FRIDAY PM UPDATE with AMC statement: AMC Theaters has gone wide with a release doubling down on its side of the ruckus with monthly movie ticket service MoviePass. The exhibitor reiterates the the decision to block sales at 10 AMC locations was made by MoviePass, and accuses the company of making “false statements” about AMC.
“AMC has taken no action to block the acceptance of MoviePass at our theatres,” AMC said in a release this afternoon. “We have no further comment about MoviePass’s unilateral actions. We are, however, disappointed that MoviePass continues to make false statements about AMC, including today when MoviePass greatly exaggerated its contributions to AMC’s profitability.”
On Thursday, MoviePass shaved 10 of the busiest AMC locations off its app in an effort to take a hard position against the nation’s largest movie theater chain. MoviePass is seeking a $3 cut on AMC tickets that it covers, plus 20% of concessions given the foot traffic it sends to AMC (a total estimated at about $2 million a week, per MoviePass insiders).
FRIDAY AM UPDATE with statement by MoviePass parent company CEO: Despite reports this morning, monthly movie ticket service MoviePass has not cut 100% ties with AMC Theatres per some Wall Street reports. Yesterday the monthly movie ticket service shaved 10 of the busiest AMC locations off its app (theaters such as the Boston Common and Empire 25 in New York City) in an effort to take a hard position against the nation’s largest movie theater chain.
If you thought relations between MoviePass and AMC were tense, buckle up, it’s going to be a bumpy ride.
MoviePass has reportedly asked AMC for a slice of admissions and concessions given the foot traffic it sends to AMC, which is around $2 million a week per MoviePass insiders. MoviePass is seeking a $3 cut on AMC tickets that it covers, plus 20% of concessions. AMC boss Adam Aron said in an earnings call late last year, “AMC has absolutely no intention, I repeat no intention, of sharing any – I repeat, any, of our admissions revenue or our concessions revenue with MoviePass.”
Ted Farnsworth, CEO of MoviePass parent Helios & Matheson, has said in reports that AMC has been ignoring MoviePass for a while and he has considered sending a letter to its board. MoviePass reportedly struck deals with close to 1,000 indie cinemas, in which it gets a $3 cut on ticket sales and/or 25% of concessions sales. Here’s the rub: While the major studios don’t mind MoviePass as they drive traffic (some in fact are shuffling marketing dollars toward them), exhibitors don’t like an outside company coming in and dictating the price of movie tickets to the public.
For $9.95 a month, MoviePass subscribers receive unlimited tickets. MoviePass counts 1.5 million subscribers, and that figure is growing.
MoviePass has refused to cover the following AMC venues: Empire 25 (New York City NY), Century City 15 (Los Angeles City CA), Mercado 20 (San Francisco-Oakland-San Jose CA), Disney Springs 24 (Orlando-Daytona Beach-Melbourne FL), Loews Boston Common 19 (Boston MA-Manchester NH), River East 21 (Chicago IL), Mission Valley 20 (San Diego CA), Tysons Corner 16 (Washington DC (Hagerstown MD), Veterans 24 (Tampa-St. Petersburg (Sarasota) FL) and Loews Alderwood Mall 16 (Seattle-Tacoma WA).
The monthly movie ticket service’s research has shown its subscribers aren’t loyal to any theater: They’ll literally drive past two theaters to get to the showtime or title that they want to see.
Helios & Matheson (HMNY) was down 4% in trading this morning at $8.56 whereas AMC was down 4% at $12.62 at 7:56 AM PST.
In the midst of this melee this morning, Farnsworth released the following statement against AMC:
“When HMNY acquired the majority stake in MoviePass, we made the strategic decision to reduce monthly subscription fees to $9.95 a month to get movie fans back into the theaters. As we’ve grown our subscriber base, we’ve seen a dramatic increase in movie theater attendance among our subscribers, which proves to us that MoviePass is working to revitalize a declining industry. Other theater companies have seen this attendance resurgence and have approached MoviePass to collaborate. Since the get-go, AMC has not been interested in collaborating with MoviePass – a move that is not in the interest of our subscribers and AMC theater-goers.
We know that we currently represent approximately 62% of AMC’s operating income, assuming that AMC is flat year over year. This equates to $34.4 million of gross profits to AMC in the upcoming quarter. On an annualized run rate basis, that’s over $135 million to AMC’s gross profits – which doesn’t include concession sales from MoviePass subscribers. In publicly disclosed 2017 financial documents, AMC claimed each customer spends $4.88 on concessions each visit – meaning MoviePass subscribers could bring an additional $17.1 million in AMC concession revenues for Q1 of 2018, which on an annual run rate means $68.4 million more — an annualized run rate going forward of over $203.4 million revenue from MoviePass subscribers.
We’ve pulled 10 AMC theaters — less than 2% of theaters. We already know in past testing that MoviePass subscribers are not theater-loyal; they’re happy to drive by a theater that may be closer to a theater that will accept MoviePass –because of the MoviePass value.
From day one, MoviePass has been 100% for our subscribers – they are the most loyal fans we’ve ever seen and we’re honored to remove a price barrier than had been preventing the average movie-lover from going to the movies. We’re here for them and will fight battle for them every day of the week.”
PREVIOUS EXCLUSIVE, Thursday 1:41PM: Is a surprise twist for MoviePass coming out of the Sundance Film Festival where they announced they would be co-acquiring indie movies, such as The Orchard’s American Animals, some of the monthly movie ticket’s subscribers learned today that their app and cards no longer work at certain AMC venues, i.e. the Empire 25 in New York City. See tweets below.
From what Deadline has gathered, it’s not AMC turning off the spigot, rather it appears to be coming from the MoviePass side. The MoviePass debit Master Card is accepted by any and all venues that are listed on the ticket agency’s mobile app. Essentially, MoviePass will no longer cover ticket purchases at certain big market AMC theaters such as the Empire 25 in NYC, AMC Loews Boston Common and the AMC Century Plaza. It’s not as though MoviePass won’t work at other AMC venues. Note, MoviePass doesn’t cover ArcLight Cinemas, Landmark Theateres or iPic, and that doesn’t have to do with the exhibitor, but largely the high ticket price point of these theaters, and what MoviePass is willing to cover.
CEO Mitch Lowe issued the following statement about the latest MoviePass outage as many took to Twitter to complain: “As of today, you’ll find a small handful of theaters are no longer available on our platform. Our number one goal as a company is to provide an accessible price-point for people to enjoy films the way they’re meant to be seen: on the big screen. Many exhibitors have been receptive to this mission, and we’re excited to keep working with theater chains that are closely aligned with our customer service values.
As we continue to strive for mutually-beneficial relationships with theaters, the list of theaters we work with is subject to change. We advise customers to always double check the MoviePass app for the most up-to-date list of participating theaters.”
MoviePass insiders have informed Deadline that the movie ticket service covers over $2M in ticket sales weekly to AMC.
When reached for comment, AMC would not return calls. However, this was tweeted out by their customer service Twitter handle:
Since MoviePass’ relaunch late last summer, the movie ticket agency has had rocky relationship with AMC. Initially, the world’s largest exhibitor tried to block MoviePass, but came around to accepting them. AMC CEO Adam Aron said in a November earnings conference call, “”MoviePass paid AMC, according to our records, $11.88 for each and every ticket that it purchased for our mutual guest. That’s quite a gap, $9.95 a month versus $11.88 a visit. I must point out that’s very gracious of them and we appreciate their business, but I think it’s also important to make clear that despite claims they’ve made to the contrary, AMC has absolutely no intention, I repeat no intention, of sharing any – I repeat, any, of our admissions revenue or our concessions revenue with MoviePass.”
Earlier today, MarketWatch announced, that MoviePass parent company Helios & Matheson Analytics Inc. filed a $400M shelf registration with the SEC on Thursday. In its filing, the company said it will, “from time to time” sell in one or more offerings up to $400M in any combination of stock, preferred stock, warrants, units and subscription rights. HMNY closed at $8.93 today, -2.4%. Current market cap on HMNY is just over $214M.