In a short weekend Interview (conducted via Text messages) I had with Adam Aron, the CEO of AMC Theaters, Aron downplayed the firms Chinese ownership position and referenced previous statements and comments on his stance with regard to doing a deal with MoviePass.
There is a growing group of MoviePass customers and investors who have become frustrated with the lack of progress between MoviePass and AMC. AMC’s CEO has been an outspoken critic of the MoviePass business model, and has consistently claimed he is not willing to share any revenue with MoviePass.
A small but growing group of people, lead by a Senior level US Military member, (who is choosing to stay anonymous) have been calling on AMC to offer MoviePass the same discount it offers other US based companies, such as Fandango and Costco. Costco receives approximately 25% off tickets when buying in bulk from AMC. Aron has claimed that Fandango pays full ticket price same as MoviePass. Mitch Lowe, CEO of MoviePass has consistently said he seeks only the same discount offered to Costco, and believes that given the millions of dollars of tickets MoviePass Purchases, they should be offered the same deal. Lowe has also claimed that he does not want concessions revenues as part of a deal.
Chinese companies including AMC’s majority owners Wanda, have been increasingly investing to compete with US based film companies. Some have claimed that AMC, because it is owned by Chinese investors, may not be willing to do a deal with MoviePass, specifically because they do not want to be disintermediated by the US based company. Some have even speculated that Chinese based investment operations potentially backed by AMC, are naked short selling HMNY stock in an attempt to drive HMNY & Moviepass out of business. Essentially driving down HMNY stock to a point where raising funds to fund Moviepass growth becomes more difficult.
Aron downplayed AMC’s Chinese connection. He said, “You are getting some inaccurate information. AMC is an American company, incorporated in Delaware, headquartered In Leawood Kansas, and run entirely by its American management team based in Kansas. It is publicly owned, with shares traded on the New York Stock Exchange. It is true that 59% of those shares are owned by the Chinese company Dalian Wanda but 41% are owned primarily by American institutions and individuals.”
I asked Aron if anything had changed in terms of getting a deal done with MoviePass. And I relayed to him, that it had been reported to me that Aron had claimed that Moviepass was asking for onerous terms that would take 20 times AMC’s profits.
Aron said that he “did not have any further comment about Moviepass”.
Aron followed up with referencing the below article from deadline saying. “However, you may find this article just a few months ago in Deadline enlightening as to MoviePass’ desires:”
He then sent the following quote from the Deadline story:
“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.”
MoviePass Vs. AMC: Ticket Service No Longer Covers Chain’s Busiest Theaters; Exhibitor Rips “False Statements”
I pressed again asking if AMC continued to believe that Moviepass was an unsustainable business, and if he had any change of heart about a potential deal with Moviepass. He replied again that he had no comment further on MoviePass.
I reached out to Mitch Lowe for any comment, and he did not return my messages to him.
So for now, it does not appear that any ice has thawed between AMC and MoviePass. This is of course risky for both companies at this point.
MoviePass customers and Investors will be angry if HMNY and MoviePass goes out of business. Increasing people are calling for boycott of AMC on chat boards where MoviePass fans and investors gather.
The Chinese connection to AMC, while downplayed by Aron, has some MoviePass fans upset. For AMC, this could become something like the NFL national anthem kneeling controversy. Where a perceived lack of patriotism put a hurt on viewership. If more and more consumers and investors make a connection to AMC being a Chinese owned company, that is aggressively trying to drive an innovative US company out of business, potentially taking away a service people love, that has a chance to do some real damage to AMC’s brand, and could have a lot of MoviePass customers running to alternative theaters.