Earlier this month Israeli based Cinema City International became the third largest theatre chain in Europe when they acquired Palace Cinemas. The deal includes 8 multiplexes in the Czech Republic, 4 multiplexes in Hungary and 3 multiplexes in Slovakia. This gives CCI an additional 141 screens and makes it the largest exhibitor in Central and Eastern Europe.

The sale of Palace was somewhat inevitable. The chain was founded by Arthur Goldblatt and V.J. Maury and backed with investment from a private equity firm, Argus Capital Partners. Presumably Argus wanted to cash in on their more than ten year investment in Palace. It appears they should be very happy. CCI paid EUR €28 million (or USD $38.16) for Palace which is more than six times the company’s 2010 EBITDA. The acquisition was financed with cash CCI had on hand and existing credit lines.

The acquisition has a number of upsides for CCI, not the least of which is their entry into Slovakia. The company is also increasing it’s market share in both the Czech and Hungarian markets. CCI entered the transaction as the third largest exhibitor in the Czech Republic with 13% of the country’s admissions and 15% of its box office. After picking up Palace they’ll be the country’s largest exhibitor with 111 screens across 13 venues representing 40% of admissions and 45% of the box office.

The story is similar in Hungary where CCI will now operating 162 screens across 17 multiplex boosting their 36% share of admissions and 31% share of box office to 62% and 53% respectively. In total CCI now controls 866 screens over 90 multiplexes in seven countries, including Bulgaria, Israel, Poland and Romania. This allows them to leapfrog over Cineworld, which has 801 screens at 78 sites, to become Europe’s third largest exhibitor.

And CCI isn’t stopping with palace. They have an aggressive growth strategy with 35 multiplexes presently in development giving CCI an additional 360 screens. By the end of 2013 the company has plans to be running 1,260 screens.

Speaking about the acquisition of Palace, CCI’s CEO Moshe Greidinger said:

“In the next two years we plan to invest in the acquired cinemas to upgrade their standards and to add a sufficient number of digital screens to meet what we expect will be the ongoing demand for 3D digital movies. In the Czech Republic and in Hungary, we intend to integrate our organizations, applying our longstanding business model and management tools, which we anticipate will deliver meaningful added value to our overall operations in these markets. We believe this integration will also benefit our cinema advertising business.”

Indeed, digital could be the one hiccup for CCI. Palace has been rolling out digital cinema under a deployment agreement with XDC, however CCI is rolling out d-cinema on their own. The integration and operational efficiencies Greidinger hopes to achieve with Palace might be more difficult if CCI is running two different d-cinema deployments. One thought is that rather than ending or buying out the XDC contracts (if that’s even possible), CCI might decide to stick with them, freeing up capital and credit for more acquisitions. The company has 287 digital screens.

How important is 3D to the entertainment industry or is it just another fad? It’s a question that up until the release of “Avatar” was asked at every trade show and industry conference. But if anyone is still questioning the future of 3D in Hollywood, Thursday’s announcement that Digital Domain has acquired In-Three should help them overcome their doubts.

Digital Domain is the visual effects giant originally founded in 1993 by Industrial Light and Magic veteran Scott Ross, filmmaker James Cameron special effects guru Stan Winston. The company was immediately successful in proving a worthy competitor to ILM, who dominated the special effects market at the time. It didn’t hurt that some of their projects went on to win numerous awards, including “Titanic” which earned an Academy Award for visual effects. Based in Venice, California, Digital Domain has worked on dozens of films not to mention countless commercials and music videos. They recently completed work on Disney’s “Tron:Legacy” due out in December.

In-Three, on the other hand, has focused its attention on developing a patented process for turning 2D versions of movies into high quality 3D films. Since 1999 the company has perfected a process they’ve dubbed Dimensionalization which allows filmmakers and content owners to efficiently convert 2D footage into stereoscopic images. Their most recent work can be seen in Tim Burton’s adaptation of “Alice In Wonderland”.

Now, the two companies have reached an agreement to join forces with Digital Domain acquiring In-Three. Technically, the stereo studio is being acquired by Digital Domain Holdings, the parent company of Digital Domain, which was sold in 2006 to an investment firm that includes the likes of blockbuster-maker Michael Bay. The holdings company recently completed a production studio in Port St. Lucie, Florida to augment their facilities in Venice and Vancouver, Canada. Based on a press release statement from John Textor, the CEO of Digital Domain Holdings, it looks as if the plan is to move some of In-Three’s stereoscopic work to the new studio:

“This partnership adds large scale production to In-Three’s world class technology, while creating new jobs in the state of Florida.”

The acquisition seems to make a lot of sense for both parties. Digital Domain is well known for its top notch CGI work on some of Hollywood’s biggest blockbusters, but visual effects market has become competitively fierce over the past decade. With more studio productions looking to release films in 3D, the firm needs to ramp up their stereoscopic capabilities sooner rather than later.

Meanwhile, In-Three has built a solid reputation as being the premiere company for quality 3D conversations. But with the number of 3D releases outstripping capacity, In-Three have needed more resources to scale faster. This same thinking was true in December of last year when In-Three announced a strategic alliance with Reliance Mediaworks. That partnership dissolved earlier this year.

Under one roof, Digital Domain and In-Three can offer the entertainment industry one stop shopping for all their high-end visual effects needs.

Late last week Vue Entertainment, the United Kingdom’s third largest movie theatre chain, was sold to a private equity firm. Doughty Hanson & Co. will reportedly cough up GBP £450 million (USD $730 million) to take over the circuit. The news was picked up primarily by business and trade publications, though depending on how events play out it could actually prove to be rather significant.

Based in London, Vue began it’s life in 1998 as SBC International Cinemas. With backing from Boston Ventures, co-founder and chief executive Tim Richards had opened six theatres by 2003. That was the year SBC pulled off a huge coup by acquiring the much larger Warner Village Cinema chain for £221 million (USD $353.6 million) and rebranding the company as Vue Entertainment. With 42 venues and 384 screens Vue became the third largest exhibitor in the U.K.

Then in June of 2006, Vue announced a management buyout of the company. The Bank of Scotland helped finance the deal which was estimated at £350 million (USD $644 million). By that time Vue had grown to 544 screens across 55 cinemas. Vue’s executive team took a controlling 52 percent share of the company with Coller Capital Ltd. taking a 29 percent ownership and Och Ziff Capitam Managment Group holding a 19 percent stake.

Today Vue operates 68 cinemas accounting for 678 screens throughout the U.K. and Ireland. Over last several years the company has been responsible for about half of all the multiplexes built in the U.K. They also own one theatre in Portugal and another in Taiwan. But that number could soon grow quite rapidly. Bloomberg suggested that Vue might use some of the cash from the Doughty Hanson sale to buy the U.K.’s largest circuit, Odeon, or possibly Cineworld. Another scenario has Vue scooping up a European theatre chain outside the U.K. Of course, they could always expand by opening new cinemas.

Vue was such an appealing investment opportunity that Doughty Hanson had to outbid private equity firm BC Partners and Ontario Municipal Employees Retirement System to close the deal.

Meanwhile, Vue’s executive team will earn £70 million (USD $112 million), with Richards receiving roughly £25 million (USD $40 million). Some of that money is being reinvested into the company so that the management team can maintain a “significant” minority share of the cinema chain.

So, what may read like just another run-of-the-mill finance story on the face of it, may actually turn out to alter the exhibition landscape in the U.K. And what about Vue’s management team? Presumably they’re under contract with their new owners. In speaking to the Daily Mail it doesn’t seem as if Richards or his team is going to run off with their riches:

“Vue has come a long way since it was launched in 2003 and this next phase of our journey with Doughty Hanson as our new partner is going to be very exciting. We will continue to innovate, enhance and grow the business. We will continue to open fantastic new state of the art cinemas, such as the new 14 screen all digital Vue multiplex cinema in Westfield’s Stratford City which opens in September next year.”

Vue has been one of Europe’s digital cinema early adopters and is known for its modern, state-of-the-art multiplexes, 90 percent of which feature stadium seating. The circuit is currently rolling out Sony 4K digital cinema equipment in all its theatres in a conversion which is due to be complete in 2012.

Last week Hoyts Cinemas announced that it had reached an agreement for an undisclosed sum to purchase privately owned Australian Multiplex Cinemas (AMC). Based in Sydney, Hoyts presently operates 50 cinemas with 406 screens throughout Australia and New Zealand. After taking over the five multiplexes owned by AMC they will have a total of 448 screens which will account for roughly 25 percent of the AUD $1 billion box office in Australia.

Three of the five venues Hoyts will be picking up are located in Queensland, specifically Redcliffe, Stafford and Sunnybank. The other two are in Tweed Heads, New South Wales and Frankston, Victoria. This means Hoyts will now operate multiplexes in every Australian state, as Delfin Fernandez, the company’s Chief Executive Officer, pointed out in his press release statement:

“We are thrilled to build a truly national footprint of Hoyts cinemas by integrating these great assets into our network. We are particularly excited to continue the full digitisation of the AMC circuit in the first half of 2011, bringing Queenslanders greater opportunities to enjoy cutting-edge 3D technology and experience new content such as live sporting and music events.”

This isn’t the first time Hoyts has courted AMC. In October of 2008 Hoyts announced a bid to takeover AMC, which never came to fruition. Though this new deal requires regulatory approval, both circuits expect the sale to be completed sometime next month.

Hoyts is owned by Pacific Equity Partners, an investment group which purchased the theatre chain in December 2007 for AUD $440 million and AUD $140 million in debt from James Packer’s Publishing and Broadcasting Limted and West Australian Newspapers. The acquisition of AMC will surely serve to fan the rumors that the company is looking to sell the circuit. PEP’s executive Chairman denied such activity in several media outlets after the purchase was made public:

”It’s a business as usual acquisition. We have been talking to AMC for 2½ years. The timing is unrelated to anything else that is going on.”

And what else is going on? It’s no secret that PEP had to call off a plan to take Hoyt’s public earlier this year when financial markets seemed less than amenable to new floats. Kirk has said that PEP may try for a Hoyt’s IPO when the timing is more appropriate, or alternatively conduct a trade sale, possibly to another private equity firm.

This should not be a shock to anyone. PEP, like any equity or venture capital group, will eventually want to cash in on the investment they have made in Hoyts, much as they would with any company or asset they have invested in. That is, presumably, why PEP’s own investors placed their trust in Kirk and his team in the first place.

So long and thanks for all the Guinness – DTS has put an end to the corporate Seitensprung that was DTS Digital Cinema, which has been picked up by UK satellite company Beaufort International Group Plc. Here is what the press release on DCinemaToday.com had to say in the opening paragraph:

Beaufort International Group Plc announced today that it has acquired the business and assets of DTS Digital Cinema from DTS, Inc. for an undisclosed sum. Beaufort made the acquisition through its US subsidiary, Beaufort California, Inc. Chris Thomas, Beaufort California, Inc.’s CEO, commented, “We are very pleased to have made this acquisition. DTS is an established brand in the cinema industry, and provides a solid foundation for us to develop our plans in digital cinema.” Thomas continues, “DTS has laid the groundwork for us with its 15-year history in providing the highest quality digital audio for film to over 30,000 screens worldwide.

The price has elsewhere been quoted as $3.3m, which puts it at leas than half of the previously disposed Lowry Digital Images (sold last month to Reliance for $7.5m). From the press release we learn that Beaufort “will continue to use the DTS brand for the foreseeable future under our agreement with DTS.” Strangely there appears to be no website for Beaufort, so it is up to the trusty analysts at Screen Digest to drill down into the deeper meaning of this buy:

Datasat is a deliverer of media content through its wholly-owned (mainly) satellite networks, and the acquisition fits into a strategy of widening their reach to the digital cinema space. Up to now, Datasat’s content delivery strategy has focused on areas where high quality, secure file trasnfers are necessary, and has avoided media and broadcast industries. However, with the introduction of digital cinema, which needs very secure networks for large files (as opposed to live feeds or pre-recorded broadcasts) this move makes sense. Currently, company operates in five broad industrial areas: corporate, diplomatic, emergency, security, medical.

Nowhere is there any mention of Ireland, perhaps wisely as the nationwide Irish conversion to digital cinema is a standing joke in digital cinema circles. While there have been some positive noises about the DTS Digital Cinema hardware and platforms, it remains to be seen how the de-merged company will succeed against the likes of Doremi and Dolby, which unlike DTS is holding on very hard to its digital cinema division.

DTS meanwhile goes back to focusing on consumer products licensing, which seems to be a profitable field judging by this article; DTS shares jump as 1Q profit rises on sales.

Pyramid Saimira continues to play in the merges and acquisitions pool, this time buying a majority stake in the U.K. gaming company, Aurona Technologies. While there are no details as to the amount Pyramid spent, VC Circle reports it was an all cash deal.

At first glance, Aurona Technologies may not initially seem like a an appropriate acquisition for Pyramid Saimira Group which has traditionally been focused on film production, distribution and exhibition. After all, Aurona is a video game software company with headquarters in London and offshore development offices in Hyderabad. They specialize in working with video game developers who publish titles for devices such as Sony’s Playstation and Microsoft’s XBOX 360. However, Pyramid’s theater subsidiary is looking to install the latest digital cinema equipment in their venues a move that would allow their theatres to be used for viewing concerts, sporting events, meetings and. . . interactive gaming tournaments.

Another thought might be that Pyramid is looking to acquire some engineering and software expertise as it looks to build out its digital cinema operations.

Whatever the motivation, Pyramid no doubt has a plan. In the last half of 2007 the company acquired a controlling portion of Dimples Cine Advertising, a Mumbai based cinema advertising company, and in November hoovered up the Texas based FunAsiA theatre chain with hopes of expanding its 23 screens to 60 within a year. They weren’t nearly as successful in their October bid to pick up Hoyts Group, the Australian based multiplex theatre operator.

The stereotype of the immigrant Indian convenience store worker that has kept Apu employed at the Kwik-E-Mart for the past 17 years on ‘The Simpsons‘ may soon have to be changed to that of the immigrant Indian concession stand employee. Recently, the Indian cinema chain Pyramid Saimira Theatre announced it had purchased FunAsia, a Texas-based 17 screen circuit. On Monday, their competitor Adlabs Films announced that it would take over operations for “several existing cinema properties” in the United States accounting for 200 screens in 28 cities.

Adlabs is one of India’s largest entertainment corporations producing and distributing both film and television in addition to a thriving post production business. Adlabs Cinemas is the company’s exhibition subsidiary and operates 112 screens in 37 theatres.

There was little information about the deal other than a few blurbs found online and this post on IndianTelevision.com. Whether Adlabs were buying the theatres outright, leasing them or simply taking over operations was not disclosed. Who knows, maybe all these “existing cinema properties” are run-down single screen dives in the middle of nowhere. Though this is highly unlikely given the immigrant population Adlabs would no doubt hopes to attract to such venues with Indian language films they intend on programming. All news reports pegged the theatres in major markets on the East and West Coasts as well as the Mid-West.

To put the news in some perspective, medium sized circuits such as Landmark Theatres run 232 screens in 58 locations. Likewise Muvico has 14 locations housing 259 screens. So, starting out in the U.S. with 200 screens would nearly put Adlabs on the same level when it comes to screen count. Only time will tell whether they can compete in revenue. Given their size and ongoing success however, Adlabs does not seem like a company that likes to fail. Indeed, with Pyramid Saimira Theatre investing as much as $75 million in their U.S. theatres, it would not be shocking to see Adlabs double or triple such an investment in their North American cinema operations.

Indian exhibition company Pyramid Saimira Theatre (PSTL) has become the first Indian cinema operator to enter the US market with the acquisition of FunAsia cinema, radio and banquet halls (!) operation in Texas. The exhibitor operates 11 screens in Houston and six in Dallas where it mainly shows Hindi (Bollywood) films, making it the largest Asian theatre chain in the US. The acquisition was covered in most of the India press, given the uniqueness of the international expansion – though Pyramid already operates cinemas outside India in Malaysia and Singapore – with the best being in the financial press, such as the Business Standard:

“The US and Canada are big markets for Hindi and south Indian movies, and we intend to increase the number of screens of FunAsia in the US to 60 by the end of this fiscal from the present 23 screens by expanding to about 15 locations,” P S Saminathan, managing director, PSTL, said.

PSTL has four subsidiaries for film production, distribution and international theatre business, and each one will have separate fund-raising programmes, he added.

The company is also looking at aggressively expanding in the high-margin food and beverages business to boost its bottom line. While it is exploring the option of floating a separate company for the food and beverage business in India, it also intends to set up 10 food courts, involving an investment of about Rs 15 crore, in its multiplexes across the country under the brand name Cafe Pyramid this fiscal.

And the Economic Times:

The acquisition was made through its subsidiary Pyramid Saimira Entertainment America, and is aimed at targeting 80 to 90 per cent of share in the Asian film market.As the US and Canada are the second major overseas markets for Hindi and South Indian films, the company planned to set up 60 screens at 15 locations in those countries by the end of the current fiscal, PSTL Managing Director P S Saminathan told reporters here.

Declining to divulge the value of the acquisition, he said FunAsiA complexes included 17 screens with 4,765 seats and catered to South Asians in north America. PSTL would make a foray into the UK market in the third quarter, he added.

While the acquisition is significant, it comes not long after the failure of the more ambitious take over attempt of Australian exhibitor Hoyts. However, this is a foot in the door of the US market and if it is to be by targeting the more obvious NRI (non0resident Indians) market first, so be it, Pyramid must be speculating.

Australian exhibitor Hoyts has been sold to Pacific Equity Partner in a defeat to India’s Pyramid Saimira Theatre, which had pursued the deal aggressively. James Packer’s Publishing & Broadcasting Ltd. and West Australian Newspapers Holdings Ltd. are reported to have sold Hoyts Australian and New Zealand cinemas and stake in cinema advertiser Val Morgan in a deal valued at A$440m ($382m). The article by Bloomberg says that Packer is looking to sell media assets to invest more in gaming:

Pacific Equity plans to invest in Hoyts’s 40 Australian and nine New Zealand cinemas to reverse declining attendances. Third-quarter pretax profit at Hoyts fell 9 percent to A$8.5 million as a dearth of blockbuster movies hurt ticket sales.

“We believe there are opportunities for growth through further investment in digital entertainment and digital advertising media technologies,” Simon Pillar, Pacific Equity’s managing director, said in an e-mailed statement.

Publishing & Broadcasting and West Australian will each get A$150 million from the deal. The companies combined in January 2005 to acquire Hoyts from Packer’s private company, Consolidated Press Holdings Ltd., for A$347 million.

The deal is a blow to the international expansion plans of Pyramid Saimira Theatres, who were reported to have offered A$450m for Hoyts, i.e. A$10m more than Pacific, but for whatever reason they lost out.

The latest from Publishing & Broadcasting’s imminent sale of Australian cinema chain Hoyts is that the field of candidates is now down to two suitors. Sydney buyout firm Private Equity Partners is down to the wire against India’s Pyramid Saimira Theatre, as the offer prise has gone up to a reported $450 million. The Indians seem the most keen on the deal, according to an article in the Sydney Morning Herald:

Pyramid, which is based in Chennai, is India’s largest digital cinema chain with more than 126 theatres, which it wants to increase to 1000 cinemas across the country over the next two or three years. It raised $US90 million ($104 million) in July by selling convertible bonds in order to expand internationally.

Managing director PS Saminathan was in the US yesterday and could not be reached for comment on a report in Mumbai’s Business Standard that said he expected to win the bidding contest for $450 million. He said in an interview two weeks ago that buying Hoyts “will add a huge amount of value to the group because we are already present in India, in Malaysia and in Singapore.”

West Australian Newspapers, which bought half of the stake in Hoyts from PBL in 2004 looks set to follow PBL’s lead and sell out when the sale goes through rather than to try to match the bid price. Bidders have to place their final offers ‘today’(it’s Friday in Australia already) and the sale is expected to go through in November.