Mike Fleming

The country’s two largest theatrical exhibition chains, AMC and Regal, this morning officially launched Open Road, a venture that will acquire and distribute films that can play in wide release on about 2000 screens. Distribution veteran Tom Ortenberg will run the company. He expects to have three pictures out starting this fall. “Once we’re up and running, we will be distributing 8 to 10 films per year, and possibly more,” Ortenberg said.

The move had been expected since the Sundance Film Festival in January. Open Road joins a crowding field of companies targeting wide-release finished films. What’s unusual here is that two theater chains are behind what Ortenberg termed a “straight content play.” The two entities control between 5,000 and 6,000  venues each in the U.S. (Regal is slightly larger) and between them are responsible for about 31% of the theaters in the U.S., doing about 45% of weekly business. Theater chains like AMC and Regal have railed as big studios continue to shrink theatrical windows on their event films. This venture gives the chains a little opportunity to push back: When those same studios supply stinkers that barely pack theaters or after their big films are mostly played out and hanging on to squeeze out those final drops of theatrical revenue, AMC and Regal can conceivably allocate screens to its own product. Just recently, AMC and Regal were among the chains that said they would not give screens to films that DirectTV wants to show on VOD four to six weeks after theatrical release.

While the largest allocation of P&A is TV commercials, Open Road product has the potential benefit of in-house promotion for films that will get at least 25% of theater penetration in AMC and Regal theaters. Ortenberg said he was unsure exactly how those promotional opportunities would manifest themselves.

“At its core, Open Road is a content play that recognizes that in many weeks of the year, AMC and Regal have excess capacity in their theaters,” Ortenberg told Deadline. “What’s better than to address this by filling those screens with great movies and stories looking for distribution? These films will be playing in all theater chains nationwide, and we will be competing for the same films that other midsize distribution companies go after. We will be an acquisitions-based company. We will not produce, we will not develop, but we are open to pre-buying from script stage or acquiring a completed film. Within those parameters, we will look for films we can acquire at an attractive price and market and distribute in a cost-effective manner to as broad an audience as possible. My experience shows those pictures will be available.”

Recent successes that would fit the model of films Ortenberg and his small team will look for include the remake The Mechanic or The Last Exorcism. “It include all genres, from action and thrillers, dramas and comedies, and a little bit of horror but probably not an abundance of it,” he said.

Open Road adds another player to a distribution field targeting wide-release films. Others include the Peter Schlessel- and Bob Berney-run shingle FilmDistrict, a reinvigorated  Weinstein Company, Focus Features, Lionsgate, Summit Entertainment, Sony’s Screen Gems and Relativity Media. Distributors like Roadside Attractions and Anchor Bay have been getting more ambitious in their acquisitions as well. Dealing in 2000-screen releases isn’t cheap; the P&A costs on each are a minimum $20 million, distributors say. Some of the companies engage in production, but Open Road’s intention to get involved in script-stage pre-buys puts it in direct competition with them. Makers of those films have received less in minimum guarantees due to a bottoming-out in the business. More bidders means a more competitive marketplace.

Ortenberg began his movie career in the Columbia Pictures back office in San Francisco in 1985 as an assistant cashier. Over the years, he held the title of president of distribution and marketing for Hemdale, and then started the Los Angeles office of Lionsgate where he worked 13 years. Ortenberg left to  serve a short stint at The Weinstein Company as president of theatrical films before starting One Way Out Media, a consulting company that had clients including River Road’s Bill Pohlad. Ortenberg’s name was often mentioned for distribution head jobs (it was once rumored he might run River Road after Berney left, but Pohlad has yet to commit to another run at a distribution company). Ortenberg will shutter the consulting company after being sold on the Open Road business plan.

“This was the first distribution opportunity that has excited me since I went off on my own,” Ortenberg told me. “[AMC president/CEO] Gerry Lopez and [Regal CEO] Amy Miles and their respective teams, these are people I’ve known for a long time. The idea of two large companies getting into the distribution business like this presents a model that is very workable, with a great chance for success. Being co-owned by AMC and Regal presents Open Road with some strategic advantages. The business model is built on low overhead, keeping acquisitions and P&A low. We will have one office in Los Angeles, and there will be no development and production teams. There are plenty willing to finance independent motion pictures, some based on foreign pre-sales, some financed by high net worth individuals. We will rely on them and we will come in as a low overhead company that will pay low minimum guarantees and do a strong job in distribution.”

Before 1950, major studios had controlling interests in theater chains until the Supreme  Court broke that stranglehold. The co-mingling between suppliers and exhibitors continued sporadically since those restrictions were relaxed in the 1980s. Viacom owner Sumner Redstone separately owns National Amusements, Paramount and Warner Bros. had interests in Mann Theaters, Sony once owned Loews, Disney once partnered with Pacific Theatres in the El Capitan and The Crest in Hollywood and Westwood, and Universal had an interest in Cineplex Odeon. Mark Cuban and Todd Wagner have their art house chain Landmark Theaters and their Magnolia Pictures, HDNet Films and 2929 Productions film shingles.

Below is the official announcement:

KANSAS CITY, Mo. & KNOXVILLE, Tenn.–(BUSINESS WIRE)–AMC Entertainment Inc. (AMC) and Regal Entertainment Group (Regal), the two largest theatrical exhibition and entertainment companies in the United States, announce today the launch of an innovative distribution company, Open Road Films.

“Open Road Films will distribute these movies to theatres across the United States, playing them well beyond Regal and AMC’s screens.”

Open Road Films will be a dynamic acquisition-based domestic theatrical distribution company that will concentrate on wide-release movies.

“As major studio releases have declined in recent years, Open Road Films will fill an important gap that exists in the market today for consumers, movie producers and theatrical exhibitors,” said Gerry Lopez, chief executive officer and president, AMC. “We are committed to providing a wide array of movies – year round – that appeal to all of our diverse groups of guests. Open Road Films will provide a broader availability of movies to consumers.”

“Regal and AMC are in a unique position to provide Open Road Films with strategic access to theatrical exhibition, enabling more great stories to reach the big screen,” said Amy E. Miles, chief executive officer, Regal. “Open Road Films will distribute these movies to theatres across the United States, playing them well beyond Regal and AMC’s screens.”

Tom Ortenberg has joined Open Road Films as its Chief Executive Officer, bringing more than 25 years of movie marketing, distribution and acquisition experience to the company. Ortenberg has an esteemed track record in delivering successful motion picture content to theatres. After opening Lionsgate’s first office in Los Angeles in 1996, Ortenberg served as President, Theatrical Films, while overseeing the release of a diverse slate of films including Crash, Monster’s Ball, 3:10 to Yuma, My Bloody Valentine 3-D, The Forbidden Kingdom, Open Water, Hostel,” the Tyler Perry film franchise and the Saw horror movie franchise. In 2009 Ortenberg served as President of Theatrical Films for The Weinstein Company, working closely with Quentin Tarantino on the marketing and distribution of Inglourious Basterds, Tarantino’s highest grossing movie ever at the box-office with $120 million in theatrical receipts. Most recently Ortenberg founded a broad-based entertainment consulting firm, One Way Out Media.

“Open Road Films will approach movie distribution with discipline, focus and innovation,” said Ortenberg. “With strong support from exhibition we will market and distribute wide-release motion pictures in an effective, cost-efficient manner, playing in all theatre chains across the country” said Ortenberg.

Based in Los Angeles, the company will distribute approximately eight to 10 movies per year and expects to release its first film later this year.