Bloomberg News

Universal Pulls Video Plan for ‘Tower Heist’ After Protests

October 12, 2011

(Updates closing stock prices.)

Oct. 12 (Bloomberg) -- Universal Pictures abandoned a plan to offer the Eddie Murphy comedy “Tower Heist” on pay television three weeks after its theatrical release, yielding to a threatened boycott by exhibitors.

Universal delayed the planned experiment to offer the film for $59.99 to cable customers of parent Comcast Corp. in Atlanta and Portland, Oregon, the studio said today in an e-mailed statement. That’s earlier than the usual three to four months after the start of a theater run.

Theater chains operating 12 percent of U.S. screens, including Cinemark Holdings Inc. and National Amusements Inc., controlled by Viacom Inc. Chairman Sumner Redstone, said they would boycott the film. Studios have been experimenting with so- called premium video-on-demand by releasing some films to television early to compensate for declining DVD sales.

“Universal continues to believe that the theater experience and a PVOD window are business models that can coincide and thrive and we look forward to working with our partners in exhibition to find a way to experiment in this area in the future,” the studio said.

Theater operators are concerned earlier TV releases will cut into ticket sales. The film, also featuring Ben Stiller, is scheduled to be released in theaters on Nov. 4.

“We feel it will damage the exhibition release,” Rafe Cohen, president of Sherman Oaks, California-based Galaxy Theatres LLC, said in an interview yesterday. “The next step would be to cut the price until they get takers.”

Galaxy, a closely held company, operates 108 screens in 10 locations, including Austin, Texas and Las Vegas.

Talks With Theaters

The decision to delay the test came after discussions between the studio and exhibitors, John Fithian, president of the National Association of Theatre Owners, said in a statement.

“They have been engaged with individual exhibitors on this test, and while it was something that many theater owners could not ultimately support, the open and collaborative nature of the dialog is appreciated,” Fithian said.

Comcast, based in Philadelphia, is the largest U.S. cable- TV service, and acquired control of NBC Universal, parent of Universal Pictures, in 2009.

Comcast rose 2.7 percent to $23.60 at the close of trading in New York. The stock has gained 7.4 percent this year. Cinemark, based in Plano, Texas, gained 2.1 percent to $20.13.

--Editors: Rob Golum, Anthony Palazzo

To contact the reporter on this story: Michael White in Los Angeles at mwhite8@bloomberg.net

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


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