Biggest Cinemas Delay ‘Iron Man’ Ticket Sales in Dispute

Regal Entertainment Group (RGC) and AMC Entertainment, the largest U.S. theater chains, stopped advance sales for Walt Disney Co.’s “Iron Man 3” in a revenue-sharing dispute that threatens the start of the summer movie season.

Regal, the biggest cinema operator, stopped selling tickets this week to the superhero sequel from Disney’s Marvel unit, a person with knowledge of the situation said yesterday. AMC, based in Kansas City, Missouri, said this week it wasn’t offering advance sales for the May 3 opening because it hadn’t reached terms with Disney. Studios and exhibitors in the U.S. split the revenue from theatrical ticket sales.

The biggest chains’ united front makes it tougher for Disney, owner of Marvel, Pixar and Lucasfilm, to obtain better terms for “Iron Man,” the summer’s first likely blockbuster, and future films. Regal and AMC account for about 30 percent of U.S. screens, according to the National Association of Theatre Owners. Negotiations this close to a big opening are rare, said Dale “Bud” Mayo, chairman of exhibitor Digital Cinema Destinations Corp. (DCIN)

“I’ve never heard of it,” Mayo, whose Westfield, New Jersey-based company isn’t involved in the dispute, said in an interview.

“Iron Man 3,” which stars Robert Downey Jr. and Gwyneth Paltrow, is projected to gross $151 million domestically in its first weekend, the estimate of researcher Boxoffice.com. That would be the biggest opening weekend so far in 2013. The first two “Iron Man” movies, made for a combined $340 million, generated $630.8 million in the U.S. and Canada, according to Box Office Mojo, which tracks ticket sales.

Theatrical Slump

“We hope to reach agreement and get tickets on sale as soon as possible so it doesn’t affect opening weekend,” Ryan Noonan, an AMC spokesman, said in an April 16 e-mail.

Burbank, California-based Disney, the world’s largest entertainment company, didn’t respond to requests for comment. The company is using “Iron Man” to gain better terms with theater owners on its future releases, Deadline.com reported this week.

Domestic box office receipts are down 11 percent this year to $2.62 billion, according to Hollywood.com. Marvel had the top-grossing film last year with “The Avengers,” based on comic-book characters including Iron Man.

Revenue Split

Typically, studios and theater owners agree on a general ticket-revenue split well in advance and then refine after the theatrical run based on outperformance or underperformance, said Mayo, 71, who is founder and chief executive officer of Digital Cinema.

The U.S. flap follows a decision by Disney (DIS) to release a separate version of “Iron Man 3” in China. The company said on March 30 that it won’t seek official Chinese co-production status. Co-productions aren’t counted against foreign-movie quotas and can provide studios with a larger share of revenue.

“Iron Man 3” was partly made in China with Disney’s Beijing-based partner, DMG Entertainment. A release date for the Chinese version wasn’t announced.

Disney slipped 0.1 percent to $60.68 yesterday in New York. The shares have advanced 22 percent this year, closing at an all-time high earlier this week, compared with an 8.8 percent gain for the S&P 500 Stock Index.

Regal, based in Knoxville, Tennessee, has 6,777 screens, while AMC, which was acquired by China’s Dalian Wanda Group in September 2012, has 5,336, according to the theater association.

To contact the reporter on this story: Christopher Palmeri in Los Angeles at cpalmeri1@bloomberg.net

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

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