Content Creators and Movie Theaters (DIS and others)

I’m mostly putting this here so I don’t forget about it, and so people can add to this potential trade research as we get closer to the sunset date (which is further explained below).

Some people might wonder why some of the major content creators (e.g., Disney) do not own their own movie theater chains. It seems like this kind of vertical integration would work perfectly - they get the full revenue from ticket sales, and they can utilize a theater to push merchandise or other cross-selling opportunities. The reason why content creators do not own theaters is because of United States v. Paramount Pictures, Inc., which actually restricted studios from owning theaters, and led to the breakup of Paramount Pictures into separate studio and movie theater companies.

The Paramount Decrees, which forced this breakup, were terminated in August 7, 2020, which started a two-year sun setting period, after which, these rules would no longer apply. This means starting August 8, 2022, it is very likely that Disney (and/or other content creators) will make a purchase of a theater company.

That being said, this does not mean that AMC is necessarily going to get bought, especially if the company has to pay an excessive premium for the shares. I’ll expand upon this as I do more research into the potential acquisition targets.


Nice theory but why would a telecommunications company that has a stream to viewer platform already want to buy real estate when it’s not necessary? Why not just release everything on Disney+ or HBOMax for people to watch at home?

You mean why would they want to bring people into a physical location as a captive audience so they can sell them overpriced food/drink and potentially sell them other related products (Disney Cruises, Disney Vacations, etc.) and merchandise?

Maybe this doesn’t apply to every content creator, but I do think the case for Disney to want to buy a theater chain is solid, given all the other things they will want to sell people and the ability to capture full revenue on ticket sales.

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Interesting possibility but in my thinking why would lets say Disney need to own a movie theater when they can just go straight to AMC and have their movies in theaters without the overhead of having physical location?. I could see studios partnering with AMC to do more events as what they just announced with Disney. The physical location aspect is true for sure, since parks make up a lot of Disney’s revenue, but don’t see why AMC acquisition, especially at these levels, would ever happen. AMC is not worth the current valuation on a financial level, I don’t think the mouse would fall for this trap.

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I did say right in the last paragraph that this doesn’t mean AMC is going to get bought… There are other potential targets that probably have better/more realistic valuations.

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Yeah, understandable. Just thinking out loud here, I think it’s definitely something interesting about this statue sunsetting for sure.

Because movie theater attendance has been declining for a while and due to COVID and streaming wars its been accelerated (The Numbers - Movie Market Summary 1995 to 2023). I don’t see how Disney could look at the collective profits from movie streaming services the past decade and think they have something up their sleeve to deal with the fact that there’s a serious growth gap. AMC is definitely a play but I just don’t see how any company sees potential value in it that hasn’t been tapped

Like I just said, I mentioned AMC, but I also explicitly said that this doesn’t mean AMC is going to get bought by them, since their valuation is likely unrealistic. This potential play would be more about Disney and a potential acquisition target than AMC specifically. I’ve deleted AMC from the thread title to hopefully mitigate this confusion.

My understanding of Disney+ is that Disney is basically losing money on this, but they have to do it to compete with Netflix and Amazon. Just because attendance is declining at movie theaters doesn’t mean there is no value in owning the theater. As I already said, they would get full revenue from ticket sales of their content, so between that and food/drink sales, I’m sure there would not be an issue with “added overhead”. Then they get the added bonus of pushing all their other products on moviegoers, which doesn’t happen now.

Edit: I also looked at the link you provided. Ticket Sales down, but box office $$$’s up. Since the actual money being made isn’t declining, but is going up (discounting COVID of course), that is more in favor of making a purchase than avoiding one. And maybe they can get a discount (because of COVID) on a chain that isn’t AMC.

Reading a bit more about the specific ruling/opinion, it appears that only the original five studios were actually bound by this consent decree, however the fact that it still existed may have indicated what is and is not acceptable behavior, meaning those not subject to the decree would have still followed it to avoid potential government lawsuits.

If that is the case, it would make sense why no studios have attempted to merge with a theater yet. I also think it makes sense for Disney (or any other studio not subject to the consent decree) to not to jump on this right away, since the ruling came in the middle of COVID. Any potential purchase may wait until it seems clear COVID will no longer be an obstacle.