The release of another blockbuster film has been delayed. Studios have another option for movie releases, however, even if they seem reluctant to use it.
Warner Bros., the Hollywood studio owned by AT&T (ticker: T), on Monday delayed the premiere date of Tenet, its action-thriller directed by Christopher Nolan, until further notice due to a surge in Covid-19 cases across the U.S. The film was slated to premiere on Aug. 12 after being delayed twice. Warner and other studios like Walt Disney (DIS) have delayed the release of other films such as Wonder Woman 1984, Mulan and Black Widow.
These indefinite delays could cause Warner to skip a theatrical release for Tenet altogether, LightShed Partners’ Richard Greenfield wrote in a Tuesday report. Instead, Warner should premiere the movie on AT&T’s recently launched subscription streaming service HBO Max, he wrote.
“There simply does not appear to be a way to safely open theaters before a vaccine is widely available. Movie studios need a new distribution strategy and fast,” Greenfield said.
The current health situation leaves studios with two choices, Greenfield said. Hollywood can delay releases into 2021 in hopes of a vaccine or shift releases to their online, subscription-based streaming services. Greenfield added that, even when theaters were open, social distancing guidelines would lead to lower box office numbers and selling the rights for these films to streaming giants like Netflix (NFLX) or Amazon.com (AMZN) is less compelling.
HBO Max, which launched in May, hasn’t been as successful as the streaming veterans due to a lack of original content, according to Greenfield. The fledgling streaming platform has also suffered from shutouts by Roku (ROKU) and Amazon Fire TV devices.
Debuting Tenet on HBO Max “could be just the power move WarnerMedia needs right now,” Greenfield said, noting recent successful moves by competitors like Disney releasing Hamilton on its streaming platform.
But such a move is easier said than done.
Warner told Barron’s that Tenet will not be released on HBO Max. “We’re grateful for the support we’ve received from exhibitors and remain steadfast in our commitment to the theatrical experience around the world,” Toby Emmerich, chairman of Warner Bros., said in a statement Tuesday to Barron’s. “Our goals throughout this process have been to ensure the highest odds of success for our films while also being ready to support our theater partners with new content as soon as they could safely reopen.”
Greenfield also acknowledged releasing the Nolan film on HBO Max would require Warner to renegotiate contracts with distributors. He also said that the current subscription fee level for HBO Max—at $15 a month—would not be sustainable to produce big-budget films, especially if a theatrical releases are abandoned in the future.
Warner’s parent, AT&T will release its second-quarter earnings on Thursday pre-market. Management discussion on the initial response from HBO Max users will be a focus among other telecom and broadcast conglomerate segments.
AT&T stock closed down 0.1% to $30.21 Wednesday, while the S&P 500 was up 0.6%.
Email: editors@barrons.com
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