11 November 2024
Last week, the CJ Cinema Summit took center stage with notable industry figures in attendance, including Tony Chambers, who serves as the Executive Vice President and Head of Theatrical Distribution at The Walt Disney Studios Company, alongside the insightful Dimitrios Mitsinikos, CEO of Gower Street Analytics. Their engaging discussion provided a wealth of knowledge on the intricacies of film distribution today. You can catch the full conversation on-demand here.
On Thursday, 14 November, the CJ Cinema Summit will shift focus to the evolving landscape of independent film distribution and the world of art house cinema, featuring a lineup of esteemed executives from leading companies. The esteemed panel includes Lisa Bunnel from Focus Features, Elisa Federoff of NEON, Sarah Timlick of Elevation Pictures, and Nicole Weis from IFC Films. Register now for free access here.
In the wake of last week’s U.S. Presidential Election, where Donald Trump triumphed over Vice President Kamala Harris, the relevance of cinema trade publications in the realm of political discourse has come into question. While the implications of Trump’s return to the presidency might seem trivial when juxtaposed with pressing global matters like climate change and geopolitical stability, the potential ripple effects on the film industry remain significant. Examining how Trump’s policy decisions could indirectly influence both cinema operators and film distributors worldwide is imperative, albeit acknowledging that he won’t be drafting laws specific to the film industry.
One significant concern involves the ramifications of increased trade tariffs on Chinese goods. Should Trump enact such measures, retaliatory actions from China could inhibit the distribution of American films, impacting the broader market. Fortunately, major studios have already adjusted their financial models to mitigate dependency on Chinese box office revenue, alleviating some potential negative consequences.
Nevertheless, as large media conglomerates continue to dominate the Hollywood landscape, any adverse policy changes that impact one revenue stream will invariably create a domino effect throughout their entire organization, including their theatrical divisions. The worrying trend has been evident as the decline in linear television revenue has forced studios like Paramount and Warner Bros. to reassess their strategies, staffing, and production timelines.
The editorial boards of major publications like the Los Angeles Times and Washington Post have reflected the pressures within the media landscape, as their billionaire owners directed them not to endorse any presidential candidates. With companies like Paramount owning CBS News and Disney owning ABC News, the complexities of media ownership in the current political climate are significant, placing the cinematic landscape at a crossroads amidst political upheaval.
Trump’s prior administration saw significant tension with media outlets, notably with his administration actively blocking major acquisitions, such as the AT&T-Time Warner deal. This interference raised challenges for Warner Bros. While alliances with media moguls like Rupert Murdoch facilitated smoother transactions for Disney, the industry’s political entanglements continue to evolve.
In discussing the implications of Trump’s second term, Warner Bros. Discovery CEO David Zaslav acknowledged the uncertainty surrounding the upcoming administration. He suggested this period of transition may yield opportunities for industry consolidation and revitalization that could benefit the cinematic landscape considerably.
The fierce competition among numerous streaming services has led to an oversaturated market, compelling media companies to pursue consolidation. The number of major Hollywood studios has dwindled, reflecting similar trends witnessed in the music and publishing industries. This consolidation suggests a reduction in the overall volume of film releases, further marginalizing independent and niche films.
In the near term, the anticipated acquisition of Paramount Global by Skydance Media is projected to close by the end of Q1 2025, with both Shari Redstone and Larry Ellison maintaining close ties to Trump. Notably, discussions regarding a potential sale with Comcast unfolded earlier this year, introducing questions of strategic direction for the iconic studio.
Speculation regarding technology firms’ forays into Hollywood has gained traction, yet the feasibility of such acquisitions is debated. While Amazon has successfully acquired MGM, Netflix appears to be content with its current strategy. Apple’s foray into media assets remains cautious, highlighting the challenges of investing in a sector plagued by declining traditional television revenue.
As for the media companies under Trump’s influence, the anticipated “Trump Bump” in viewership may not materialize as in his first term, given the waning public interest in his political maneuverings as he embarks on another term.
Moreover, the political framework facilitates certain candidates’ longevity in the public eye, allowing them to persist even with ostensibly disqualifying histories. A glaring example of this can be seen in the Motion Picture Association’s congratulatory message to Trump two days after the election, a generic statement that could have been prepared in advance, reflecting the industry’s cautious approach to political engagement.
“The Motion Picture Association congratulates President-elect Donald Trump and the incoming 119th Congress on their electoral victories. We look forward to collaborating on crucial issues impacting the film, TV, and streaming industries, sectors that support over 2.7 million jobs, bolster more than 240,000 businesses across the nation, and generate over $242 billion in annual wages for our workforce. We commend every individual who contributed to ensuring fair elections and safeguarding our country’s democratic processes.”
Distributors
The financial results for the third quarter from major Hollywood studios reveal a troubling trend: the rise of streaming income comes paired with a substantial decline in theatrical revenues. Lionsgate, Paramount Global, Sony Group Corporation, and Warner Bros. Discovery presented earnings that reflected the ongoing challenges plaguing the film industry, especially after the impacts in the wake of last year’s labor strikes, where cinemas struggled to meet revenue expectations.
Lionsgate reported disappointing outcomes, with CEO Jon Feltheimer highlighting the underperformance of their film division, particularly with the commercial failure of “Borderlands,” which garnered a mere USD $33 million against a whopping USD $100 million budget. The studio encountered an operating loss of USD $88.6 million despite revenue of USD $948.6 million, though their motion picture division produced a modest USD $2.6 million profit, a stark decline from the previous year’s figure of USD $67.5 million.
Meanwhile, Paramount Global, in the midst of its acquisition process with Skydance Media, posted a 6% decrease in overall revenue to USD $6.73 billion. However, streaming revenue saw a more favorable 10% increase to USD $1.86 billion which partially offset the ongoing declines in both linear television and theatrical divisions. Notably, linear television accounted for a staggering 80.1% of Paramount’s revenue during the quarter, while theatrical revenue plummeted by 34%, only accounting for a meager 1.6% of total revenue.
At Sony, the Pictures Division experienced a noteworthy revenue drop of 14%, totaling USD $2.38 billion, while theatrical earnings remained relatively stable at USD $455 million for the period ending 30 September. Warner Bros. Discovery has also faced its share of hurdles, with CEO David Zaslav addressing the ongoing adaptations required amid substantial industry disruptions. The theatrical revenue decline of 40% was notable, particularly when compared to last year’s blockbuster success with “Barbie,” even as its streaming platform Max grew by 8%, adding 7.2 million new subscribers. The collective earnings reports underscore a central industry quandary: although streaming demonstrates increased profitability, it has yet to completely compensate for the downward spiral of traditional television revenue and may be contributing to decreased theatrical box office figures.
Exhibitors
In response to the tough financial landscape, AMC Theatres has been proactive; their investor relations teams have been working overtime. Alongside the announcement of third-quarter earnings totaling USD $1.35 billion, AMC unveiled a series of strategic initiatives aimed at enhancing the overall moviegoing experience while stabilizing its financial outlook. Despite facing a net loss of USD $20.7 million this quarter, a sharp decline from a profit of USD $12.3 million in Q3 2023, CEO Adam Aron expressed an optimistic outlook, attributing improved adjusted EBITDA and rising revenue per patron to the second-best adjusted EBITDA recorded in AMC’s extensive 104-year history. Aron pointed to the rebound in box office numbers and anticipated a surge in sales as they gear up for an exciting lineup of releases heading into the holiday season and 2025.
Shortly after the earnings announcement, AMC introduced its “XL at AMC” format across the United States, following positive pilot results in Europe. Launching in early 2025, XL at AMC will feature immersive 4K laser projection and enormous screens measuring at least 40 feet (12 meters), enhancing the experience for patrons in viewing films with unmatched clarity. AMC aims to roll out this fresh format across 50 to 100 locations nationwide by the end of 2025, with ambitions to expand to over 200 locations in the future. Aron emphasized the rising consumer preference for larger screens as they redefine the cinematic experience, 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.”
On the same day, AMC launched its ambitious “Go Plan,” a robust USD $1 – $1.5 billion investment initiative focused on revitalizing theaters and amplifying premium offerings like IMAX with Laser, Dolby Cinema, and PRIME formats. This plan includes substantial renovations in top-performing venues within both the U.S. and Europe, with new Luxe Cinemas slated for ODEON in the UK. Moreover, AMC aims to double or triple its “Laser at AMC” auditoriums over the next seven years as part of this transformative investment strategy. Citing the plan as “AMC’s most aggressive and forward-looking investment initiative of the decade,” Aron reiterated the organization’s commitment to the theater experience while emphasizing financial prudence in the timing of these future investments.
Cinemas
In a significant development, the nonprofit Upper West Side Cinema Center has moved forward by signing an agreement to acquire the iconic Metro Theater located on Broadway near 99th Street for USD $7 million, contingent upon successful fundraising by year-end. This historical theater, which has remained closed since 2005, is renowned for its distinctive pink Art Deco exterior. The theater was previously owned by the estate of Albert Bialek, who passed away last year.
The initiative to resurrect the Metro Theater is spearheaded by independent film producer Ira Deutchman and Adeline Monzier, a consultant for The Metrograph. They have garnered pledges covering roughly one-third of the necessary funds for the acquisition and plan to raise the remaining amount through contributions from local residents, philanthropic support, and government assistance. Deutchman expressed his enthusiasm for the project, noting, “I’d never worked on a project before where every single person I tell about it, their response is, ‘Oh, that is so needed,’” highlighting the theater’s nostalgic significance for community members.
Should they succeed in securing the property, Deutchman and Monzier will embark on a major fundraising effort to gather the estimated $15 million to $25 million required for a complete restoration. Although past attempts to repurpose the venue—including proposals for a gym and a cinema by Alamo Drafthouse—fell short, the nonprofit aims to restore the theater as a valued cultural hub while preserving a historic landmark within the Upper West Side community.
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Historic Lincoln Plaza Cinema in New York City, a landmark that has been a beloved venue for independent and foreign films since its opening in 1980. This acquisition marks a pivotal moment for the center, reinforcing its dedication to providing a platform for cinema that otherwise might not receive widespread distribution.
The transition of the Lincoln Plaza Cinema from a commercial entity to a nonprofit organization underscores a shift in how audiences engage with film. By focusing on curating a diverse selection of independent, art-house, and international films, the Upper West Side Cinema Center aims to cater to the unique tastes of the community. Their mission extends beyond mere exhibition; they are committed to educational programs and events that deepen the public’s appreciation for film as an art form.
The nonprofit initiative is particularly noteworthy in the current cinematic landscape, where traditional theaters are grappling with the impact of streaming services and evolving audience preferences. Enhanced by the experience of veteran film programmers, the center is poised to revitalize local interest in cinema by offering programming that emphasizes artistic vision and cultural relevance.
As they prepare for this transition, the Upper West Side Cinema Center is also engaging with local stakeholders to ensure that their offerings reflect the diverse perspectives and interests of the neighborhood. Their approach includes soliciting feedback from filmgoers and exploring partnerships with local filmmakers and organizations.
In the wider context of the film industry, this shift towards nonprofit models could inspire similar initiatives across the country. It offers a potential blueprint for struggling independent theaters and community cinemas that seek to maintain relevance in a rapidly changing market. By prioritizing community engagement and cultural enrichment, these organizations may find pathways to sustainability and growth, even as blockbuster productions and streaming giants dominate the mainstream film discourse.
As the adaptation continues, audiences will likely see an increase in opportunities to experience thought-provoking cinema that challenges the conventional definitions of entertainment, reaffirming the role of local theaters as essential cultural hubs. The outcome of such ventures may ultimately reshape the dynamics of film distribution and exhibition, underscoring the importance of inclusivity and diversity in storytelling.
