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AMC Boss Adam Aron Says Biz Is Bright, But Won’t Board Majors’ PVOD Plans Unless It’s In Chain’s Best Interest: Q&A

Deadline logo Deadline 3/29/2017 Anthony D'Alessandro
© Provided by Deadline

When a fresh face enters the exhibition biz, it’s a head-turner. Historically, exhibition in the U.S. had been built on family-run enterprises, from owning the brick and mortar to booking the movies. It’s why some sources say a preciousness exists among theater chains to protect the theatrical window: It’s been their bread and butter from generation to generation. No one is an outsider to the film industry more than Adam Aron, a seasoned hotel-travel executive and co-owner of NBA’s Philadelphia 76ers, who landed the CEO job at AMC Entertainment in January 2016. Aron brings a different angle to the exhibition biz, one that’s so strong, he isn’t going to simply rely on cash cow revenues from popcorn and soda. Within months of becoming CEO, he shook up the nation’s theatrical landscape by absorbing Carmike Cinemas for $1.1 billion, making AMC the largest theater chain stateside. Reviving businesses is what Aron does:  When he presided over Vail Resorts as chairman and CEO from 1996 to 2006, Newsweek hailed him as the guy who “transformed the U.S. ski industry.” So it comes as no surprise that on the exhibition side, Aron is the loudest supporter of the majors’ initiatives to introduce a premium-video-on-demand window that complements theatrical. Deadline sat down with Aron at CinemaCon after AMC completed their $964M acquisition of the Nordic Theater Group, raising their global screen tally to 11K and venues to 1K in 15 countries.

DEADLINE: Your luxury and remodeling expansion. Do you foresee the whole chain being all recliners, all luxury, or is there room for stadium seating too?

ARON: AMC today in the United States is three brands — AMC theatres, AMC Dine-Theatres and AMC Classic. If you look at the AMC Theatres, by the end of next year, about two-thirds of them will be renovated with full blown AMC amenities including recliner seating, better food and drink. We will have some theater upgrades at every theater across all three brands, like the Coca-Cola freestyle machines with 100 flavors for guests. But in terms of recliner seats, I think there will always be some theaters where some or all of the seats will be more traditional movie theater seats. Most of the theaters with the AMC brand and the AMC classic theaters will not have recliner seats.

DEADLINE: When you say AMC that includes the Carmike venues too?

ARON: We’re re-branding all the Carmike theatres as either AMC, AMC Dine-In or AMC Classic Theatres right now. Actually, looking back at AMC prior to the acquisition of Carmike, most of the AMC theaters will stay in the AMC brand, but some of those will move to the AMC Classic brand as well.

DEADLINE: The whole notion of stadium seating. Is that going away? Or will it still exist in certain markets?

ARON: Stadium seating in a sense still exists even in recliner theaters because the rows are tiered by height. There’s just fewer rows and a lot of leg room. But it’s a big industry, there’s a role for traditional seating in some theaters, and a role for recliner theaters in other.

DEADLINE: The major studios and their push for premium video-on-demand: If they pull this off, do you think it will ding theatrical? Talks are still early, nothing is firm on either side, and this whole pitch goes beyond the majors speaking with you. TV licenses are tied to theatrical, and an important window to preserve.

ARON: My sense of the whole issue with premium-on-demand-video is this: If you look at what has traditionally been the theatrical window, the first 75-to-90 days in the United States and Canada, studios and theater exhibitors have made a lot of money and just last year the domestic box office was $11.4 billion, an all-time record. We believe that the future of that theatrical window is still quite bright. That is why we invested over $3 billion to acquire Carmike, Odeon and Nordic. And that’s why we’re investing in 2017 in the neighborhood of $700 million to upgrade and enhance movie theaters. We are highly confident that the future of moviegoing at movie theaters is going to be strong and robust in the years and decades to come. Having said that, we believe that if the smart people are flexible and innovative in their thinking, there are intelligent ways to alter the current window and for that reason we have been willing to sit down with major studios and discuss variations to what has been the case here before. If those variations are done right, we think studios will make more money, and we’ll make more money. But clearly we’re not going to sign on to anything that’s not in our financial interest.

DEADLINE: Super premium tickets which Cineplex Odeon has been practicing where, for an upcharge, you get both the theatrical ticket and a digital download. Do you think that’s the solution for most major studios?

ARON: I was given some good advice when I was 30 years old, that to comply with all provision of the Sherman anti-trust act, never to comment about pricing, prospectively and going forward. I’ve followed that advice for decades and I’m going to follow that advice again today.

DEADLINE: Isn’t this just about moving up the electronic sell-through window? Because no one is going to pay $30 for a film that bombed in theaters.

ARON: I’ve already said what’s appropriate to say publicly on the subject. Clearly we’re talking with studios. We may or may not reach agreement. But if we do, then we can apply some imagination to change the nature of the business that would make more money for studios and exhibitors.

DEADLINE: What were the takeaways – upsides and down – for AMC from the Paramount experiment with Paranormal Activity 6 and Scouts’ Guide to the Zombie Apocalypse?

ARON: I wasn’t around back then (at AMC). From what I heard, I don’t think there were any great leanings from those experiments, and I don’t think that those experiments are central to the talks that are going on at the moment.

DEADLINE: Some sources have told me that down the line there’s going to be a shrink in supply of screens, more event films and all the mid-level and low-budget films are going to be less common. Is that forecast too cynical?

ARON: Yes, that’s way too cynical. AMC Theatres this year will play hundreds and hundreds of movies. It’s certainly true that some of those movies are going to way out-perform others. But my experience in life is that the only thing is constant in life is change, and so no matter what direction people think our industry will move in today, five years, ten years, fifteen years, or twenty years from now, people will think we’re moving in a different direction. I think people love going to the movies and I think studios will figure out a way working with exhibitors to make a whole variety of movies profitability for the benefit of those who make the movies, and for the benefit of those who show the movies and for the benefit of the moviegoing public.

DEADLINE: Your stock is down 10% over the last two months despite having investor briefings, is there something that Wall Street isn’t getting about AMC?

ARON: First, let’s start with that our stock is way up compared to a year ago. We were trading at $19 in January 2016 and we are trading above $30 today, so our stock has been a very strong performer. There is some confusion with the three acquisitions that we made in the past four months as to what the earning power of our company is, and I’m sure as we report earnings throughout 2017 there will be a clearer and sharper focus on the potential of AMC to deliver profitability for its shareholders. In my experience, when you deliver earnings, the share price takes care of itself.

DEADLINE: Last year you spoke out against NATO chief John Fithian when he made remarks against 21st Century CEO James Murdoch. Are there any regrets over that? 

ARON: I didn’t speak out against NATO, when I said I disavow the comments for the reasons that were articulated at that time. And as far as having a regret about that statement, I’m glad I made that statement. I have profound respect for all our studio partners, profound respect for NATO. There are ways to carry oneself in dealing with one’s partners, and all we said at the time is that AMC didn’t think it was appropriate at the time to gratuitously insult the leader of 21st Century Fox.

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