While making press rounds for Avengers: Age of Ultron, writer-director Joss Whedon made it pretty clear he had some beef with the executives at Marvel during production, from scenes the studio forced him to work into its latest superhero team-up and scenes it wanted cut, to the overall pressure of churning out yet another massive financial success for the studio and for the franchise’s fans. With the movie finally in theaters across the globe, Mr. Whedon is free to move on to other pursuits, and it appears it is now theater owners’ turn to air their own grievances with the studio.
According to The Wall Street Journal, the National Association of Theatre Owners (NATO) has received “an avalanche of complaints, concerns and fears” from members of its organization. The issue: new conditions imposed upon theater owners by Disney, Marvel’s parent company, restrict their abilities to price and exhibit the film in the manner that best suits them. Among the specific complaints are restrictions on when theater owners can and cannot offer matinée discounts for the film; when they can alternate showings of the film with other movies on the same screen; and new payment rules NATO says could raise prices for all parties over the long term.
In response to a strongly-worded letter from NATO, Disney has begun altering its approach on certain issues, including the matinée cutoff — the agreement called for matinée pricing to end by 5:00 p.m. instead of 6:00 p.m. — and suggested ticket pricing minimums, both of which are part of the studio’s licensing agreement that outlines how, when, and for what price exhibitors can show a film to the public. Essentially, Disney wants to cash in as much as it can from the latest film in one of its biggest and buzziest franchises, and that desire has left some exhibitors pretty ticked off and feeling the agreement is unfair.
Per its licensing agreement with theater owners, Disney looks primed to receive about 60% of the domestic box-office receipts for Age of Ultron, well above the industry average of 50% but not far from the norm when it comes to returns for films of its ilk. While studios cannot dictate the prices theaters charge for tickets to their films, Disney’s agreement included a proposal to use a NATO-published national average ticket price as the minimum price it would use to split box-office revenue, even if the theater chose to charge less for the film, thereby boosting Disney’s share of the receipts and encouraging theaters — especially those in smaller markets — to increase prices. This proposal raised exhibitors’ eyebrows most, as an inability to discount ticket prices for the film or charge what they consider a reasonable ticket price could lead to a cycle of price increases that “may constitute illegal vertical price fixing under state and federal antitrust laws,” according to NATO.
It’s no surprise negotiating power over the specific terms of these agreements rests largely with the major studios, whose blockbuster franchises have become must-sees for moviegoers of all types; theater owners who choose not to exhibit big box-office draws stand to lose out on a great deal of business in the process, so it’s hardly an option for them to say “thanks but no thanks” when deciding whether to show films like Age of Ultron, Furious 7 and Star Wars: Episode VII – The Force Awakens, which at this point are guaranteed to earn a boatload of cash.
U.S. theater owners aren’t the only ones lodging complaints with the studio, however, as more than 150 theaters in rural Germany refused to screen the film altogether. The decision came after the studio insisted on taking a larger cut of ticket sales in those communities, while also choosing to contribute less to local advertising campaigns and other expenses related to exhibiting the highly-anticipated sequel. The agreement would have forced theater owners to step up their own efforts and subsequently their own costs if they chose to place the film in their exhibition rotations, and ultimately some felt it was in their best interests to forego the opportunity.
Disney has quite a big year ahead of it, as Ant-Man, Inside Out, The Good Dinosaur, and Star Wars: Episode VII are all due in theaters before 2015 comes to a close. Time will tell whether theater owners’ disputes with Disney over the studio’s licensing agreements are a sign of things to come, but it’s clear exhibitors in the U.S. and across the globe will remain dependent on the studio for the foreseeable future. Most theater owners are likely to continue going along to get along here, but if Disney further exerts its control over exhibitors like it did with Age of Ultron, perhaps more will go the route of those rural German theaters and skip out on showing the films in Disney’s upcoming slate. Then again, looking at the revenue likely to come from all those titles, maybe not.
