As I type these words, executives at Discovery Inc. are putting the finishing touches on their USD $43 billion acquisition of WarnerMedia. The deal was announced last May and came as a shock, since AT&T had just purchased Time Warner three years earlier after a lengthy court battle with the United States Justice Department. The move was seen as an admission by the telecom giant that, unlike Discovery, they were not cut out to run a media and entertainment business.
There was rampant speculation at the time about who from Warner Media might remain once the deal closed and Discovery took over. It was assumed that Discovery would install their own management team as often happens in such acquisitions. Reports began to emerge almost immediately of senior executives like WarnerMedia CEO Jason Kilar cutting their exit deals. However, the incentives to stay on until the transaction was complete must have been enticing because few, if any, of the WarnerMedia team jumped ship. That is, not until this week.
A majority of WarnerMedia’s senior executives announced their departure this week ahead of the deal closing as early as Today. Discovery began announcing their leadership team within days. It is being described as Discovery “cleaning house,” though my perspective on all the executive shuffling is similar to that of Los Angeles Times journalist Meg James, who tweeted: “Warner Bros. Discovery gets new management team. Alternative headline: David Zaslav brings his Discovery crew to the new company. To the victor goes the spoils.”
The thing about perspectives however, is that everybody has one. Take for instance the news that Kilar, whose infamous Project Popcorn opened all 18 Warner Bros. theatrical release throughout 2021 day-and-date with HBO Max. When he announced his intention to step down from WarnerMedia through the same kind of impromptu memo that launched his alternative distribution strategy, it is a safe bet nobody who works in motion picture exhibition (nor perhaps some who work in distribution) was overly upset. More than a few staffers at CNN may have, in fact, rejoiced.
But there is always an alternative point of view. For instance, Martin Peers, a columnist for the tech-centric publication The Information, wrote that Kilar’s departure was a pity, “… for both Warner Bros. Discovery and the entertainment industry more broadly.”
Actually, in the case of Kilar, the alternative point of view turned out to be first person, since the executive went on a round of exit interviews with selectively chosen media outlets. On the future of movie theatres Kilar told Peter Kafka at Recode:
I think there will be room in mainstream theaters, but non-exclusively. I think that the biggest, IMAX-worthy spectacles will have exclusive theatrical runs, albeit shorter than the industry is used to. But I do think there will be ample room in the theaters for romantic comedies, for nuanced dramas, but those motion pictures will not be exclusively distributed in theaters.
Kilar told Deadline that the strategy of releasing Warner Bros. theatrical titles day-and-date on HBO Max was effective and beneficial to the company. “History is already looking at it quite favorably. It worked,” he said.
That is a rather myopic perspective and, at best, revisionist. If Project Popcorn was such an overwhelming success, why isn’t Warner Bros. still releasing its theatrical movies day-and-date on HBO Max? If it really led to a huge increase in HBO Max paid subscriber levels and didn’t cost the company hundreds of millions of dollars in “make good” payments to talent and an going Village Roadshow lawsuit, then why isn’t Zaslav bending over backwards to retain Kilar, its architect? Why isn’t Kilar a part of the new Warner Bros. Discovery leadership team? Why was he kept in the dark about merger talks between AT&T and Discovery until it was already negotiated and about to be made public?
It’s not that David Zaslav, the head of Discvoery, doesn’t know talent when he sees it and mistakenly overlooked Kilar. After all, he managed to keep executives such as Casey Bloys onboard as Chief Content Officer of HBO and HBO Max and Toby Emmerich will stay on as Chairman of Warner Bros. Pictures Group. The latter is great news for the theatrical motion picture business.
Emmerich started at New Line Cinema as a music supervisor back in 1992 and worked his way up to President of Production where he oversaw such films as “The Lord of the Rings” franchise, “Elf,” “The Notebook,” “Wedding Crashers,” “The Conjuring” franchise, among many others. I first met him in the late 1990s through his screenplays for “Frequency” and “The Last Mimzy,” which he managed to complete while working as an executive at New Line. Emmerich is well versed in all aspects of the movie business and is known for being enthusiastic and kind. Perhaps that’s why he’s been with Warner Bros. for thirty years in ever more important roles, surviving a number of regime changes.
However, if reading all the news about the WarnerMedia Discovery merger or the ongoing tumult of The Slap at the Oscars (and yes, media outlets have started capitalizing that phrase), why not take a break and watch this week’s CJ Cinema Summit. We were live at BAFTA in London where learned all about the renovation of their historic headquarters at 195 Piccadilly from those who worked on the project. Benedetti Architects, Christie, CinemaNext, Dolby, Harkness and QSC all worked together to redevelop the property amid a global pandemic.
Distributors
Warner Bros. Goes Through Executive Shuffle Ahead of Discovery Takeover
As has been openly expected since Discovery announced it would be taking over WarnerMedia from AT&T more than a year ago, most of the studios top brass are headed for the door just as the USD $43 billion deal is set to close. It would be more accurate to say that Discovery is cleaning out the senior executives put in place by AT&T to run WarnerMedia and installing their own management team.
Let’s start with who won’t be making the transition. These include CEO Jason Kilar, WarnerMedia Studios and Networks Group chairman and CEO Ann Sarnoff, chief financial officer Jennifer Biry, chief human resources officer Jim Cummings, head of streaming Andy Forssell, chief revenue officer Tony Goncalves, executive vice president of communications Christy Haubegger, general counsel Jim Meza and chief technology officer Richard Tom.
David Zaslav, president and chief executive officer of Discovery Inc., has already announced the team that will be leading what is to be named Warner Bros. Discovery. At the top of the food chain will be JB Perrette, who will be CEO and President of Warner Bros. Discovery Global Streaming and Interactive Entertainment. Kathleen Finch will become Chairman and Chief Content Officer, US Networks Group, a newly created role responsible for seeing television assets. Another new position is Chief Revenue and Strategy Officer, is being filled by Bruce Campbell.
There is a group of executives simply making the transition from Discovery to the new Warner Bros. Discovery. These include Gunnar Wiedenfels as Chief Financial Officer, Savalle Sims as General Counsel, Lori Locke as Chief Accounting Officer, as well as Adria Alpert Romm as Chief People and Culture Officer.
Then there are those who are staying on such as Channing Dungey, who continues as Chairman of Warner Bros. Television Group. Casey Bloys will remain Chief Content Officer of HBO and HBO Max. May be the most important senior executive from a cinema industry standpoint is Toby Emmerich will maintain his role as Chairman, Warner Bros. Pictures Group. A longtime executive in the Warner family of companies, Emmerich will oversee Warner Bros. Pictures, New Line Cinema, Warner Bros. Feature Animation and all DC films.
Watch this space over the next few weeks as the executive shuffle is likely to continue.
Source: Deadline
Organizations
Italy Sets Minimum 90-Day Theatrical Window
Dario Franceschini, Italy’s Minister of Culture, dropped a bombshell this week by saying he had signed a new law that mandated a minimum 90-day theatrical window for all films being released in the country before they could appear on streaming services. An earlier law had imposed a similar regulation only on local productions that had received government subsidies.
Franceschini made the announcement while speaking at a conference in Rome put on by the National Association of Audiovisual and Digital Film Industries (ANICA). The law also covers selections of the annual Venice Film Festival. Many titles show up at the event, which occurs in late August or early September, at the start of their awards campaign. Over the past five years, with festivals such as Cannes in France requiring official selections to be released in movie theatres, streamers such as Netflix have relied heavily on Venice to premiere titles.
Referencing a need to bring audiences back to movie theatres after the pandemic, Franceschini referenced new legislation in France which set theatrical release windows to 15-months before a title could be streamed. Ironically, the new French law was actually a decrease of the theatrical window which was previously 36-months.
Source: Screen
Box Office
Chinese Cinema Closures Drag Down Boxoffice
Chinese movie theatres are facing a persistent slump due to the extended lockdowns of major cities such as Shanghai and associated cinema closures to battle outbreaks of the COVID Omicron BA.2 variant. China’s boxoffice recorded its lowest takings this year with just USD $12.6 million in business. Several major local movies have shifted release dates and Hollywood titles are not attracting audiences in significant numbers where cinemas are still open.
China’s boxoffice to date is USD $2.2 billion, which is 24% lower than it was at this point last year. This means that China’s position as the number one global cinema market by revenue for the past two years is in question for 2022. Overall March boxoffice was just CNY 912 million (USD $143.4 million), the lowest it has been in a decade. Theatre operating rate is less than 50% across the whole of China. Cinemas that are still open are restricted to 75% occupancy. Despite the closures, market leader Wanda has announced bullish expansion plans, with plans for 50-100 new cinemas per year. Wanda currently has a 15% market share, up from 13.5% before the pandemic, rising to as much as 17% of box office for some film titles.
There were five major Hollywood movies released for the Qingming Festival, “but the box office performance of each film can only be described as dismal,” according to CNHubei, with boxoffice down 86% compared to the same time last year. Cinemas in Beijing report just 4% attendance rate and screenings with just two or three patrons, meaning the cinemas were losing money on every show. Only six film releases are planned before 1 May, which is the next date for major local film titles, many of which shifted their release dates forward.
Source: Variety
Exhibitors
France’s Second Largest Cinema Chain CGR for Sale
The owner of France’s second largest cinema chain CGR Cinémas has announced that it is for sale, as part of a “bundle” with other properties and business interests. The company’s head Jocelyn Bouyssy announced that current owners Luc and Charles Raymond, the sons of the group’s founder, had “decided to hand over” to a new owner, with a “group evaluation process underway.” The deal would cover CGR’s 74 cinemas (over 700 screens), 17 hotels and five Burger King operations, with the asking price put at around one billion euro. CGR is the second largest chain in France after Cinemas Pathé-Gaumont and ahead of UGC, as well as being sixth largest in Europe.
CGR is also developer of the premium cinema concept ICE, which it has deployed within 40 of its own cinemas as well as other operators in France and Saudi Arabia. The company has also diversified into film distribution with the creation of Apollo Films and CGR Events for event cinema and live events. As well as the 17 hotels under the CLR Hôtels brand, the conglomerate includes a thalassotherapy center, a Pierre Gagnaire restaurant and a few other restaurants, not counting the Burger King franchises. The company recently opened its most recent multiplex in Maillot with eight screens, replacing its existing cinema in town, with a further four auditoriums opening in July.
CGR is said to already have received 12 bids that are currently under evaluation. It is not clear who would be an obvious buyer, not least given that the cinema operation is bundled with several non-cinema businesses. The timing is also noteworthy, given that French cinemas are still struggling with admission numbers significantly below what they were before the pandemic.
Source: Variety
Organizations
New UK Cinema Industry Program To Support Ukraine
The UK Cinema Association and the Event Cinema Association have begun a joint initiative with support from the digital agency Powster, to help the cinema industry in the United Kingdom raise funds for their counterparts and others affected on the ground by the war in Ukraine.
Cinemas for Ukraine has been developed in discussion with the Union of Cinema Theatres of Ukraine, the trade body representing cinema operators in the territory.
Funds raised by the appeal will be directed to the Fedir Shpyg Charitable Foundation, which has long-standing experience in providing targeted charitable assistance. Beneficiaries will include those working in the Ukrainian cinema industry, their families and others affected by the conflict.
Source: Celluloid Junkie
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