Congress on their electoral victories. We look forward to working with them on a wide range of important issues for the film, TV, and streaming industry, which supports more than 2.7 million American jobs, boosts more than 240,000 businesses in cities and small towns across the country, and delivers over $242 billion in wages to our workforce each year. We commend everyone who worked this year to ensure fair elections and preserve our nation’s legitimate democratic processes.”
Distributors
Studio Earnings Show Declining Theatrical Revenue in Third Quarter of 2024
The third quarter earnings reports from major Hollywood studios reveal a clear trend: streaming income is rising while theatrical revenue continues to decline. Lionsgate, Paramount Global, Sony Group Corporation, and Warner Bros. Discovery all presented figures that weren’t too surprising for anyone in the movie business. The impact of last year’s labor strikes was felt, particularly in cinemas, where box office revenues remained below expectations.
Lionsgate faced a tough quarter, with CEO Jon Feltheimer acknowledging a disappointing performance for their movie division, particularly with the underwhelming results of “Borderlands,” which grossed only USD $33 million worldwide against a USD $100 million budget. The studio’s operating loss was USD $88.6 million on revenue of USD $948.6 million, though its motion picture group managed a small USD $2.6 million profit – significantly lower than last year’s USD $67.5 million.
Paramount Global, currently undergoing an acquisition by Skydance Media, reported a 6% decline in total revenue to USD $6.73 billion, with streaming up by 10% to USD $1.86 billion, offsetting some of the ongoing decline in its linear television and theatrical divisions. To add a little perspective, linear accounted for 80.1% of Paramount’s revenues during the quarter, whereas theatrical, which was down 34%, only made up 1.6% of revenue.
At Sony, its Pictures Division saw revenues drop 14% to USD $2.38 billion, with theatrical revenue remaining relatively stable at $455 million for the quarter ending 30 September. Warner Bros. Discovery faced challenges as well, with CEO David Zaslav addressing the company’s efforts to adapt amid “generational disruption.” Although Warner Bros.’ theatrical revenue dropped 40%, partly due to a tough comparison with the success of last year’s “Barbie,” its streaming platform, Max, delivered an 8% revenue increase, adding 7.2 million subscribers. The bottom line, no pun intended, is that the studios’ collective earnings reports underline the central issue: while streaming is increasingly profitable, it has yet to compensate fully for the declines in traditional television earnings and could be faulted for cannibalizing theatrical box office.
Source: Celluloid Junkie
Exhibitors
AMC Theatres Announces a Plan for More Premium Offerings and Extra Large Screens
AMC Theatres kept its investor and public relations departments rather busy last week. Along with earnings for the third quarter of 2024, the world’s largest exhibitor announced several major initiatives as part of its continued effort to elevate the moviegoing experience and stabilize its financial outlook. For Q3 AMC reported revenues of USD $1.35 billion, though it saw a net loss of USD $20.7 million, a significant drop from its USD $12.3 million profit in Q3 2023. Despite the loss, CEO Adam Aron expressed optimism, citing improvements in adjusted EBITDA and revenue per patron, emphasizing the company’s achievement of “the second-best third-quarter Adjusted EBITDA in AMC’s 104-year history.” (Say that three times fast.) Aron credited these gains to a strengthening box office, predicting continued improvement as AMC prepares for a strong lineup of releases for the upcoming holiday season and into 2025.
One day after its earnings call, AMC was back to introduce the “XL at AMC” format in the United States, following a successful pilot in Europe. Set to launch in early 2025, XL at AMC features 4K laser projection and large screens of at least 40 feet (12 metres), allowing patrons to enjoy films on the biggest non-premium large format screens available. This rollout is expected to span 50 to 100 U.S. locations by the end of 2025, with plans to expand to 200-250 locations over time. Aron noted the growing preference among moviegoers for larger screens, stating, “Through XL at AMC, not only do guests get to enjoy the magic of 4K laser projection on a huge screen, but we’ve also made identifying these extra-large screens even more convenient for guests.”
Later that very same day, AMC unveiled its “Go Plan,” an ambitious USD $1 – $1.5 billion investment strategy aimed at renovating theatres and expanding premium offerings, such as IMAX with Laser, Dolby Cinema, and PRIME formats. The plan includes major upgrades across top-performing locations in the U.S. and Europe, including new Luxe Cinemas at ODEON in the United Kingdom. In addition, AMC aims to double or triple its “Laser at AMC” auditoriums over the next seven years as part of this investment. Aron underscored AMC’s commitment to its core theatrical experience, calling the Go Plan “AMC’s most aggressive, forward-looking theatrical investment initiative this decade,” while noting that the timing of investments would be aligned with AMC’s financial prudence.
Source: Celluloid Junkie
Cinemas
Sale Agreement Reached for New York City’s Historic Metro Theater
The nonprofit Upper West Side Cinema Center has signed an agreement to purchase the historic Metro Theater on Broadway near 99th Street for USD $7 million, contingent on raising the funds by the end of the year. The theatre, closed since 2005, is known for its distinctive pink Art Deco facade. The building is being purchased from the estate of Albert Bialek, its current owner who passed away last year.
The effort to revive the Metro Theater is led by Ira Deutchman, an independent film producer, and Adeline Monzier, a consultant for The Metrograph. They have already secured pledges covering roughly one-third of the sale price, with plans to source the remaining amount from donations by local residents, philanthropic contributions, and government support. According to Deutchman, the theater has inspired strong support from the community. “I’d never worked on a project before where every single person I tell about it, their response is, ‘Oh, that is so needed,’” he said, underscoring the nostalgic value the theater holds for Upper West Side residents.
If the group succeeds in purchasing the property, their next step will be to launch a major fundraising campaign to cover the estimated $15 million to $25 million needed for full restoration. Previous attempts to repurpose the space, including proposals for a gym and an Alamo Drafthouse cinema, have been unsuccessful. The Metro Theater’s landmark status has limited redevelopment options in the past, but the nonprofit hopes to restore it to its former glory as a neighborhood cultural center, preserving a historic piece of the Upper West Side.
Source: The New York Times
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Celluloid Junkie is the leading online resource dedicated to the global film and cinema business. The Marquee is our newsletter focused on motion picture exhibition; keeping industry professionals informed of important news, the latest trends and insightful analysis