Tag Archives: Cinemark

Fathom Events New CEO John Rubey Provides Both Experience and Leadership

John Rubey

John Rubey, CEO of Fathom Events

When National CineMedia (NCM) spun off its alternative content division, NCM Fathom Events, into a completely separate business entity at the end of 2013, it did not identify a chief executive officer for the newly formed company. Kurt Hall, the chairman and CEO of NCM, stayed with the cinema advertising network, and Fathom went off to find a suitable senior executive to fill its open leadership position. Their search came to an end earlier this month when it was announced John Rubey would become the stand-alone Fathom Events first CEO.

If Rubey’s name sounds vaguely familiar there’s a good reason why. Rubey comes to Fathom after spending the last 14 years as the President of AEG Network Live, the concert promoter’s in-house multimedia production company. While with AEG he helped produce some of the earliest noteworthy events in the nascent alternative content industry by beaming concerts into cinemas from the likes of Bon Jovi, Dave Matthews Band, Garth Brooks and Phish.

This is a great hire for Fathom as Rubey brings a lot to the table. He’s got more than two decades of experience working in one form or another on content and marketing for big-ticket entertainment events. Before signing on with AEG, Rubey founded and owned Spring Communications which specialized in pay-per-view events. He has a working knowledge and practical experience in multiple forms of media production, entertainment marketing, alternative content and working with exhibitors. His relationships and ties to key players in the concert and entertainment industries run deep.

The whole purpose of AEG Networks Live is to “eventize” a concert, a tour, an arena or sports, generating marketing opportunities and actual revenue. These goals are identical or complimentary to most alternative content releases. To help him achieve these objectives during his tenure at AEG, Rubey worked with content aggregators and distributors such as Hulu, MySpace, Vevo and YouTube. Thus, he’s no stranger to digital content distribution and its many intricacies.

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2013 – Bad Year for Film; Great Year for Exhibitor Share Price

It may seem paradoxical, but while 2013 was a bad year for films in terms of growth, it was an excellent year for cinemas. Even with a strong summer at the box office, 2013 was flat or even down compared to the previous year in most western countries. Only emerging markets like China showed strong and significant growth on the back of their multiplex expansions.

It would seem logical that this trend would be reflected in the share price of listed exhibitors, but analysis by CelluloidJunkie.com has found that major exhibitors in the four largest English-speaking territories (USA, Canada, UK and Australia) had one of their best years ever in terms of share price. We will examine this, as well as looking at the possible causes and outlook.

We first have to preface the analysis by noting that it is difficult to make a completely accurate like-for-like comparison. While the majority of the largest exhibitors in the US and Canada are publicly traded (Regal, Cinemark and Cineplex are, while AMC is privately owned by China’s Dalian Wanda Group), the same is not the case in UK, where only one of the Big Three is listed (Cinemaworld; Odeon-UCI and Vue are privately held), whereas in Australia the multiplex chains are privately owned (Hoyts) or have complicated joint ownership or subsidiary status (Village and Greater Union/Event Cinemas).

Even so, it is still possible to get a good idea of how markets value exhibitors and why 2013 was a good year for them, as we will see.

USA and Canada

2013 was a flat year in terms of box office growth. Statistics from BoxOfficeMojo tell us that overall gross was $10.925 billion, compared to $10.823 billion the previous year. While up by $100m year-on-year, this “growth” is effectively cancelled out by inflation. The underlying ticket sales are likely to show a decline when the official statistics are published by the MPAA. Projecting an annualized rate The Numbers sees attendance fall from 1.36bn to 1.19bn between 2012 and 2103.

This decline is in-line with what was predicted ahead of CinemaCon last year. Reported in Deadline:

“Bond analysis firm Fitch Ratings forecasts a “modest” decline in 2013 ticket sales and long-term challenges that should “cause concern” for lenders. Studios will find it “difficult to replicate” the success they had last year with hits including The Avengers and The Dark Knight Rises, analysts Shawn Gannon, Rolando Larrondo and Mike Simonton conclude. In addition the 3D market is “starting to mature.””

All-in-all you would think that it would have been good to short stocks in exhibitors, but you would have been wrong.

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Regal Cinemas went from strength to strength as the share price rose from just under $14 per share in January 2013 to close to $20 per share at the start of 2014, before slipping down closer to $19 recently.

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Meanwhile competitor Cinemark started the year below $27 and ended it above $33, before currently landing just above $30. Not as strong as Regal’s growth, but still significant.

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North of the border, Cineplex pulled off the most impressive stock market feat of them all by increasing from C$32 to coming within a whisker of C$45 before declining to just over C$40.

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Barco Expands In Latin America and India

Barco Logo.jpgAfter launching their 4K projector at ShowEast, Belgium based Barco is ramping up their global sales effort with the announcement of two new deals.

The first was a reseller partnership arrangement with Real Image in India, a country presently experiencing high growth in new multiplex openings. Real Image may be familiar to some as the company behind Qube Cinema. Barco will provide training, service and customer support to Real Image in a deal that should help the projector manufacturer strengthen marketing efforts and increase its install base throughout the territory.

Real Image will be able to offer Barco’s entire digital cinema product line to their customers, a necessity in a country where cinemas range from small single screen complexes in remote geographical areas to state-of-the-art venues in large urban areas. Arvind Rangnathan, Chief Executive Officer of Chennai based Real Image pointed this out in the press release announcing the partnership:

“The complete range of digital cinema projectors offered by Barco are ideal for this market, be it the mid-sized multiplex screen or the large single screen… we are now able to provide a stunning experience in 2D and 3D even on larger cinema screens.”

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Cinemark Announces NextGen Cinema Concept

PrintWhat is the next hot trend for theatre owners and moviegoers? Cinemark, North America’s third largest theatre chain, thinks they may have the answer and they have begun publicizing a new cinema concept. Last Friday the Plano based circuit announced plans to build what it has dubbed Cinemark NextGen theatres. The first such complex will be the Cinemark Frisco Square which is set to open in Frisco, Texas some time in December.

Based on the press release and various news reports it seems as if the NextGen theatre concept is being marketed as a technologically advanced, and thus superior, moviegoing experience. Alan Stock, Cinemark’s Chief Executive Officer said in a statement:

“The new Cinemark NextGen theatres represent the next generation in cinema. We have designed an entertainment environment that offers technologically advanced amenities and a movie-watching experience that simply cannot be duplicated.”

The environment Stock refers to will feature giant screens that cover an entire wall of each auditorium, Barco digital cinema projectors, 3D systems from RealD and a customized JBL sound system. There is no mention of how the sound system will be any different from the standard 5.1 or 7.1 digital surround setups that can be found in most theatres these days. Nor is it clear how NextGen theatres will be any different than the 29 Cinemark XD Extreme auditoriums they have opened since 2009.

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Travis Reid Departs DCIP To Head Up Screenvision

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Travis Reid

Last Thursday Digital Cinema Implementation Partners (DCIP) announced that Travis Reid, their CEO, had resigned. That same day on-screen advertising giant Screenvision announced that Shamrock Capital Advisors, a private equity fund founded by the late Roy Disney, had finalized the $160 million purchase of the company and had appointed Reid as its new CEO.

At ShowEast, which was just wrapping up at the time, many industry folks I spoke with were surprised to hear the news, though looking at it objectively, the move is somewhat inevitable.

Reid has had a long career in motion picture exhibition that includes his stint as the President and CEO of Loews Cineplex for which he worked from 1991 until 2005 when the chain was acquired by AMC Entertainment. In 2007 he joined DCIP, the deployment entity formed and owned by North America’s largest exhibitors; AMC, Regal Entertainment and Cinemark. Reid has also sat on the boards of Cineplex Galaxy, Yelmo and Fandango among others. As Shamrock’s Managing Director Steve Royer said in Screenvision’s press release:

“Travis has an over thirty-year history in the exhibition space having operated chains and most recently, pioneering the digital revolution for the cinema exhibition industry. He was our ideal candidate.”

Reid led DCIP through a challenging period in its formation and development. Not only did he successfully oversee the companies protracted negotiations with major studios for virtual print fees (VPFs), but just as it seemed digital cinema was taking off, the financial meltdown caused funding for rollouts to dry up for more than a year. Reid and DCIP persevered and in March of this year he secured $660 million in funding from a consortium of banks.

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“Paranormal Activity 2″ Trailer Too Scary For Cinemark

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When was the last time you heard about a movie trailer being pulled out of theatres because audiences complained it was too scary? Especially a teaser trailer? It seems unimaginable doesn’t it?

Well, apparently it’s not impossible as this is just what happened last week when Paramount Pictures was lucky enough to get the teaser trailer for “Paranormal Activity 2″ to run in front of “Twilight Saga: Eclipse” at certain Cinemark locations. After the initial midnight show on opening night, as well as one in the wee hours of the morning, the theatre chain received a number of complaints from patrons in Texas claiming the “Paranormal Activity 2″ teaser trailer was too scary. Many felt its content was inappropriate to be placed in front of a film aimed at teenagers.

Sure enough, Cinemark had to inform Paramount a day or two into the run that they would be pulling the trailer from a number of theatres. There was no word on whether the trailer was tacked onto the front of another film title.

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It’s Official – DCIP Gets $660 Million In Funding

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A boisterous cheer erupted this morning during the Inter-Society Digital Cinema Forum (ISDCF) meeting when the proceedings were interrupted with news that Digital Cinema Implementation Partners (DCIP) had just officially announced they had received their financing. Indeed, DCIP published a press release stating that they had raised USD $660 million in financing. The funds will be used to roll out digital cinema in North America’s three largest circuits; AMC Theatres, Cinemark and Regal Cinemas.

As we previously reported when it was still a widely circulated industry rumor, DCIP’s financing will come in the form of USD $445 million in senior bank debt, USD $135 million in junior capital and USD $80 million in equity from the theatre chains themselves. JPMorgan assisted DCIP in raising the money which is being supplied by a who’s who of financial institutions including Bank of America, Barclays Bank, Citi, Credit Suisse, Deutsche Bank, GE Capital, Morgan Stanley and the Sumitomo Mitsui Banking Corporation.

There are sure to be tons of news stories generated by DCIP’s announcement, especially since it will allow media outlets to wave around the trendy “3D” phrase in hopes of attracting a few extra eyeballs. The reports will cite that nearly 14,000 screens throughout North America will be converted to digital by AMC, Cinemark and Regal who formed DCIP as a joint venture in 2007. (Truthfully, it’s probably more like 10,000 screens when all is said and done). No doubt they may even go so far as to pull press release quote from Travis Reid, DCIP’s CEO, which states:

“We are excited that with the continued support of our owners, studio partners and financial advisors we have completed this critical step in our process. Over the next few years, we’ll be aggressively implementing the transition to digital technology in theatres across North America. Guests will enjoy enhanced presentation and additional entertainment options at their favorite theatres as Exhibitors and content providers capitalize on the flexibility enabled by digital technology, including many upcoming releases using digital 3D. Having this substantial financial package and our studio partnerships in place, we’re pleased to launch this new era of technology to guests looking for an exceptional out-of-home experience.”

Check out the way Mr. Reid so adeptly snuck the word “capitalize” into that quote. Pretty slick. It’s funny though, because I always imagined his press release quote would read more along the lines of:

“Phew! That was harder then it needed to be and dare I say it’s about time we landed some money. Thankfully I will no longer have to answer questions every other week about when DCIP will be getting its financing.”

Since the mainstream media will take care of all the cheerleading about how 3D will soon be coming to a theatre near you, I figured it might be interesting to further explain the types of financing DCIP is getting. I mean what’s with all these terms like “senior debt” and “junior capital”? Does the senior debt have offspring named after it? And does the junior capital have a father with the same name? Read More »

More Rumblings About DCIP’s Financing

dcip.jpgLast week both the New York Times and the Wall Street Journal reported that an announcement from Digital Cinema Implementation Partners about their financing was imminent. The opportunity to play 3D content will certainly be welcomed by AMC Theatres, Regal Cinemas and Cinemark, however from the way the two newspapers covered the story you might get the impression it was the only reason. The financing would allow Hollywood studios to “roll out more 3-D movies in the wake of the success of James Cameron’s ‘Avatar’” wrote the Wall Street Journal and the New York Times said the “money would allow future 3-D film releases”.

Both media outlets seem to have gotten their hands on some internal briefings or at the very least seen an early draft of a press release as they have updated some of the details from previous reports about DCIP’s financing. A more exact figure of USD $660 million was cited by both papers which is down from the original USD $700 million rumor which was first floating around. As well, the number of screens has been upped to 14,000 from 12,000 with the Wall Street Journal putting the number of actual theatre sites being converted at 1,100. The New York Times laid out the details as follows:

According to a draft announcement making the rounds in Hollywood, the new financing, arranged by JPMorgan and Blackstone Advisory Partners, would total about $660 million. Of that, $445 million is expected to come from senior bank debt, $135 million from what is described as “junior capital” and $80 million from equity contributed by the member theater circuits. Nine banks, including Bank of America and Citibank, are part of the lending group. Blackstone raised the $135 million from other investors.

I always find it amusing to see how mainstream media covers the transition to digital cinema in reporting such news. The Wall Street Journal piece states:

In a digital conversion, theaters rip out old celluloid film projectors, and stop receiving weekly shipments of large film canisters. They instead use fiber optic lines to transfer huge digital film files.

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JPMorgan Finds $700 Million For DCIP

dcip.jpg That collective sigh of relief you may have heard over this past weekend no doubt came from the North American motion picture exhibition and distribution industries. The Los Angeles Times report that investment bank JPMorgan was finally able to round up roughly USD $700 million for Digital Cinema Implementation Partners must have come as some relief.

Heaven knows we’ve been hearing about DCIP’s quest for financing for well over a year now. It seems at every ShoWest, Cinema Expo or Show East for the past 18 months we’ve been told by investment bankers that money is on the way. Though let’s face it, if the staggering amount of money being sought wasn’t enough to cause a delay, the worldwide credit crunch certainly didn’t help. Financing hasn’t been easy to come buy in any business sector and no matter how lucrative the project.

Of course, DCIP is the deployment entity founded by three of the world’s largest exhibitors; AMC Theatres, Cinemark and Regal Cinemas. With anonymous sources close to the negotiations confirming that DCIP’s financing will be announced in the next two weeks, the company can finally begin the rollout digital cinema technology on 12,000 screens across the United States and Canada.

Back in 2008 JPMorgan, armed with virtual print fee agreements from the studios, went looking for USD $1 billion for DCIP to convert 14,000 screens across all three circuits. Since then, AMC has gobbled up Kerasotes adding another 900 odd screens to the mix. There was no word on which screens or theatres will be converted or what will happen to those screens which don’t make it into the first 12,000. Nor was a time frame given to complete the transition, though it has been widely expected to take three years.

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Report: Movie Theatre Popcorn Makes You Fat (Surprise!)

200911192223.jpg As if theatre owners didn’t have enough to worry about with studios shrinking release windows at every opportunity, they may soon have to start worrying about moviegoers bypassing the real bread and butter of any exhibitor’s business, or more appropriately the popcorn and butter. A new study conducted by the non-profit Center for Science in the Public Interest and released earlier today reports that the food items found at most movie theatre concession stands are incredibly unhealthy. Lab tests revealed that eating a medium popcorn and soda combo from Regal Cinemas was the equivalent of eating three McDonald’s Quarter Pounders topped with 12 pats of butter. For those with a more of an interest in nutrition, that’s 1610 calories and 60 grams (three days’ worth) of saturated fat.

The CSPI report also found that the candy sold by most exhibitors is no better. An extra large box of Junior Mints contains 570 calories and 8 grams of fat. Raisinets are 420 calories and 11 grams of fat. M&Ms may be tiny but they pack in 790 calories and more than a half a day’s supply of saturated fat (16 grams). Then there’s the calorie king of all movie theatre confections, Reese’s Pieces which are loaded with 1,160 calories and 35 grams of saturated fat. To hammer the point home the study compares the intake of such candy to eating a 16-once T-bone stake with a buttered baked potato as a side order. It’s a miracle that E.T. the Extra-Terrestrial’s heart was still able to glow after downing all those Reese’s Pieces in Steven Spielberg’s blockbuster back in the early 1980s. The alien rightfully should’ve keeled over from a heart attack according to CSPI.

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