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Amazon Might Buy Landmark Theaters


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Following news that the antitrust laws preventing film studios from owning theater chains may be reversed, Amazon is looking to be the first studio to take advantage and is reportedly looking to buy Landmark Theaters. Landmark has just over 50 theaters in 27 markets across the country.

 

 

It's easy to imagine Amazon turning the economics of theater ownership on its head. Having a massive conglomerate willing to use the theater experience as a backdoor for all their other consumer products could either hasten the demise of theaters or change the industry forever. It's hard to see this going through without other content companies joining in.

 

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Here is a cut’n’paste from a post I made about this on Facebook.

 

The paramount consent decree is a DOJ agreement that settled a bunch of issues in the cinema industry, most notably the outlawing of circuit dealing and the ownership of movie theaters by movie studios.

 

The big issue here is the studios owning theaters. Think about this: AMC now owns roughly 30% of all screens in the UD. AMC has a valuation of around 2 billion dollars. Disney in the last decade has spent twice that acquiring Marvel and Lucasfilm each, and is now in the process of spending 75 billion to get Fox.

 

What is so crazy about the idea of Disney buying AMC and then locking their films up exclusively (times or indefinitely) at AMC sites? Or simply using the fact that they own the movie and the theater to unfairly undercut what Regal, Cinemark, or your favorite small circuit can reasonably charge?

 

Vertical integration over promises and under delivers about...all of the time.

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No fucking way would shareholders be ok with Disney putting Marvel, Pixar, and Star Wars on only 30% of the screens in North America. It would never happen. 

 

Last time I checked, Minecraft is still on every platform imaginable after being acquired by Microsoft.  Microsoft!

 

Having said that, I would love to see it happen because no doubt Comcast would buy Regal just to continue to fuck with Disney. 

 

 

 

 

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11 hours ago, sblfilms said:

Here is a cut’n’paste from a post I made about this on Facebook.

 

The paramount consent decree is a DOJ agreement that settled a bunch of issues in the cinema industry, most notably the outlawing of circuit dealing and the ownership of movie theaters by movie studios.

 

The big issue here is the studios owning theaters. Think about this: AMC now owns roughly 30% of all screens in the UD. AMC has a valuation of around 2 billion dollars. Disney in the last decade has spent twice that acquiring Marvel and Lucasfilm each, and is now in the process of spending 75 billion to get Fox.

 

What is so crazy about the idea of Disney buying AMC and then locking their films up exclusively (times or indefinitely) at AMC sites? Or simply using the fact that they own the movie and the theater to unfairly undercut what Regal, Cinemark, or your favorite small circuit can reasonably charge?

 

Vertical integration over promises and under delivers about...all of the time.

What is the UD?  

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47 minutes ago, ManUtdRedDevils said:

No fucking way would shareholders be ok with Disney putting Marvel, Pixar, and Star Wars on only 30% of the screens in North America. It would never happen. 

 

They are Ok with moving their entire catalog to a single Disney owned streaming service, but sure, it would “never happen”. 

 

But that isn’t the only thing I said. Disney currently charges exhibitors 65% of the ticket revenue to play their biggest movies. In a scenario where they own a theater chain, they could discount the price of their tickets by those 35 percentage points and undercut what competitors can reasonably charge.

 

They could also choose options like opening their movies a week early at their theaters, or even just a day. The anti-competitive shenanigans are nearly endless.

 

And we are talking about a studio that is well on its way to owning 40-50% market share in the next 10 years. 

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I think the question facing the industry here could well end up being: what happens to movie theaters when they don't really have to make money?

 

AMC lost money last year, and though they've turned things around, this last quarter they made ~$22 million dollars of net income on ~$1.4B in revenue.

 

Amazon doesn't break out income by segment, but they do break out revenue. Amazon's subscription services (primarily Prime), had a net sales of $3.4B last quarter, and I think it's fair to guess they made a tidy profit on that. They're going to spend $5B on Prime content this year, and probably follow Netflix to at least $8B in 2019. Now, AMC, who owns ~1000 theaters is far larger than Landmark with their measly 50, but with their reach and questionable profitability, they do seem an easy acquisition target for an Amazon or a Disney or a Comcast.

 

What does a theater chain become when it's simply an extension of a massive profit center?

 

I don't have a great answer for that, and I rather hope we don't find out. For me, the theater experience has improved massively in the last few years. Lots of theaters have closed, but the ones that remain in my area are far nicer than they used to be, with better seats and reserved seating, with better screens and sound systems, and with full bars. I've also really enjoyed the subscription model for theaters, and even though that wasn't started by the theater chains, I've now moved to AMC's service and found it excellent. I'd hate for the motivation that has spurred the industry to up their game to disappear because a corporate parent was using them as pawns in some larger game.  

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Streaming service is a different conversation than movie theaters. The revenues from streaming is significantly smaller while the upside to having a piece of the ever growing streaming industry is much larger.

 

I just don’t see what the upside is for Disney to own AMC and either make its catalog exclusive to a 30-50% market share or discount its catalog at 35% at its locations and lose out on hundreds of millions.  For what purpose would such a decision accomplish?  

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42 minutes ago, ManUtdRedDevils said:

Streaming service is a different conversation than movie theaters. The revenues from streaming is significantly smaller while the upside to having a piece of the ever growing streaming industry is much larger.

 

I just don’t see what the upside is for Disney to own AMC and either make its catalog exclusive to a 30-50% market share or discount its catalog at 35% at its locations and lose out on hundreds of millions.  For what purpose would such a decision accomplish?  

 

You don’t see why anti-competitive strategies work?

 

They work.

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1 hour ago, ManUtdRedDevils said:

Streaming service is a different conversation than movie theaters. The revenues from streaming is significantly smaller while the upside to having a piece of the ever growing streaming industry is much larger.

 

I just don’t see what the upside is for Disney to own AMC and either make its catalog exclusive to a 30-50% market share or discount its catalog at 35% at its locations and lose out on hundreds of millions.  For what purpose would such a decision accomplish?  

For Disney, just imagine that they buy AMC and change nothing. Recently AMC reports that film exhibition costs are almost exactly 50% of their ticket revenues. All the sudden that 50% of ticket revenue for 40-50% of the entire box office is now a intracompany expense. They very much have an incentive to put their films in as many theaters as possible, and I don't think a film like Infinity War or Black Panther could be profitable without being everywhere. Still, it suddenly would give Disney theaters an incredible advantage over non-Disney theaters, which is the exact kind of thing that lead to the Paramount decrees in the first place.

 

I'm also not entirely sure that revenues from streaming are significantly smaller than the box office. The total domestic box office this last (record breaking quarter) was $3.4B. Netflix alone made $3.8B, of which $1.8B was made in the US. I can't tell if these guys are estimating the whole year or how they get their numbers, but they seem to think the US streaming market will bring in $11B this year, which would put it neck and neck with the total US box office. There are a lot of reasons these are not fair comparisons one way or another, but I think it's probably fair to say that streaming (not even including VOD, just subscriptions), will be worth more than the US box office very shortly, if not this year.

 

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