The following is a copy of a news article published on August 16, 2017 by the Wall Street Journal, containing quotes from Ted Farnsworth, the Chief Executive Officer of Helios and Matheson Analytics Inc. (“HMNY” or the “Company”), and Mitch Lowe, the Chief Executive Officer of MoviePass Inc. (“MoviePass”):
MoviePass Says Success Will Convince Theater Industry to Cooperate
By Ben Fritz on August 16, 2017 (2:59 p.m. ET)
A digital ticketing company that drew the wrath of America's largest theater chain said it plans to quickly amass subscribers and use the resulting market power to convince the film industry to work with it. MoviePass, which on Tuesday slashed the monthly price it charges subscribers to see up to one movie a day to $9.95 from between $40 and $50, sees itself as "friend, not foe" to theater chains like AMC Entertainment Holdings Inc., amc o.s6% A the head of its parent company said in an interview. AMC is concerned that MoviePass's new pricing undervalues moviegoing and is "unsustainable," since the latter company has said it would pay full price for each film its subscribers see, via debit card systems. "In the end if we end up having to subsidize overusage who is winning?" responded MoviePass Chief Executive Mitch Lowe. "It's the theaters and studios." Nationwide, movie tickets cost an average $8.95, according to the National Association of Theatre Owners; in some large cities they can top $15. AMC said Tuesday that it is working with attorneys to try to block MoviePass subscriptions from being used at its more than 600 U.S. theaters. Mr. Lowe said MoviePass's plan is looking to build a large subscriber base and then use it as leverage to negotiate partnerships with theaters and studios. MoviePass could negotiate for a cut of popcorn and soda its subscribers buy, Mr. Lowe suggested, or could join with studios on marketing campaigns to drive attendance to certain releases. In addition, MoviePass would look to sell digital copies of movies and other related products to its customers, he said. Subscribers typically see twice as many movies as they previously did, Mr. Lowe said, which would generate more ticket and concession sales, benefiting the entire movie industry.
A spokesman for AMC said the chain, controlled by China's Dalian Wanda Group Co., had no comment beyond its Tuesday statement, in which it said: "Promising essentially unlimited first-run movie content at a price below $10 per month over time will not provide sufficient revenue to operate quality theaters." Mr. Lowe said he spoke Tuesday to executives from Regal Entertainment Group and Cinemark Holdings Inc., the nation's second- and third-largest theater chains, and that they were supportive of MoviePass. Representatives of both companies, which haven't commented on the MoviePass offer, didn't immediately respond to requests for comment.
Shares of AMC declined 2.5% Tuesday after MoviePass's price-cut announcement and shares of Regal and Cinemark each fell about 1%. MoviePass, which was founded in 2011, on Tuesday also said it had agreed to sell a 51% stake in itself to technology company Helios and Matheson Analytics Inc. for up to $27 million and that it plans to offer public shares next March. Ted Farnsworth, Helios' CEO, said MoviePass may look to raise private funding as well in order to cover the costs of growing its business. "I always said to Mitch that if we get subscribers we're going to have people throwing money at us," said Mr. Farnsworth. "Every time you do disruption, people will think you might be a little bit foolish in the beginning." Messrs. Farnsworth and Lowe declined to specify how many subscribers they added after announcing the huge price cut on Tuesday. Demand was so high that MoviePass's website stopped working at times. Previously, the company had about 20,000 subscribers. "We're way, way, way, way, way beyond that now," said Mr. Farnsworth.
—Erich Schwartzel contributed to this article.
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