As you may have noticed Patrick von Sychowski is in Amsterdam attending IBC which means you must suffer my attempt at putting together a Daily Cinema Digest. Be sure to check out all of Patrick’s coverage of IBC after catching up on the day’s (or in this case, week’s) cinema news.
Hey, remember when North American exhibitors built way too many multiplexes during the 1980′s and 90′s over extending themselves to such a degree that during the early 2000′s the industry began to consolidate with cinema chains buying each other out or merging? Well, it seems this is a trend that might be hard to avoid. India has been going through a huge multiplex boom over the past decade and now it seems has entered the consolidation phase of the business cycle. Rumors are afoot that Carnival Films is in negotiations to acquire the majority of Reliance MediaWorks theatre chain Big Cinemas. This would be the third such merger or acquisition for India’s exhibition industry in as many months:
Inox Leisure, India’s second largest multiplex operator, acquired Delhi-based Satyam Cineplexes Ltd for nearly Rs.240 crore, paying Rs.182 crore in cash and taking over its debt in a deal that expanded Inox’s presence to 50 cities, with 91 multiplexes and 358 screens; and Housing Development and Infrastructure Ltd (HDIL) sold its multiplex business Broadway Cinemas to Carnival Cinemas for an undisclosed amount.
If the deal goes through Carnival would end up with 280 screens. That really seems to be one of the main reasons for all the mergers and acquisitions; more screens a bigger market share of the box office and thus more leverage when negotiating with film producers and distributors over film rental.
According to the omnipresent anonymous source “familiar with the situation” Reliance isn’t looking to completely exit exhibition:
“The contour of the final transaction is yet to be arrived at, but Big Cinemas will not entirely exit the business. It will form a strategic alliance with an existing cinema exhibition chain that will run the daily operations and it will receive proportionate revenues from them as part of the partnership. Reliance MediaWorks will also invest in the venture as part of its growth strategy because it believes there is growth potential in this business.”
Don’t expect the consolidation of the Indian exhibition industry to slow down anytime soon. Jehil Thakkar, head of the media and entertainment practice at KPMG, told LiveMint:
We certainly do see the cinema multiplex industry continuing to consolidate inorganically as the real growth opportunity lies there… Most of the big players are seeking inorganic growth options and scale is a very important part of this business.”
I just love that word “inorganic”. Do you think since organic products usually cost more at stores that inorganic ones would cost less? If so, maybe Carnival could get a discount on Big Cinemas since it would technically be considered “inorganic growth”. LINK
South Korea – The sale of exhibition circuits isn’t limited to India. Over in South Korea an investment group is looking to cash out on their seven-year investment in Megabox. Korea Multiplex Investment Corp.
Inside, though anonymous, sources have told various media outlets that backers Korea Multiplex Investment Corp., whose shareholders include the National Pension Service, Public Officials Benefit Association and Military Mutual Aid Association, are pushing for a sale of the company and have been reaching out to potential buyers.
Megabox is one of South Korea’s largest multiplex operators controlling 21% of the screens in the country as of last year. That figure is third to CJ CGV which operates 43% of screens and the film division of Lotte Shopping Company which controls 32%. Korea Multiplex, which owns 50% of Megabox (Jcontentree Corp. holds a 46% stake in the exhibitor), is hoping the circuit will sell for as much as 13 times its current earnings.
In 2013 Megabox netted KRW 25.6 billion (USD $24,745,216) on KRW 206.1 billion (USD $199,218,321) in revenue. LINK