Film-Tech Forum ARCHIVE: Fox plays hardball with AMC

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Posted by Charles Everett (Member # 889) on 06-27-2002, 07:11 PM:

All of us Film-Techers know that Loews does not play any 20th Century Fox pictures in Manhattan. This ban has been in effect over 3 years (since before Star Wars Episode 1) because Fox played hardball on terms with Loews. That hasn't been much of a problem lately since the AMC Empire and in most cases the UA Union Square want Fox product to play in a showplace theater.

Now Fox is playing hardball on terms with AMC. Fox has demanded 100 percent of the surcharge for online/phone orders. As a result AMC has not sold online/phone tickets to Unfaithful or Minority Report -- and made its reasons known to the public on the AMC website.

AMC has gone one step further: It no longer promotes Fox pictures in the e-mail newsletter for the Moviewatcher club. No mention of Minority Report last week, no mention of Like Mike this week or next.

Wonder who'll be the first to blink?

Posted by Manny Knowles (Member # 1171) on 06-27-2002, 07:52 PM:

There was a long period when I worked for AMC during which time they did not play Paramount movies because of a stand-off similar to this one (I don't recall what the terms were).

The battle actually predated my stint with the company. AMC definitely did not blink and, eventually, Paramount mellowed out. That's a lot of screens they'd have to kiss goodbye.

I know a lot of folks on this site don't have many kind words for AMC but I think we should support them in this endeavor in whatever way(s) we can. Their motives don't include us, but we will all be affected directly or indirectly by the outcome of this "fight."

Posted by Adam Wilbert (Member # 1184) on 06-27-2002, 08:31 PM:

This also happened with Harkins in Arizona and New Line. Then, someone at New Line passed away and the Harkins execs jumped on a plane and made good with the new guy.

Posted by Dennis Benjamin (Member # 1137) on 06-27-2002, 08:56 PM:

Those "firm terms" will bring out the venom within the motion picture industry. Marketing VPs and Film Buyers usually don't bluff on thoses things.

I.E.

Cobb Theatres with New Line's "THE MASK"
Regal Cinemas with New Line's "Rush Hour 2"

Interestingly enough Regal did not open "RUSH HOUR 2" nationwide and it still was one of the top grossing movies of all times......

------------------
"Running through life at 24 frames per second"

Posted by Thomas Procyk (Member # 1170) on 06-28-2002, 08:03 PM:

Dennis -- and don't forget the Regal/Dreamworks brouhaha that happened around the time of Galaxy Quest. We had to remove all Dreamworks trailers, posters, standees and other promotional items from the theater. This went on for a couple weeks, then I guess they kissed and made up... Don't know what the cause of it was, though.

=TMP=

Posted by Christopher Duvall (Member # 284) on 06-29-2002, 06:14 AM:

Thomas
it was screwy film terms...

Posted by Jim Ziegler (Member # 86) on 06-30-2002, 02:40 AM:

Cinemark did not play American Beauty when it went wide, we did not play Evolution, and we opened Chicken Run a week late...

Posted by Neil Hunter (Member # 1005) on 06-30-2002, 11:09 PM:

Well, since Jim has brought it up, Cinemark almost didn't play Shrek last summer due to outrageous rental fees and the like. With all these examples of film companies losing these battles with exhibitors, I wonder why they still act bull-headed about this stuff.

Posted by Charles Everett (Member # 889) on 08-23-2002, 04:06 PM:

Fox may play hardball -- but not with Searchlight titles.

The Loews Lincoln Square in NYC got to open One Hour Photo. The AMC Hamilton picks up The Good Girl on its national break -- and you can get your tickets online.

Posted by Frank Angel (Member # 248) on 08-24-2002, 06:18 PM:

My understanding at the time was that Fox wanted a percentage of the gross for concessions sales during ST-Ep1. Of course to an exhibitor, that isn't one small step for distributorkind but one giant leap into exhibitor anathema. Loews rightly saw this as a prescedent that could never be reversed. To refuse to play what was the hottest title of the moment I thought was an amazing show of huge steel nuts. I heard that during the corporate meeting, when the terms were put down on the table, the Loews exes thought it was a joke and everyone was laughing. When they realized that the Fox guys were serious, the got up and walked out.

From the very beginning, distribution has tried very hard to go up that road of wanting a percentage of concessions. I believe they even took NATO to court over it and lost (I think it was Disney -- surprise, surprise -- who brought the challenge). But this is only hearsay. The argument being, no one is coming to your theatre to buy popcorn -- they come because of our picture and so we are entitled to a portion of those sales. Sure is a good thing the ruling went in NATOs favor or the whole economic picture would be very different today.

As for Fox getting into it with AMC, Fox had better watch its butt because if AMC hunkers down and refuses to play Fox product, Fox is going to be in big trouble in NYC. Having no play on either side of the street in both the Loews E-Walk or the AMC Empire in Times Square has got to be a major blow to Fox, both in revenue and prestige.

Frank

Posted by Richard C. Wolfe (Member # 431) on 08-25-2002, 12:34 AM:

Who says that distribution isn't already getting a piece of the concession action.

There was a time, many many years ago when almost all theatres made a profit (or at least existed)without concession sales. It wasn't until during the depression that many theatres started selling refreshments as they were looking for any way to bring in extra revenue. Most of the major deluxe houses didn't get concession stands until the early 40s, as they looked down upon the thought of selling such as beneath them. The average film rental during that period for a first run house was budgeted at 25 to 35%. Most film was sold flat, but it still had to fall into that budget parameter. From almost the very beginning distribution felt itself entitled to a share of those sales, but exhibition always balked. Distribution simply raised the film rentals. Those rentals continued to rise throughout the decades until we arrived to where we are and have been for quite some time... paying 60 to 70% for opening weeks.

I have been in this business for over thirty five years, and during that time have known of very few theatres that could stay afloat if it were not for concession sales. I have to laugh when I read in newspaper and magazine articles that state that theatres make most of there profit on concessions. 95% of all theatres make ALL of there profit from concessions. Most theatres fall well short of breaking even from ticket sales. They therefore must pay the difference from there concession sales. The very fact that we must give up a portion of our concession income to pay operational costs proves that distribution is already getting a share of those sales.

Posted by Frank Angel (Member # 248) on 08-25-2002, 04:09 PM:

Good point Rich. But don't most first runs open at 90/10? Nowadays I think 70/30 is a good deal for a big title!

I just don't quite understand how exhibition got into this mess in the first place. After all, without theatres the distribs wouldn't have any place to show their pictures. Suppose just one large chain decided they wouldn't play any picture at any percentage higher than 60/40 or any picture with a minimum of say more than three weeks. If that chain represented 30% of the screens across the country, seems to me that would be one huge loss for any distrib's opening weekend. And as we all know, they seem to almost irrationally and compulsively focused on those first weekend numbers. If they loose one chain, that would devastate their positioning in those stupid weekend tallies -- who's number one in BO sales. If a second chain were to do the same, wouldn't that would be a tremendous amount of power shifted to exhibition? And what if NATO got all its members to adopt the same guidelines, just like the MPAA member studios seem to have all gotten together and now make deals all with the same terms. I could never understand why it is that distribution gets to dictate the terms when exhibition certainly wheels enough power to at least be able to negotiate terms and not just accept whatever is handed to them.

In the old days, distribs saw theatres as their life blood. Use to be, the neighborhood theatres would be able to negotiate terms based on the business they did. The distrib's booker had all the BO statements on file and could see what kind of business the theatre was doing and would determine terms many times dropping percentages based on that business. Although I came into the business after this had stopped, there were the stories you heard about some companies selling product to older theatres flat and with low guarantees just to keep the theatre afloat -- they knew that it was important to have theatres to play product in even a theatre was going through a slump. Distribution and exhibition were partners. Them days are over.

Ah, buying pictures FLAT....what a concept! When I started, you could occasionally get a picture flat if you were playing a double bill from the same distrib. But that was long ago in a galaxy far far away.

Frank

Posted by Dustin Mitchell (Member # 372) on 08-26-2002, 10:02 PM:

Theatres still keep 40-50% of admissions when it all averages out. If you don't believe me look at your P&L's or at SEC filings for exhibitors. True, you will fall short of paying your operational costs if you don't factor in concessions, but I wouldn't call it FAR short.

Posted by Frank Angel (Member # 248) on 08-29-2002, 10:15 PM:

Short is short, be it far or near -- you still go out of business.

Posted by Charles Everett (Member # 889) on 12-11-2002, 12:37 PM:

Fox and AMC have made nice. As of last Friday (12/6) AMC lets you purchase tickets for all Fox films online.

Posted by Steve Kraus (Member # 476) on 12-11-2002, 03:36 PM:

I believe that the 90/10 business or similar extremely high percentage is calculated AFTER deducting a house nut from the box office revenue. The house nut is supposed to represent the operating costs of the theatre--presumably in a multiplex you could apportion it by seat count per screen--but is really just an agreed upon figure. Hopefully someone with actual knowledge of booking and deals can explain this better. It used to be a three way thing...90/10 after nut...60 or 70 etc with no nut...vs a minimum guarantee...whichever was greater.

Posted by Joseph Pandolfi (Member # 223) on 12-14-2002, 12:03 PM:

Same situation with National Amusements and Fox/Searchlight here. The New Haven County Area is blacked out from certain releases. Mostly noted were "Castaway" and "Moulin Rogue" were played in independent houses rather than chains.

Posted by Richard C. Wolfe (Member # 431) on 12-14-2002, 11:58 PM:

Steve, you are absolutely correct.

As well as being a theatre owner, I am also a booker/buyer for numerous independent exhibitors throughout eastern Pennsylvania. Often I see people post about how awful it is that theatres have to pay 90% for the first week. No one pays that amount unless they have given a guarantee that is higher then what the film terms call for, and then they would be paying possibly a 100% or more. That seldom happens. When the 90% comes into play they have already deducted there house expense, and are theoretically getting a 10% profit off of ticket sales, even before adding concession or advertising profits. As you said the 90/10 is always an "either/or" situation whereby the distributor calculates the film rental by the straight percentage and the 90/10 and then bills at whichever is higher.