Entertainment Industry

Category: AMC

AMC Entertainment in talks to sell to China's Wanda Group

AMC IPO

AMC Entertainment, the United States' second-largest movie theater chain, is negotiating a deal to sell all or part of itself to Wanda Group, owner of China's largest theater company, two people familiar with the talks said.

The deal, if concluded, would make Wanda the first Chinese company to establish a major foothold in the North American theatrical business. AMC operates 5,048 screens in 347 theaters in the U.S. and Canada. It would also give AMC access to China's burgeoning market, which is in the midst of a multiplex building boom and was No. 2 at the international box office last year behind Japan, accounting for $2 billion in ticket sales, according to the Motion Picture Assn. of America.

The talks between AMC and Wanda have intensified in recent weeks in the wake of AMC's move to pull the plug on a planned stock offering to raise up to $450 million and use the proceeds to pay down debt, according to sources who asked not to be identified because the negotiations were confidential. Top shareholders in AMC include JPMorgan, Apollo Investment Fund and Bain Capital Investors.

AMC withdrew the offer because of concerns that market conditions weren't ripe for a stock offering, and possibly to position the company for a sale, people close to the transaction said.

A spokesman for AMC declined to comment, as did a representative for Wanda. News of the talks with Wanda was first reported by the New York Times.

Wanda Cinema Line Corp. Limited is the largest cinema chain in China. The parent company, Wanda Group, is a major player in real estate development including department stores and hotels.

The company has been in the news of late because its chairman, Wang Jianlin, is reportedly under investigation for ties to disgraced Chongqing party chief Bo Xilai. Bo was sacked, accused of corruption, and his wife charged with the murder of a British businessman. Wanda's headquarters are in the northeastern city of Dalian, where Bo was once a senior official.

AMC posted a loss of $82.7 million on revenue of $1.93 billion in the 39 weeks ended Dec. 29, 2011, compared to a profit of $36.88 million on revenue of $1.9 billion during the same period in 2010, according a filing with the Securities and Exchange Commission. The company cited higher interest expenses, investment losses in Beverly Hills-based 3-D technology company RealD and costs related to its acquisition of Kerasotes.

In May 2011, AMC closed a deal to acquire 92 theaters and 928 screens from Chicago-based Kerasotes Showplace Theatres, the nation's sixth-largest movie chain.

China has been heavily expanding its own entertainment industry, both to boost the country's global influence or "soft power" and to feed the demands of a surging middle class. Several Hollywood studios have been maneuvering to take advantage of the opportunity to grow business in China.

Burbank-based Walt Disney Co. recently said it would partner with the animation arm of China's Ministry of Culture and China's largest Internet company to help develop China's animation industry. Glendale-based DreamWorks Animation has announced a joint venture with Shanghai Media Group, China's second-largest media company, to build a family entertainment company to produce animated and live action movies and TV shows for the Chinese market. That deal was unveiled in February when Chinese Vice President Xi Jinping visited Los Angeles.

China is also rapidly expanding its theater industry. Although no major U.S. theater chain has expanded into China, Beverly Hills-based Real Inc. also has partnered with Beijing SAGA Luxury Cinema Management Co. to equip the Chinese theater chain with 3-D technology. Imax Corp., the Canadian big-screen theater company, also formed a joint venture with Wanda  to open 75 theaters by 2014.

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-- Richard Verrier and David Pierson

Photo: An AMC theater in Burbank. Credit: Ringo H.W. Chiu / For The Times

Movietickets.com joins lawsuit against exhibitor AMC

Amc MovieticketsGlobal online ticketing service MovieTickets.com has joined a lawsuit filed against one of its founding shareholders, AMC Entertainment Inc., the nation's second-largest theater chain.

MovieTickets.com, a Boca Raton, Fla.-based joint venture launched 12 years that serves 247 exhibitors, said Wednesday that it was adding its name to a suit recently filed in Florida by exhibitor National Amusements and Hollywood Media Corp. alleging that AMC breached its contract by not selling tickets exclusively through MovieTickets.com.

On the same day Movietickets.com announced the litigation, AMC touted an agreement to expand its partnership by 3,000 screens with rival online ticketing service Fandango. The deal will expand Fandango's network in Los Angeles County by an additional 25 theaters representing 400 screens.

National Amusements and Hollywood Media, a Florida-based firm with interests in online ticketing and other services, were among the founders of MovieTickets.com, which services 19,500 theater screens in the U.S. and abroad and nearly 20 million registered users.

"Despite exhaustive efforts by MovieTickets.com to resolve the dispute among the founding shareholders, AMC disabled its ticketing inventory from MovieTickets.com,'' the company said in a statement. "This is the first time MovieTickets has ever sued anyone. The company is fully prepared to take all necessary action to protect its rights, the value and integrity of the MovieTickets.com service."

A spokesman for AMC, which is based in Kansas, City, Mo., declined to comment.

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Photo: Moviegoers crowd at AMC theaters in Burbank. Credit: Ringo H.W. Chiu / For The Times

-Richard Verrier

 

MoviePass revives all-you-can-watch plan despite theater friction

Movie theater ticket line

MoviePass Inc., the New York company that angered theater chains in June over its planned roll-out of an  all-you-can-watch movie plan for $50, isn't going away.

The company, backed by AOL Ventures, on Tuesday announced plans to roll out its service across the country on a limited, invitation-only basis. Only this time, instead of partnering with MovieTickets.com, MoviePass has formed a partnership with Hollywood Movie Money, which provides promotional movie tickets to theaters across the country.

The announcement is likely to create more friction with exhibitors, many of whom have grown increasingly uneasy  about the heavy marketing of low price-tickets through discount services like Groupon, LivingSocial and MoviePass. The concern is that such promotions could hurt their business by encouraging moviegoers to wait for a bargain before trekking to the multiplex.

AMC and other theater chains blasted MoviePass when it was first announced in June, saying they had been blindsided by the program and wouldn't honor it.  But Ron Randolph-Wall, chief executive of Quantum Rewards, which operates MoviePass, anticipated a better reaction this time. "Because MoviePass will be paying theaters the full price of admission using the Hollywood Movie Money system, the theater industry benefits as well as the fans," Wall said in a statement.

No word yet from AMC and other exhibitors on MoviePass' latest incarnation.

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-- Richard Verrier

Photo: Ticket clerk Eric Michaels sells tickets to patrons at the booth at AMC Universal Citywalk Stadium 19 theaters in Universal City on Wednesday. Credit: Brian van der Brug/Los Angeles Times.

AMC and Sony reach new deal for 'Breaking Bad'

Breakingbad 
After almost losing one of its signature shows, cable network AMC has signed a new deal for 16 episodes to keep its critically acclaimed "Breaking Bad." 

For weeks, AMC and Sony Television, the studio behind the drama about an ailing high school teacher who turns to selling crystal meth to make ends meet, had been bickering over a new deal for a fifth and final season of the show. Talks got so bad that Sony actually shopped the show to other cable networks including News Corp.'s FX.

One of the issues over the show was costs and how many episodes would be produced for the final season. Sony wanted 13 episodes, whereas AMC was hoping to order just half a dozen or so in a cost-saving move.

Although AMC has ordered 16 episodes, it is not likely it will air the episodes as one season. Instead, the cable channel is expected to space the episodes out over the next few years. AMC said production on the last 16 would start next year but declined to comment on when they would air. The fourth season is currently underway.

It is not out of the realm of possibility that "Breaking Bad" will not air on AMC at all in 2012 and instead will return in 2013 and wrap up in 2014. AMC did not bring "Mad Men" back this year, choosing instead to start the next season in early 2012.

Part of the reason a network would do that is that typically the cost of producing the show does not have to be accounted for on the books until the episodes are run. AMC premiered the new series "The Killing" this year and brought back "Breaking Bad." Keeping "Mad Men" off this year, even though production has just started on the new season, will mean lower programming expenses, according to an executive at a rival cable network that carries a heavy load of original programming, who did not want to comment publicly about a competitor.

The difficulty in sealing a deal on "Breaking Bad" coupled with budget cuts on AMC's biggest hit "The Walking Dead" -- which also led to the departure of that drama's showrunner Frank Darabont -- has been the subject of much talk in Hollywood. AMC executives have denied that its lucrative deal for "Mad Men" showrunner Matt Weiner to stay on that show for a few more seasons is the cause of the financial issues at the other shows. However, AMC, a unit of AMC Networks, has declined to elaborate on why Darabont left "The Walking Dead" or what the issues were in cutting a new deal for "Breaking Bad."

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AMC's recent austerity moves have Hollywood nervous

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-- Joe Flint

Photo: Aaron Paul, Jonathan Banks, and Bryan Cranston in "Breaking Bad." Credit: Ursula Coyote / AMC

AMC's recent austerity moves have Hollywood nervous

DEAD

Usually, when a show becomes a hit in its first season, the last thing the producers need to worry about is having to watch their dollars and cents.

But that’s not the case for AMC’s zombie smash “The Walking Dead,” which not only became the cable channel's most-watched original series ever but even set records for all cable networks for viewership among the coveted adults 18-49 demographic.

Its reward from AMC: A per-episode budget cut of more than six figures for its second season, according to people with knowledge of the situation.

“The Walking Dead” isn’t the only AMC show that the network brass wants to give a haircut. Sony Television, the producer of “Breaking Bad,” is in tense negotiations with AMC over terms for a fifth and likely final season of the show.

The financial restraint is causing a rift between New York-based AMC and the creative community. The cuts being pushed for on “The Walking Dead” and “Breaking Bad” come only a few months after the network shelled out big bucks on a new deal that would keep Matt Weiner, creator of AMC’s signature drama “Mad Men,” on board for at least the next two seasons.

Sony got so irked at the terms AMC offered for a fifth season of “Breaking Bad,” which included making only six or eight episodes instead of the usual 13, that last week it approached other cable networks, including FX, about buying the program.

Cooler heads have since prevailed and AMC and Sony are trying to hammer out a new deal that will likely see the last season of "Breaking Bad" spread out over at least two years. Going that route would likely allow AMC to ease the financial pain of another season of "Breaking Bad" over a longer period of time, much the way keeping "Mad Men" off its network in 2011 also provided short-term relief to the network's bottom line.

In the case of “The Walking Dead,” not only is the budget being slashed but Frank Darabont, the show's well-regarded executive producer, was also replaced last week, just days after he appeared at the Comic-Con convention to greet the show’s fan base and promote upcoming episodes.

AMC President Charlie Collier strongly denied that the cost of keeping “Mad Men” is in any way hampering the network’s programming strategy.

“We're investing more than we ever have before,” Collier said in an interview. “The fact that future seasons of ‘Mad Men’ were going to be expensive is not a surprise to us.”

He was also quick to defend the network against complaints about its recent dealings with producers. “We've taken some of the most expensive, riskiest shows around and nurtured them and managed to grow our network.”

Until recently, AMC was a unit of New York-based cable operator Cablevision Systems Corp. In July, it along with sister cable channels Sundance, IFC and WE were spun off into AMC Networks Inc., a stand-alone public company. That will mean greater scrutiny of the company’s spending by Wall Street.

“As a public company, the financials of AMC are gradually going to become much more apparent to investors,” said Barclays Capital analyst Anthony DiClemente. “There will be many more questions about programming expenses and margins.”

Collier stands by AMC's track record and management strategy. “Are there bumps along the road? Sure, but the net results have turned out pretty well.”

-- Joe Flint

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Photo: AMC's "The Walking Dead." Credit: AMC. 

Tense talks between AMC and Sony over 'Breaking Bad'

BREAKBAD

Tense negotiations are underway between the cable network AMC and Sony Television, producer of "Breaking Bad," over a deal for a fifth and probably final season of the critically acclaimed drama.

 Talks seemed to reach an impasse last week when Sony sent feelers to at least three other cable networks about taking "Breaking Bad" should an agreement with AMC fall through, said two people with knowledge of the matter who requested anonymity because of the sensitive nature of the talks.

To be sure, negotiations between networks and producers are often contentious. As shows age, they become more expensive as actors' and producers' paychecks get bigger with success. Both sides have in dictated that they hope to reach a pact that will keep "Breaking Bad" on AMC.

Discussions grew heated when AMC tried to convince the makers of of the show that its fifth season run only six to eight episodes instead of the typical 13. That was rejected by the creative forces behind the show, which led them to approach other outlets.

"Breaking Bad" is not the only show AMC is looking to trim costs on. "The Walking Dead," which became a big hit for the network, is having its per-episode budget cut by about $250,000. Last week the show's executive producer Frank Darabont left, and there is speculation that the budget cuts were the reason. People close to AMC deny that was the case.

AMC's push to lower costs on "Breaking Bad" and "The Walking Dead" comes as the price of its signature hit "Mad Men" is expected to go up: "Mad Men" creator Matt Weiner landed a lucrative new deal to stay with the program for at least two new seasons.

In the unlikely event that "Breaking Bad" does move to another channel, the producers would probably have to agree to make additional seasons. It would be highly unusual for a network to commit to just one season of a show it acquires from another network.

AMC is a unit of AMC Networks, which went public earlier this summer.

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Photo: AMC's "Breaking Bad." Credit: Ursula Coyote

Kids have easy access to explicit music but have a harder time getting violent video games

For a kid, scoring a music CD with explicit lyrics is easy. But good luck when it comes to getting that new, blood-splattered horror game.

A sting operation conducted by the Federal Trade Commission between November and January found that 64% of kids were able to buy music CDs with a "parental advisory" label. But when the undercover, underage shoppers tried to buy a video game with a "mature" rating, only 13% slipped through. The other 87% were stopped cold.

For movies, 38% of kids were able to buy an R-rated DVD, while 33% were able to buy a ticket to see an R-rated movie in a theater.

FTC Violence Survey 
With the exception of movie theaters, retailers improved their enforcement over 2009, and all retailers showed progress since the FTC began its investigations in 2000.

"But more needs to be done," David Fladeck, director of the FTC's Bureau of Consumer Protection, said in a statement.

The issue of media violence has taken on broader resonance as the U.S. Supreme Court ponders the constitutionality of a California law that would ban the sale of violent video games to minors and fine retailers that do so. The court is expected to issue its opinion on the case this spring.

Retailers saw the FTC report as fresh ammunition against the law.

"These numbers demonstrate once again that industry self-regulation can and does work, and there is no need for punitive government regulation, such as the California video game law," Bo Andersen, president of the Entertainment Merchants Assn., said in a statement.

But family advocates echoed the FTC's statement, praising the progress being made at retail stores, but pointed out that games, as with music and videos, are increasingly available online where there are fewer checks than in stores. The Entertainment Software Rating Board earlier this week announced that it would apply a more streamlined procedure to rate downloadable video games sold over Internet-connected consoles. The decision rattled parent advocates who feared that the new process meant that fewer games would be reviewed for compliance with the voluntary ratings system.

"It’s good to see signs that retailers are making progress on enforcing the ESRB ratings about content that’s not designed for kids," said Alan Simpson, vice president of policy for Common Sense Media, an advocacy group in San Francisco, "but as the FTC points out, there is more work to be done. The study is a reminder of how important it is to have adults making sure that unaccompanied kids aren't purchasing M-rated games – and it raises serious questions about the ESRB’s troubling decision to use computers, instead of adults, to auto-rate downloadable games.”

The report on the FTC survey included a breakdown of compliance by retailers and media. Among music retailers, Target was least strict, allowing 77% of undercover shoppers to buy CDs with explicit lyrics. Clerks at K-Mart, on the other hand, let just 29% of shoppers slip by.

For R-rated DVD movies, Target was again the most permissive, allowing six out of 10 mystery shoppers to buy, while Wal-Mart clerks let only 27% through.

Interestingly, the results were just the opposite when it came to video games. Target scored best when it came to policing games, with only 8% able to purchase an mature-rated game. Wal-Mart let 20% through, the largest percentage of the six retail chains in the survey. The inconsistency suggests that enforcement may be highly variable, depending perhaps on which clerk handled the transaction or which store was sampled. 

Among theaters, AMC Entertainment stopped nine out of 10 underage patrons from buying a ticket for an R-rated film. National Amusements prevented 55% from buying, making it the most lax of the eight theater chains surveyed.

-- Alex Pham

Chart: Federal Trade Commission

Theater chains escalating fight with studios as premium video-on-demand looms

With the launch of a new premium video-on-demand initiative that will get movies from the theater to the TV screen a lot quicker around the corner, the nation's largest theater chains are waging a public war with the Hollywood studios involved.

Representatives from Regal Entertainment and AMC Entertainment have been meeting with movie studios this week to inform them that they will not play or promote any movies that will be part of "premium VOD," through which the movies would be available to rent in homes for $30 eight weeks after they launch. The exhibitors think some people wouldn't go to theaters to see movies that are available to rent so soon and that theaters would end up a marketing vehicle for a business in which they don't participate.

Regal, the nation's No. 1 chain, has taken it a step further. It is reducing the number of trailers it plays from the four studios that are poised to launch premium VOD soon -- 20th Century Fox, Sony Pictures, Universal Pictures and Warner Bros. A person familiar with the matter said that's because Regal has not been informed which movies will go premium VOD.

Regal and AMC want studios to tell them ahead of time which movies will be released on premium VOD so they know which to play and promote and which to ban, according to people close to the situation. The chief executive of Cinemark USA, the third-largest exhibitor, recently expressed a similar sentiment in an interview with the Hollywood Reporter.

Combined, those three companies represent about 16,000 of the nation's roughly 40,000 movie screens.

By cutting back on trailers and banning certain movies, the exhibitors could cost themselves ticket sales in the short run. That's an indication of how big a threat they believe premium VOD is to their businesses and how high-stakes a game they are willing to play.

"It is simply not in Regal's best interest to utilize our resources to provide a marketing platform for the release of premium video-on-demand movies," Amy Miles, chief executive of Regal, said in a statement this week.

Similarly, AMC said in a statement, "As [release] windows shrink and threaten our industry's future, it is only logical to expect AMC to adapt its economic model."

This is far from the first time that theater owners have expressed their fierce opposition to such plans. When the Los Angeles Times reported in March that DirecTV was poised to become the first provided of premium VOD and that its chief executive had floated a time frame of four to six weeks after theatrical launch, Miles and AMC chief Gerry Lopez said they wouldn't play movies under such circumstances.

Tensions have only heightened since then, as news has leaked of specific movies that may launch on premium VOD as soon as late April, such as Sony's Adam Sandler comedy "Just Go With It."

Distribution executives at several studios declined to comment on the matter, citing the sensitivity of ongoing talks.

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-- Ben Fritz

Netflix nabs 'Mad Men' rerun rights

Netflix, in a sign of its growing importance in television, will become Don Draper’s second home.

The home entertainment company has bought the rerun rights to the TV series “Mad Men,” making its online streaming service the next place to watch episodes after the show’s initial airing on cable network AMC.

Netflix will pay “Mad Men” producer Lionsgate between $750,000 and $900,000 per episode, according to people familiar with the situation.

The first-of-its-kind deal means that reruns for the critically acclaimed program won't air on a broadcast or cable network, as typically is the case. It's the first time that Netflix has bought syndication rights to a currently airing program for its online streaming service.

Though the agreement is a sign of Netflix's growing influence in the television industry, it also underscores the tough hurdles Lionsgate might have faced trying to sell the show to a traditional network. Serialized dramas such as “Mad Men” do not perform well in reruns, negatively impacting their value.

For example, A&E shelled out $2.6 million per episode for reruns of HBO’s mob drama “The Sopranos” and the show performed poorly. Reruns of ABC’s “Lost” and Fox’s “24” also did not deliver good returns for various networks.

MadMen A big hit with critics, “Mad Men” has always had a modest audience compared with other cable shows such as TNT’s “The Closer” and USA’s “Burn Notice.” Last season, it averaged just under 3.3 million viewers per episode.

The show, however, is expensive to produce. AMC pays close to $3 million an episode for “Mad Men.” Lionsgate receives an additional $2 million from foreign rights and DVD sales.

The first four 13-episode seasons of “Mad Men” will debut on Netflix Instant on July 27. Future episodes will not become available on Netflix’s streaming service, which many people access on their televisions, until seasons are complete. “Mad Men” creator Matt Weiner has said he expects to produce three more seasons.

About half of the video streamed by Netflix is now television shows. The Internet service has proved particularly popuar for dramas, as many people choose to “marathon” several episodes in a row of programs with intricate, continuing plotlines like “Mad Men.”

-- Ben Fritz and Joe Flint

Photo: Jon Hamm in "Mad Men." Credit: Carin Baer / AMC.

AMC Entertainment unveils IPO plans

Amcmore 
AMC Entertainment, the nation's second largest movie theater chain, is hoping the third time is the charm.

In a regulatory filing Monday, the Kansas City, Mo.-based theater operator said it would proceed with plans announced last July to raise up to $450 million in an initial public offering of stock.

JPMorgan and Goldman Sachs are the lead underwriters for the offering. The filing did not specify when the IPO would be launched, how many shares would be sold or at what price, but AMC said it would use the proceeds to pay down debt. Top shareholders in AMC include JPMorgan, Apollo Investment Fund and Bain Capital Investors.

This marks the third time AMC has announced IPO plans. The company originally filed for a $750-million IPO in December 2006, as private equity firms looked to recoup some of their heavy investments in the theater operator. But AMC withdrew that offering in May 2007 after investors balked at the $17-a-share asking price.

AMC then unveiled plans for a scaled-back stock offering in September 2007, but pulled the plug a year later amid market volatility. While the climate has improved for IPOs in the last year -- Beverly Hills-based 3-D technology company RealD Inc. had a successful offering last summer -- recent market uncertainty could make it a tough sell for AMC. The U.S. stock market is currently at a six-week low.

In the 39 weeks ending Dec. 30, AMC revenues rose 5% to $1.9 billion compared with the same period a year ago. The company reported a $4.4 million net loss compared with a profit of $37.8 million in the year-earlier period.

AMC and other chains in the U.S. and Canada are grappling with a steep decline in theater attendance, which is down 21% so far this year, reflecting a dearth of hits and fewer movies being released by the studios.

Along with rival Regal Entertainment, AMC this month launched a joint venture called Open Road Films that will acquire and release independent movies, putting them in potential conflict with Hollywood studios.

AMC has been bulking up on the number of cinemas it controls. In May, AMC acquired 92 theaters and 928 screens from Chicago-based Kerasotes Showplace Threatres, the nation's sixth-largest theater chain. AMC operates 361 theaters and 5,203 screens in the U.S. and Canada.

-Richard Verrier

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Photo: Movie goers crowd at an AMC theatre in Burbank on a Friday night. Photo credit: Ringo H.W. Chiu/For The Times.  
 

 

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