A24's extra 10 points are worth $19.75m on Backrooms alone

Ten percentage points does not sound like the sort of thing you lose a cinema chain over. On Backrooms it was worth $19.75m.

That figure sits underneath the row between A24 and two of the American circuits that had been playing its films for years. Exhibitors say A24 used to command roughly 40 to 45 per cent of every ticket sold to one of its releases, and that since the summer it has been asking for a cut in the low to mid 50s, The Ankler reported this week. Apply the ten-point move to the $197.5m Backrooms took in the United States, a domestic total The Numbers records to the dollar as $197,523,512, and you get $19.75m. The film cost $10m. A24 is asking the cinemas that played it for nearly twice its production budget, retrospectively, in principle, on everything that comes next.

The worldwide number is less settled than the coverage suggests. Variety reported the film passing $400m globally this month, on $202.57m from overseas; The Numbers has the international half at $195.6m and the worldwide total at $393.2m. Nobody disputes the American figure. That is the only one this fight is actually about, because film rental is negotiated market by market and the chains arguing with A24 are all in one of them.

What the chains are actually being asked to give up

Turn the arithmetic round and the exhibitor's side of it stops looking like stubbornness. A cinema that kept 57 per cent of the gross keeps 47 under the new terms. That is 10 points off 57, a 17.5 per cent cut in what the building holds on to per ticket, and it lands on the one part of the business with no upside attached, because the popcorn margin that actually pays for the projectionist does not improve when the film rental goes up.

A regional programmer quoted by The Ankler put it at street level: "45 versus 53 does mean a lot to us." The same programmer drew the comparison that matters. "Disney can demand higher prices because they make us money all the time. A24 can't do that."

That is the argument, entire. Terms are not a reward for the year you just had. They are a price for the twelve months in front of you, and a chain signing a distributor deal is buying a schedule, not a trophy.

Four films, two chains, one quarter

The dispute has been running quietly since the early summer and has now kept four A24 titles off screens.

Marcus Theatres, the Milwaukee company that runs 975 screens at 77 sites across 17 states, declined Tony, The Invite and Onslaught, calling A24's proposed terms "economically unviable" in a statement on 16 September. The two sides came to "mutually agreeable" terms the following day, the Milwaukee Journal Sentinel reported, after a standoff of several months. Neither side said what the new split is. Nobody ever does.

Harkins has not settled. The Arizona chain, which lists 33 locations across Arizona, California, Colorado and Oklahoma, pulled Tony in the week of 10 September and cancelled its Primetime bookings, and it has taken every forthcoming A24 release off its schedule. Michelle Bolden, a Harkins public relations specialist, told the Arizona Republic: "Unfortunately, we were not able to secure mutually agreeable terms with A24 to present their films at this time. We are disappointed that this is the outcome and we apologize for the inconvenience this may cause our guests." A24 declined to comment to The Ankler.

At the point both chains were out, an A24 release was unavailable at more than 110 American cinema sites. That is now down to 33, and those 33 belong to the chain least likely to blink.

Harkins has done this before, and won

The company's history is the part A24's dealmakers should have priced in. Under Dan Harkins the chain sued the major studios in an antitrust action in the 1970s over what it considered anticompetitive booking practices, and won, which is the reason it became the dominant circuit in its region rather than a casualty of one. In the 1990s it fell out with New Line Cinema and sat out Austin Powers before the two settled. M.V. Moorhead, the film critic at Phoenix Magazine, summarised the record to KJZZ last week: "Dan took on a Goliath and won."

A chain with that in its corporate memory does not treat a boycott as a crisis. It treats it as a negotiating position it has used successfully twice.

Why A24 thinks it has earned it

The case for the studio is real, and it is recent. A24 finished the summer fourth among distributors on $237m in American grosses, ahead of Paramount on $192m and Warner Bros on $165m, and behind only Universal, Sony and Disney. An independent outgrossing two majors across a summer is close to unprecedented, and it happened in a season we covered at the time as a story about supply rather than taste.

Behind the numbers there is a company valued at $3.5bn with Josh Kushner's venture money inside it, and venture money asks what the margin looks like at scale. Ten points across the whole of that $237m summer is $23.7m. Now imagine the answer to a board that has just watched a $10m film return roughly forty times its cost.

Here is the problem with that answer. Backrooms is one film, and the terms A24 wants apply to a slate that includes several that will open to a fraction of it. The majors charge what they charge because a chain that refuses them loses a year of tentpoles, not a weekend. A24 wants that grip's price without the grip.

The test arrives on Friday

Primetime, Lance Oppenheim's $14.5m film about the To Catch a Predator era with Robert Pattinson as Chris Hansen, opens across America on 25 September. It premiered in competition at Venice on 5 September and holds 89 per cent on Rotten Tomatoes from 105 reviews. It is the first A24 wide release to open with a significant regional chain refusing, on principle, to sell a ticket to it.

That is the thing worth watching this weekend. Open strongly without Harkins and A24's asking price is vindicated, and every other circuit in the country reads the result off the grosses. Open soft across the Southwest and those 33 locations turn out to have been worth more than ten points.

A24 has Club Kid dated for 6 November and The Debut for 11 December, with Nathan Fielder's Elizabeth Holmes documentary still undated. Whether Harkins lists Club Kid when tickets go on sale in late October is the next thing either side has to decide.