Attorneys for Black Widow star Scarlett Johansson filed a lawsuit in Los Angeles Superior Court on Thursday, alleging that Walt Disney (NYSE:DIS) breached her contract when the film didn’t debut exclusively in movie theaters earlier this month. Bonuses would kick in for Johansson based on certain milestones in box-office receipts, and Disney’s decision to offer the film via Premier Access (for Disney+ subscribers willing to pay an extra $30) have played an important role in keeping ticket sales in check.
Disney+ doesn’t deserve all of the blame here. The pandemic is playing the starring role. Even films like F9 and A Quiet Place Part II that opened exclusively at the local multiplex fell short of what their predecessors rang up in ticket sales. However, there is still some merit to Johansson’s argument against the House of Mouse.
Disney will be fine no matter how this plays out, but multiplex operators could be the real beneficiaries here. If movie stars and directors start to cry foul about home distribution diminishing their financial returns, could this slow the streaming migration — for now? Movie fans loving the convenience of watching fresh releases from home won’t be happy. But you can be sure that AMC Entertainment Holdings (NYSE:AMC) and its smaller rivals wouldn’t mind if Johansson comes out on top here, and film studios return to exclusive theatrical release windows.
We all know how this movie ends
A possible retreat in the streaming revolution won’t last long. Studios know how important it has been for the success of their streaming services to get movies streaming on their platforms as soon as possible. However, just the whiff of a break could get the shares of multiplex operators moving in the right direction again.
AMC remains one of this year’s biggest gainers, but the stock has surrendered nearly half of its value since peaking in early June. Potential catalysts to reverse the recent sell-off have sputtered. Box-office receipts have been contracting in recent weekends instead of expanding. However, studios going back to opening only in movie theaters — whether to appease top talent or to give exhibitors a better shot at surviving — could send AMC and its peers moving in the right direction.
Clearly things aren’t working so well at the multiplex. Black Widow‘s opening weekend of $80 million in domestic ticket sales was the country’s best showing since 2019, but it was a weak debut for a high-profile Marvel movie, even if you tack on the $60 million Disney collected through Premier Access on Disney+.
In the near term, it may not seem to matter. A surge in COVID-19 cases caused by the pesky delta variant is going to keep theater audiences light through at least the balance of the summer. Digital delivery is necessary again. The key here is that if Johansson’s legal battle is successful — or at least costly to Disney — it could shift the thinking of studios on digital distribution, at least until they go through the pipeline of films negotiated based on pre-pandemic norms.
It’s not every day that entertainment stocks are the entertainment, but this legal battle bears watching. There are some beefy implications for investors in movie studios, streaming services, and multiplex operators. Keep watching until the end credits start to roll.
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.
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