Theater Owners ‘Disappointed’ by Report of Studio VOD Plan

U.S. theater owners expressed “disappointment” at a report that four major Hollywood studios plan to show movies on a new video-on-demand service two months after the films start appearing in cinemas.

Executives of cinema chains meeting in Las Vegas this week weren’t consulted about the plan, the Washington-based National Association of Theater Owners said today in an e-mail.

Cinemas, coping with a 20 percent drop in attendance this year, have repeatedly voiced concern about proposals to shorten the usual 120 days between a film’s theatrical release and the home-video debut. An earlier release may cut further into revenue and increase piracy, the association said today.

“These plans fundamentally alter the economic relationship between exhibitors, filmmakers and producers, and the studios taking part in this misguided venture,” said NATO, which represents chains including Regal Entertainment Group (RGC) and AMC Entertainment Inc. “We would expect cinema owners to respond to such a fundamental change and to reevaluate all aspects of their relationships with these four studios.”

Time Warner Inc. (TWX), Sony Corp. (6758), Comcast Corp. (CMCSA)’s NBC Universal and News Corp. agreed to start the Home Premiere service, offering two- or three-day movie rentals through DirecTV (DTV) for $30 starting in late April, the publication Variety reported today.

The two-month time frame is longer than the four to six weeks suggested by DirecTV Chief Executive Officer Michael White on a Feb. 23 conference call. CEOs at Regal and AMC, the two largest cinema operators, said later that their chains wouldn’t show films scheduled for home viewing in his time frame.

90 Days OK

“They risk accelerating the already intense need to maximize revenues on every screen opening weekend and driving out films that need time to develop,” NATO said today.

Shortening the theatrical release period to 90 days would be acceptable, Gerry Lopez, CEO of Kansas City, Missouri-based AMC said in a March 23 interview with Bloomberg Television.

Jim Kennedy, a spokesman for Sony, said the company had no comment on the theater owners’ statement. James Finn, a spokesman for News Corp. (NWSA)’s Fox, Cindy Gardner of NBC Universal and James Noonan of Warner Bros. also declined to comment.

To contact the reporter on this story: Michael White in Los Angeles at mwhite8@bloomberg.net

To contact the editor responsible for this story: Anthony Palazzo at apalazzo@bloomberg.net

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