Cinemark Joins Regal, AMC in Supporting Paramount Warner Bros. Merger

Three’s company.

Cinemark has now joined Regal and AMC in supporting Paramount’s planned merger with Warner Bros. Discovery, which means that the world’s three largest exhibitors have all given their blessing to a union that other theater owners fear will leave them with fewer movies to screen.

In a blow to the state attorneys general who are holding up the deal, in part because they argue it will hurt exhibitors, Cinemark called for “an expedited resolution of the proposed Paramount Skydance and Warner Bros. Discovery merger.” It added that “prolonged uncertainty runs the risk of diverting time and resources away” from producing the next wave of blockbusters — in other words, clock, she’s ticking.

Cinemark’s endorsement has been rumored for more than a week. It comes less than two weeks after Regal CEO Eduardo Acuna announced that he was throwing his lot in with David Ellison. AMC chief Adam Aron was the original defector, shifting his support behind the deal last spring during CinemaCon after claiming that Ellison’s experience producing “Top Gun: Maverick” and some “Mission: Impossible” movies were evidence he would be able to make good on his promise to deliver 30 movies annually to theaters.

Skeptics note that many of the movies from the studios for the next three years have already been greenlit. They question if Paramount and Warner Bros. can keep up that pace in perpetuity while servicing nearly $80 billion in debt (yes, the studios could use the cash flow, but movies are expensive and risky investments).

However, Paramount’s recent decision to put those commitments in writing has alleviated Cinemark and others’ concerns. The company has pledged to not only make 30 films annually over three years, but to also adhere to an exclusive 45-day theatrical window and a 90-day window before movies debut on streaming. Those terms are as good as any they are getting from any other studio at this point, making it an offer Cinemark couldn’t refuse. Plus, no one is coming close to producing as many films as Paramount says it will post-merger.

“We have consistently stated we would look favorably upon media consolidation that increases the quality and output of films released into theaters with sufficient marketing campaigns and theatrical windows, and that is backed by firm commitments to ensure follow-through,” Cinemark’s statement said. 

But the big three chain’s moves left exhibition industry trade group Cinema United and its chief Michael O’Leary in an awkward position. After all, O’Leary came out swinging against the merger at the behest of his members, initially saying he wanted it to fail. “If Paramount buys Warner Bros. and production drops, there’s no question that theaters will close,” he predicted in an interview with me last spring.

So where does that leave some of the smaller chains that comprise O’Leary’s membership — think B&B Theatres, Harkins, Marcus, and other family owned and operated companies that may look at all this consolidation in more existential terms. Well, on Thursday, Cinema United backtracked, writing a public letter signed by its leadership that urged Ellison and California Attorney General Rob Bonta to “discuss all possible avenues for resolving the state of California’s pending challenge to Paramount’s proposed acquisition of Warner Bros. Discovery.” In other words, time to get off the barricades.

In return, Cinema United urged Bonta and the other AGs to make sure that Paramount stuck to its promise not only in terms of the number of movies it releases, but to also ensure they didn’t jack up the cost to show their films and continue to allow them access to their library titles.

It’s something of a face-saving move. But what choice did Cinema United and members who weren’t sold on the merger have? The combined market share of AMC, Regal, and Cinemark robbed them of much leverage. The tide had turned. That left them with a stark choice: Go with the flow or be left behind.