Daily Cinema Digest – Wednesday 4 March 2015

Nordic Cinema Group

No sooner has Odeon reminded the world that it is (still) for sale then Vue lets slip that it is interested in buying Nordic Cinema Group.

British cinema operator Vue Entertainment is preparing a bid for Nordic peer Nordic Cinema Group, majority-owned by listed Swedish private equity firm Ratos, The Sunday times reported without naming sources.

Nordic Cinema had sales of 2.6 billion Swedish crowns ($312 million) and earnings before interest, tax and amortisation (EBITA) of 366 million last year.

Citing analysts, The Sunday Times said Nordic Cinema Group could be worth between 350 and 400 million pounds ($617 million).  LINK

Carmike Cinema logo

Carmike has released its quarterly results and while Q4 was down in line with the rest of the industry, analysts are optimistic about 2015.

Carmike Cinemas (NASDAQ:CKEC) posted its quarterly earnings results on Monday. The company reported ($0.04) earnings per share (EPS) for the quarter, missing the consensus estimate of $0.20 by $0.24, American Banking and Market News reports. The company had revenue of $185.40 million for the quarter, compared to the consensus estimate of $191.00 million. During the same quarter in the previous year, the company posted $0.24 earnings per share. The company’s revenue for the quarter was up 7.9% on a year-over-year basis.

Several analysts have recently commented on the stock. Analysts at Wedbush upgraded shares of Carmike Cinemas to a “buy” rating and set a $36.00 price target on the stock in a research note on Wednesday, February 25th. Analysts at Zacks upgraded shares of Carmike Cinemas from an “underperform” rating to a “neutral” rating and set a $28.60 price target on the stock in a research note on Wednesday, February 11th.  LINK

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Breaking News: Police Find More Stolen Digital Cinema Equipment Belonging To Quanta DGT

Ana Cláudia Medina of DECO

Ana Cláudia Medina of DECO at the warehouse where the stolen digital cinema equipment was discovered.

It may be proving easier to steal 121 auditoriums worth of digital cinema equipment than it is to actually hide or fence the stolen devices.  Early Monday morning Brazilian law enforcement discovered a warehouse in Campo Grande, Brazil filled with some of the digital cinema equipment stolen from Quanta DGT in early February.

The Delegacia Especializada de Combate ao Crime Organizado (DECO) or Special Delegation to Combat Organized Crime, had been investigating the crime since February 19th when the goods would have entered the state of Mato Grosso Do Sul. According to Ana Claudia Medina, the DECO delegate in charge of the investigation, suspicion centered on the warehouse located at 4466 Rua Filomena Segundo Nascimento, the main street in Jardim Itamaracá a section of Campo Grande, the state’s capitol.

Search and arrest warrants were issued, before DECO moved in to search out the stolen goods, though no arrests were made. The owner of the warehouse where the equipment was found was unaware his facility was being used for criminal activity, having only recently signed a lease agreement with the alleged perpetrators. “He has testified and was discarded as a member of the gang,” said Medina of the warehouse owner. “Arrest warrants have already been ordered,” she added, though would not provide further details as the investigation is ongoing.

Authorities counted up to 31 Barco projectors in the warehouse and are awaiting “experts”, presumably from Quanta DGT to arrive and examine the equipment before tallying up the number of devices that had been located. Medina said, “There is at least BRL R$5 million (USD $1.71 million) in merchandise. Witnesses said they saw at least three trucks doing the downloading. I believe that the other equipment must be in another state.”

Medina’s theory is likely correct. In mid-February, roughly 44 screens worth of digital cinema equipment turned up in the back of a semi-truck near Morro do Papagaio in Belo Horizonte, the capital of Minas Gerais, one of Brazil’s 26 states. In that particular instance the discovery of the stolen devices occurred by happenstance after police pulled the truck over during a routine traffic stop. The driver of the truck managed to elude captivity.

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The Silver Secret of Korea’s Most Successful Cinema

Hollywood Silver Cinema

Most multiplexes in South Korea see occupancy of just 20% to 30%, but one cinema has figured out the secret of selling out almost every show. It is a model that is now spreading all across Korea as other cinemas jump on the trend. It is also one that will have increasing relevance in Japan, Europe and the United States in the coming years.

Hollywood Silver Cinema does not make much of an impression from the outside. The single-screen is a small (just 300 seats), old fashioned cinema on the fourth floor of the Nakwon Arcade located in Seoul’s old Jung-gu district, on the other side of the river from the ritzy Gangnam-gu district that Psy immortalised in his song and music video. Yet according to the cinemas CEO Kim Eun-ju its average seat occupancy reaches a staggering 80% to 90%.

The cinema opened in 2009 as a social enterprise, where previously the Hollywood Theatre attracted young Koreans with American blockbusters. The cinema still shows Hollywood blockbusters every day, but not “American Sniper”, “The SpongeBob Movie” or any Marvel super heroes.

Speaking to AsiaOne Entertainment, CEO Kim explains what films they show:

“The films we select are mostly from the 1940s to ’70s that were ranked first to fifth at the box office at the time,” she said.

Past selections have included “Gone with the Wind” (1939), “Ben-Hur” (1959), “Dr. Zhivago” (1965) and “Cinema Paradiso” (1988).

“We do show recent releases from time to time. Films that we think could appeal to senior citizens such as ‘My Love, Don’t Cross That River‘ (2014) or ‘Masquerade‘ (2012).”

The ‘silver’ in the cinema’s name does not refer to the screen (it doesn’t show any 3D films), nor the nitrate in the 35mm print stock but to the typical patrons. The only fifty shades of grey you will see in this cinema is the hair colour of the audience (those that are not bald yet). But the ‘silver appeal’ is now rapidly spreading throughout Korea.

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Daily Cinema Digest – Monday 2 March 2015

Volfoni logo

3D equipment maker Volfoni is looking to capitalise on many of RealD’s 3D lease contracts coming to an end in the next 12-24 months by ramping up production capacity in China and France.

After just 15 months since its launch at CineAsia 2013, the SmartCrystalTM Diamond has been the number one selling Hi-Lef 3D system. With over 300 units shipped, this represents one installation every 36 hours somewhere on the planet. Backed by this success, Volfoni proudly announces today that it has opened a second factory for the production of the SmartCrystalTM Diamond in China. Volfoni repeats it successful roll out of production processes that have been developed by its R&D and Production team in Nice, France.

“The unique compact Triple Beam Technology from Volfoni is extremely well adapted for mass production without any compromise on quality”, says Jérôme Hamacher, Chief Operating Officer of Volfoni.

The new Volfoni-Factory will be located in Qingdao, the upcoming Hollywood of China.  LINK

Alejandro Ramirez Magana Cinepolis

India – The Economic Times interviews the CEO of Kinepolis about the company’s expansion in India.

Cinepolis has been in India for about 7 years but has only 194 screens. You expanded faster in other countries. What’s holding you back?

Of the 12 markets we are in, India is the most challenging for business because of the really long time it takes to get permits and licences, high cost of real estate, over regulation in many areas, high taxes and high entertainment taxes across many states. We have never faced entertainment taxes above 16% anywhere in Latin America because we only pay VAT or GST. Whereas here, we pay up to 68% taxes in some states. So, it’s a challenge. In some ways, India is also more protectionist than other countries. There are more barriers to tariff and non-tariff to trade so when you add it all, it becomes a more challenging business. But I see a lot of optimism with the new government.

Globally, growth for Cinepolis has been organic. But in India you have acquired Fun Republic. Why the change in strategy?

We are going to continue with our organic growth strategy, which has always been our default strategy in every market. We have grown to be the fourth-largest, mainly through our organic growth. In India, inorganic does make more sense because of many reasons like long lead time for mall development and a long list of licences to get operational. This is the reason why we acquired Fun, as it made strategic sense.  LINK

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Daily Cinema Digest – Friday 27 February 2015

NCM logo

US advertising major National CineMedia has published its quarterly and full year results. Q4 was up slightly but the year as a whole was down, in line with box office.

Total revenue for the fourth quarter of 2014 increased 0.3% to $123.1 million from $122.7 million for the comparable quarter last year. Excluding revenue from the Fathom Events division that was sold in December 2013, advertising revenue increased 13.9% from $108.1 million for the fourth quarter of 2013. Adjusted OIBDA excluding Fathom Events increased 22.3% to $72.5 million from $59.3 million for the fourth quarter of 2013. Net income for the fourth quarter of 2014 was $8.1 million, or $0.14 per diluted share compared to net income of $19.0 million, or $0.32 per diluted share for the fourth quarter of 2013. Excluding $3.8 million in pre-tax costs associated with the proposed merger with Screenvision in the fourth quarter of 2014, the impact of the Fathom business on the fourth quarter of 2013 and 2014 and non-cash impairment charges in 2013, net income for the fourth quarter of 2014 would have decreased to $0.18 per diluted share, compared to $0.19 per diluted share, for the fourth quarter of 2013.   LINK

Vista Murray

Ticketing software major Vista Group saw sales grow 55% on the strength of major deals in China and the United States, while profits shrank less than forecast.

Net profit fell to $3.99 million, or 5.9 cents per share, in calendar 2014, from $5.71 million, or 9.76 cents a year earlier, beating its July prospectus forecast for $3.44 million, the Auckland-based company said in a statement. Revenue rose to $47.2 million from $30.5 million a year earlier, and ahead of the expected $45.2 million.

“It’s a really good solid performance from our Vista Entertainment Solutions,” chief executive Murray Holdaway said. “There were questions about whether we could grow that business and we’ve shown we could grow it.”  LINK

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UK’s Odeon For Sale Again – Third Time the Charm?

Odeon for Sale

Private equity group Terra Firma has announced that UK/European cinema chain Odeon & UCI Cinema Group (Odeon for short) is for sale. The merged exhibition operation failed to attract bidders willing to match the asking price in both 2011 and 2013 but Terra Firma’s chair Guy Hands is hoping that third time will prove the charm. Yet prospects for potential buyers are distinctly uncertain and Terra Firma has admitted that it may end up seeking a stock market listing instead.

Hands is quoted in a Reuters exclusive as saying:

“We will look to begin the process to sell Odeon towards the end of the year,” said Hands yesterday. “We are likely to appoint banks by May. Possible buyers could include US cinema groups or South American cinema firms, and private equity groups from Europe, the US, and China.”

The blunderbuss approach of targeting pretty much every potential buyer on the planet, while hedging your bets by reserving the right to do an IPO, could be faulted as demonstrating a lack of finesse or coherent sale strategy. It is also not clear what Terra Firma has to gain by announcing its intentions (emphasis on plural) this far in advance of even appointing a bank, unless it thinks it can instigate a feeding frenzy of suitors and bidders.

There is no asking price at this stage, but the figure of GBP £1 billion (USD $1.55 billion or EUR €1.36 billion) has been mentioned, which is less than the failed asking price of GBP £1.2 billion in 2011. The exhibitor has not reported income and profit for the 2014 financial year, but the 2013 figures reported last April saw profits before interest, tax and other charges decline 24% to GBP £69.2 million (USD $107.5 million) while sales shrank by 5% to GBP £706.7 million (USD $1.1 million).

A detailed valuation analysis of Odeon’s worth is beyond the scope of this article and the sort of things banks get paid big bucks to do. For a handy overview of the key metrics and tools for evaluation of (US) cinema exhibition operations we refer those interested to the Fulcrum Inquiries Valuation Guide: Movie Theaters. As a recent guide, Australia’s Hoyt’s was sold last year on undisclosed terms to a Chinese investor but had earlier been valued at AUS $900 million (GBP £473.9 million or USD $731 million) on the basis of revenue of AUS $550 million and profit of earnings before interest, tax, depreciation and amortisation of slightly more than AUS $80 million.

Using Hoyt’s as a model – not unreasonable, since the chain share many characteristics with Odeon – gives a valuation of somewhere between GBP £778 million to GBP £1.156 billion, which gives an average of GBP £967 million. Hands would be more than keen to round that up to a cool one billion pound sterling. But is Odeon worth it and who would buy it?

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China Cinema Digest – Thursday 26 February 2015

China Daddy Trip

The box office over Chinese New Year (CNY), traditionally always strong and devoted to domestic blockbusters, was up significantly this year to 350 million yuan (USD $56 million). The reason is attributed to the growth in the number of screens, which is set to cross 25,000 by early March.

Single-day box office close to 350 million yuan of the strongest in the history of blowout

According to the country’s major mainstream cinema to rough statistics, as of 24 o’clock last night, National City theater box office on February 19 of about 330 million yuan; not enough time plus part of the statistics reported missing at the box office and is expected to eventually accessible 350 million Yuan. The current average fare of less than 40 yuan Chinese cinema, which means the country on February 19, about 10 million people into the theater viewing. Day become the country’s largest cultural consumption events. At present, the Chinese New Year holiday is only just beginning; the law in recent years from a historical point of view, last week will be the peak viewing audience and box office visits will be started almost the same output, the seventh day before the expected total audience Visitors reach sixty-seven million.

After the seventh day, as some people go to work, there are some cities in the return of the road, the market heat will be reduced, but the Chinese New Year holiday to go to the fifteenth day after will be completely finished. So even after the seventh day trips Pujiang half the audience, to the fifteenth day before there would have been two or three million, add up to a hundred million.  LINK

Chinese New Year cinema

CNY is like a combination of Thanksgiving and Christmas, so it is an opportunity for families to spend time together – in silence in the cinema. Micro-channels providers were quick to offer impossibly cheap cinema ticket deals.

Tencent also launched “Please watch the movie universe” campaign, users can spend 188 yuan to buy a movie ticket prices, which contains 12 movie coupon, then like red envelopes will generally share this package to my circle of friends, or micro-channel group inside. Baidu also launched the “stand by 20 yuan,” online discount. After the user through the phone Baidu search for “movie tickets”, you will go directly to the page and the next one after purchase, minus $ 10, if paid in Baidu wallet, you can minus 10 yuan.

“Micro-channel supplier of low-fare passenger seemingly led the theater, but also to a certain extent, to mislead the consumer.” Hangzhou Golden Elephant cinema Weng Liping, general manager, told reporters that the general movie tickets cost 25 yuan to 35 between the yuan, too low prices make consumers think that the normal fare but became unreasonable.

Weng Liping believes that the Internet cheap tickets compress the cinema’s own space operations in the face of these ridiculously low fares, cinema launch membership immediately lost its appeal, is not conducive to get sticky customers.  LINK

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Daily Cinema Digest – Wednesday 25 February 2015

Box office 2015

Cinemas in North America are on track for a record year, with share prices of the major exhibitors already reflecting this box office optimism.

Analysts expect that box-office revenue this year in the United States and Canada will soar past $11.5 billion, outpacing the record $10.9 billion set in 2013, when blockbusters such as “Frozen” and the second “Hunger Games” movie debuted. And theaters already are performing more than 10 percent better than they were at this time last year, when films such as “The Lego Movie” became surprise hits.

The splashy start has pushed shareholders to invest in some of the country’s biggest theater chains: This year, AMC Entertainment‘s stock is up 24 percent, Carmike Cinemas is up 18 percent, Cinemark is up 17 percent and Regal Entertainment Group is up 11 percent.  LINK


Having previously tested the waters with “War Horse” in 4K, Sony has now partnered London’s National Theatre to beam four NT Live stage shows over the next 12 months in 4K. (Sadly for Cumberbatch fans, his “Hamlet” from the Barbican will only be in 2K.)

The initiative between Sony Digital Cinema, National Theatre Live and cinema chain Vue Entertainment International will kick off with the NT’s production of David Hare’s Behind the Beautiful Forevers, based on the book by Katherine Boo, directed by Rufus Norris and starring Meera Syal.

During the 12-month agreement, Vue customers at 83 sites across the country will exclusively be able to enjoy the productions projected in 4K – the highest quality currently possible with commercial digital cinema projection.  LINK

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AMC’s Premium Recliner Seating Plans Revealed

AMC recliner seats

A week after Regal announced that it plans to convert 25% of its screens to luxury seating, AMC has provided details about its plans for reseating. While the Chinese-owned exhibitor is not committing to a particular screen percentage target, the ambition is great for the cinema chain that in many ways kickstarted luxury reseating trend amongst the major exhibitors. AMC also continues to stress that reseating is only a part of its overall enhanced guest experience.

While attendance and box office was down for AMC in the forth quarter of 2014 (by 4.3% and 4.5% respectively), as well as for the year as a whole in line with the rest of the industry, the exhibitor managed to eek out an overall increase thanks to better concessions spend. AMC’s food and beverage (F&B) revenues per customer increased by 13.5% to $4.46 in the last quarter of 2014, a record high for the company.

Speaking at the Q$ 2014 earnings call (transcript by Seeking Alpha), CEO Gerry Lopez reminded the analysts listening in that when the reseating initiative was started three years ago it was not universally well received. “I don’t think I can use over an open line some of the adjectives and some of the names that we were called for this notion of taking two-thirds of the seats out of an auditorium,” he said. Yet today, “we’re seeing the same things that you are seeing which is everybody’s announcing them and everybody is doing them.”

At the end of the 2014 calendar year AMC had refitted or installed luxury recliner seats in 598 screens across 53 theatres, which represents an increase of 51% on the previous year. The reseated theatres are said to have delivered an increase in admissions of 13.8% on a per screen basis, compared to an average industry decline of 4.3%, in the last quarter of 2014.

Looking at the year as a whole, AMC claims that reseats delivered a 25.3% increase, compared to an industry slump of 5.6%. Taken together reseats thus delivered an 18 and 31 point outperformance for the quarter and the year.

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Daily Cinema Digest – Monday 23 February 2015


Imax’s quarterly earnings were down slightly, but ahead of Wall Street’s expectations. The company said that it is focusing on international expansion and expects to cross 1,000 screens this year.

IMAX Corporation signaled that international markets will be an ongoing focus in the years ahead as it announced fourth-quarter earnings on Thursday.

The Canadian company reported fourth quarter revenues of $102.4 million, down from $105 million during the same period in 2013.

Net income also took a dip in 2014, with the company reporting $22.5 million for the year compared to $27.8 million in 2013, while full-year 2014 revenues were $290.5 million compared to $287.9 million the year before.  LINK

American sniper

A troubling finding about Americans’ attitudes to movies in the cinema and at home, based on a CBS poll. The good news is that the younger demographic leans more towards cinema than the older, though only slightly.

2014 marked the lowest box office take for Hollywood in nearly two decades — a fact borne out by a recent CBS News poll, in which Americans, by a wide majority, say they watch more movies at home than at the theatre.

According to the poll, 84 percent of Americans say they watch more movies on a small screen at home, while just 4 percent say they watch more movies on a big screen at the theater. Ten percent say they watch about the same amount equally.

In fact, Americans say they prefer the small screen. A majority of 57 percent find watching a movie on a small screen at home to be more enjoyable, while just 36 percent say they prefer taking in a big-screen experience.  LINK

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