AMC Entertainment, the world's largest movie theater operator, said on Tuesday it would no longer play any Universal Studios films in any of its theaters globally.
On Tuesday, The Wall Street Journal reported that the animated sequel to "Trolls" had been more profitable for Universal than the original because of its on-demand release.
The Journal quoted NBCUniversal Chief Executive Officer Jeff Shell as saying he expects to release movies simultaneously in theaters and direct-to-home formats.
Universal Studios is owned by NBCUniversal, a subsidiary of Comcast. AMC has 1,000 theaters across the globe.
"AMC believes that with this proposed action to go to the home and theaters simultaneously, Universal is breaking the business model and dealings between our two companies," AMC Chief Executive Officer Adam Aron said in a letter addressed to Universal Studios Chairman Donna Langley.
With movie theaters worldwide shuttered since mid-March due to the coronavirus pandemic, AMC said the action was effective from Tuesday and would apply as and when its theaters reopen.
Universal released the following statement to CNBC after AMC said it would not play any Universal Studios films in any of its theaters globally:
"Our goal in releasing Trolls: World Tour on PVOD was to deliver entertainment to people who are sheltering at home, while movie theatres and other forms of outside entertainment are unavailable. Based on the enthusiastic response to the film, we believe we made the right move. In fact, given the choice of not releasing Trolls: World Tour, which would not only have prevented consumers from experiencing the movie but also negatively impacted our partners and employees, the decision was clear," the statement said. "Our desire has always been to efficiently deliver entertainment to as wide an audience as possible. We absolutely believe in the theatrical experience and have made no statement to the contrary. As we stated earlier, going forward, we expect to release future films directly to theatres, as well as on PVOD when that distribution outlet makes sense."
Universal added that the company looked forward to having "additional private conversations" with AMC but was "disappointed by this seemingly coordinated attempt ... to confuse our position and our actions."
Major film releases have been postponed as theaters across the United States have shut down as part of the preventive measures taken to stop the spread of the novel coronavirus.
The three main movie theater chains - AMC, Regal and Cinemark - have said they do not expect to reopen until late June or July.
Some films, including Universal Pictures animated "Trolls World Tour," have been released directly to streaming platforms or video on demand. Universal will do the same with the upcoming Judd Apatow comedy "The King of Staten Island".
Comcast owns NBCUniversal, which is also the parent company of CNBC
CNBC's Sarah Whitten contributed to this story