Tag Archives: UK

Cineworld’s Me-Too Eastern Expansion Comes At A Price

Cineworld Logo

UK’s publicly listed exhibitor Cineworld is expanding into Central Europe through £503 cash and equity deal for Warsaw-listed Cinema City International (CCI), which will make it the second largest chain in Europe after Odeon UCI. The deal signals a strategic shift for Cineworld after a small domestic acquisition and and an abandoned south European deal, indicating that future growth lies in Central and Eastern Europe (CEE), as well emerging markets like Turkey and Russia, while box office declines in Western Europe.

The deal, subject to shareholder approval, will see Cineworld pay CCI £503 in cash and shares, of which £272m will be in cash, with a £110m rights issue launched to help fund the purchase, and giving CCI a 24.9 per cent stake in the merged business. CCI currently operates 99 multiplexes with 966 screens (giving it a 9.75 screen/site ration) in six countries in Central and Eastern Europe (Poland, Hungary, Czech Republic, Bulgaria, Romania and Slovakia) as well as in Israel. The combined entity will have  201 sites and 1,852 fully-digital screens (9.21 s/s ratio), indicating that the two are a good match in terms of mostly being new multiplexes. Shares rose by 10.27 and seven per cent for Cineworld and CCI respectively, meaning the markets largely welcomed the merger. The operator will be the largest or second largest in all territories where it is present. But at what price?

Cinema City Territory Map

Competition and change in strategy

Unlike its UK competitors Odeon UCI and Vue, Cineworld has previously been focused exclusively on UK and Ireland , where it operates five of the ten highest grossing sites (though both BBC and Screen claim that it operates all ten of the most profitable sites). Odeon had inherited sites in Spain, Germany and elsewhere through its merger with Odeon in 2004, following the acquisition of both by Guy Hand’s Terra Firma. Odeon UCI abandoned plans for a £1bn+ floatation, settling for a £475 re-financing plan instead two years ago. Reasons cited for this change included “problems in its Spanish markets, where results were weak in the second quarter after a 30 per cent fall in volumes, and a bumper crop of bigger blockbuster films set for release in 2015.” Vue had meanwhile bought Polands second largest cinema operator Multikino, having already established itself in Germany (through the acquisition of CinemaxX), Portugal, Denmark and Taiwan, before being bought by two of Canada’s largest pension funds last year.

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Fancy Heading Up UK’s Digital Cinema Group?

cea-logoThe UK’s Cinema Exhibitors’ Association (CEA) had previously announced that they are setting up an organization to support small-to-medium sized exhibitors in the switch to digital, along the lines of the semi-hibernating Cinema Buying Group (CBG) of NATO. CEA’s CEO Phil Clapp commented at the time that:

many [cinemasl also recognise that they are extremely unlikely to be able to secure funding deals to allow them to convert on their own. We strongly believe that the proposed funding group may be the only option to achieve this for a significant majority of small and medium-sized cinema operators.

Now the time has come to appoint someone to head up this mission. From the announcement:

As detailed in an advert appearing in the next edition of Screen International, the CEA is looking to recruit – initially on a six month contract – an individual with the following qualities:

  • Experience of work in film distribution and/or exhibition at a senior level, with an understanding of the key industry issues and processes between the two sectors;
  • Experience of digital cinema contracts and/or deployment;
  • Knowledge of the major US studios and international distributors, including the key decision-makers on issues around digital cinema;
  • Proven negotiating skills; and
  • Experience of running an organisation at director or a similar senior level.

Key initial tasks for the successful candidate will be to: establish the necessary business, governance and financial structures for the group; undertake an analysis of the current market for digital cinema in relation to group members; and, through discussion with potential funding partners and others, to identify those approaches which might provide a ‘best fit’ for group members with regard to financial support.

It may be somewhat optimistic to think that this can be achieved in six months, but the contract does have an extension option. Expect whoever is appointed to be spending a lot of time on a plane somewhere between Heathrow and LAX.

Daily Cinema Roundup – Friday 1 May

- UK exhibitor Vue has bold expansion plans for London, announced as part of the tie up with retail property group Westfield and build a total of eight sites by 2011, with two ‘crown jewel’ sites in London. From THR.com, “Vue Entertainment CEO Tim Richards said the site at London’s Westfield shopping center aims to be “the jewel in the crown” for the chain. It will be an all-digital venue with “no film projectors in sight” and Richards claims it will be the biggest purpose-built cinema in Europe, with 3,000 seats in a complex of more than 100,000 square feet.” Tim hopes to throw open the doors to this all-digital 3D entertainment palace in time of James Cameron’s “Avatar”;

- Fellow UK exhibitor Cineworld has just announced another terrific quarter. From Reuters, “Cineworld said in a statement that box office takings were up 19.1 percent in the 17 weeks to April 23, driven by British multi-Oscar winner Slumdog Millionaire, but other income led by advertising was down 24.6 percent in the same period.” From the Press Assosiciation we learn that 3D is also padding the coffers nicely. “So far the group has been “very encouraged” by its initial investment in 3D after it claimed 50% and 46% box office share for children’s films Monsters versus Aliens and Bolt.” Cineworld is also opening more screens, next up 10 screens in Aberdeen and five in Witney. From Brand Republic we learn that “The rise in cinema takings comes as consumers continue to desert UK pubs and clubs.“;

– No sooner has the Dolby announced the Arqiva satellite tie-up then its green digital cinema credentials get trumpeted for the distribution of eco-mentary “Big River Man“. From Home Cinema Choice, “The film will be mastered in the US and then transmitted from there to the company’s UK centre. From there the DCP (Digital Cinema Package) will be transmitted to digital cinemas around the UK – cutting out the need for air freight and couriers, which in the past have been used to transport 35mm film and hard drives containing digital prints, and significantly reducing Big River Man’s carbon footprint.” Friends of the Earth might be happy but as the subject of the film is a ‘horseburger-loving Slovenian‘ don’t expect this to get the support of PETA.

- Anti-social behaviour is the bane of cinema operators in most countries, but in the UK the problem is Greys Gone Wild. From The Telegraph, “Pensioners at the Odeon, in Leicester, have been reprimanded for threatening, pushing, poking, bullying, harassing and intimidating staff, saving seats for friends and queue jumping. Concerns were also raised about customers abusing the complimentary tea and biscuits arrangement.” The Senior Screen programme will be terminated, a three-page letter (see above) warned, if this type of bad behaviour is not curtailed;

- National Amusements sale of some of its cinemas appears not to be going as well as hoped, we learn from THR.com. “U.S. screens included in a $1 billion-plus batch of National Amusements theaters drew fewer than a half-dozen bids by Thursday, but more were expected by Friday’s deadline after lucrative properties initially withheld were tagged for sale. A separate auction of National’s roughly 275 U.K. screens completed its first round of nonbinding offers last week amid a flurry of last-minute bidding.” Apparently other major cinema chains are not knocking on the doors, meaning that financial institutions are likely to have put in ‘lowball’ offers only at this stage;

- UK’s Empire Cinemas has awarded the contract for its telephone booking system. From the press release, “Telephonetics VIP, the speech automated specialist, today announces the signing of a multi-year contract with Empire Cinemas Ltd for the supply of its MovieLINE® automatic speech recognition (ASR) ticket booking and information technology solution to all of its 17 UK cinema sites. After a 3 year long relationship with Eckoh, Empire Cinemas has decided to switch their supplier to major competitor Telephonetics VIP. ” I’m sorry, I didn’t understand – could you repeat that? Click, brrr:

- Barco is trumpeting its successes in Latin America in a press release out just in time for, errh, ShowCanada. “Digital Cinema pioneer Barco announced today that the deployment of its digital cinema projectors is growing substantially into the Latin American marketplace. Spearheaded by Barco’s relationship with Texas-based Cinemark International, Barco DP-2000 projectors have been deployed into more than 25 Cinemark multiplexes throughout Mexico, Central and South America, including major cities in Argentina, Chile, Peru, Guatemala, Panama, Colombia, Ecuador and Brazil.” This triumph is somewhat undercut by the toll that the H1N1 (don’t-call-it-swineflu) is taking on the Mexican exhibition industry at the moment. It is no small irony that this summer’s box office might be undone by  small virus instead of a great big recession. Do your duty and visit your local multiplex this weekend – bing your hand sanitizer gel if you are worried;

- Ending on a positive note (as we like to here on CJ), Australia’s The Age has an article where the headline really says it all ‘Cinema boom shows even economic clouds have silver lining‘. “”Cinema does represent demonstrable value, particularly in tougher economic times, and compared to the cost of holidays, concert tickets and restaurants,” Liebmann said. Spending on filmed entertainment is set to rise by 5.3 per cent a year until 2012, to $3.4 billion, according to PricewaterhouseCoopers.” And who are we to argue with PWC?

Daily Cinema Roundup – Sun 19 April 2009

syrian-cinema

- UK cinema goers spent GBP 250m in the first quarter of 2009, reports the FT, with “Slumdog Millionaire” leading the way with 6m visitors. “The latest figures, compiled by the Film Distributors’ Association (FDA), support the frequent claim that cinema-going, perceived as a cheap night out, actually increases during times of economic hardship.”;

- Multiplex opening in Damascus represents the first new cinema to open in the Syrian capital since 1985. AFP reports that just 10 cinemas in Syria cater to the city’s population of 4m, though only two of them are functioning effectively (see photo above). “Filmmakers and cinema owners blame the parlous state of the industry on high taxes slapped on admission tickets, the state’s financing of commercial instead of artistic productions and the ready availability of pirated DVDs.”;

- Adding to Pakistan’s many other woes, the renewed screening of Bollywood (Indian Hindi) films in the past two years has failed to attract audiences back to the cinemas, according to The Hindu. “After the closure of 1,300 of the 1,500 cinema halls across the country in recent times, the Pakistan Film Exhibitors Association pressed the government to allow the screening of Indian movies, saying it was the only way to save the remaining 200 theatres.” But of some 5 Bollywood films released, only “Singh I Kinng” was a hit.Terrorism and piracy said to be to blame.

- Radio on the big screen! US National Public Radio (NPR) is coming to some 400 cinemas near you. ‘This American Life – Live’ “Popular NPR show will be simulcast live to more than 400 theaters in the country. Ira Glass to host. Guests include Joss Whedon, David Rakoff, Starlee Kline, Mike Birbiglia and Dan Savage. When: 8 p.m. Thursday Cost: $20, available through www.Fandango.com or at the theater.”

big-six-mux-losses

- Indian multiplexes have lost Rs 450m ($9m) since the Bollywood producers’ non-release boycott began on 4 April, according to Indiantelevision. Its research article states that ” this difference in occupancy rates would amount to revenue losses of Rs 850-900 million per month in multiplexes. This figure is much lesser than Rs 1-1.5 billion per month as is being claimed by some industry sources.”

- 2008 was a record year for German films at cinemas according to Welt Online (in German). Local fare accounted for 27 per cent of box office, the highest in two decades. Cinema going in the ge bracket 20-29 is down while the 40+ is up, confirming world wde trends of baby boomers re-discovering the joy of cinema going;

- Philips Electronics researchers have come up with a haptic jacket, lined with vibration motors, that ‘lets you feel the movies‘. ““We want people to feel Bruce Lee’s anxiety about whether he will get out alive,” says the Philips researcher. The jacket, responding to signals encoded in the DVD or to a program designed to control the jacket on the fly, can do a host of things, such as “causing a shiver to go up the viewer’s spine and creating the feeling of tension in the limbs.”” No plans for matching trousers yet.

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RealD Scores Hat Trick in 3D Deal With UK’s Vue

vue-logo Digital 3D provider RealD was bagged three of the top three UK exhibitors with the announcement that Vue will be converting 200 screens using RealD’s solution. This follows hot on the heels of #1 exhibitor Odeon/UCI’s deal for 500 screens and #2 exhibitor Cineworld’s deal to convert 30 of its 73 sites. From article in THR.com:

Vue Entertainment, the U.K.’s third-largest theater operator, is turning to 3-D technology, striking a deal with RealD to add 200 screens equipped by the 3-D specialist.

Vue and RealD said Monday that the rollout of RealD 3-D-enabled screens already has begun, with an installation at Vue’s flagship location in the British capital, Leicester Square.

“RealD 3-D is the market-leading choice for its remarkable track record of providing a superior viewing experience, something we can’t wait to bring to our many locations across the U.K.,” Vue CEO Tim Richards said. Read More »

Largest UK Cinema Chain Picks Vendors for 3D While Snubbing Third Party Integrators

logo_odeon The UK’s largest exhibitor Odeon (formed through the merger with UCI) has selected Real Image‘s Qube server and projectors from NEC to extend the company’s digital cinema and (particularly) digital 3D reach.

From the Qube press release:

Odeon and UCI Cinemas Choose Qube Servers Qube XP-D servers chosen in 111 screen 3D digital cinema rollout in Europe

The Qube XP-D digital cinema server has been chosen by ODEON and UCI Cinemas – Europe’s largest cinema operators – to be a part of their current 111 screen digitization plan across Europe.

Already playing Disney’s “Bolt” in digital 3D in Portugal for several weeks, Qube has recently commenced commercial digital 3D screenings across the UK with “My Bloody Valentine”.Photo: Qube XP-D

The digitization plan of ODEON and UCI Cinemas is in response to the significant number of digital 3D productions scheduled for release from 2009, ensuring that the audiences across Europe can enjoy the latest films in state-of-the-art cinema technology.

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Dolby Sheds Jobs From UK Cinema Manufacturing Division

Dolby Logo

As if the recent quarterly earnings reports from Warner Bros, Walt Disney and News Corp were not proof enough that the entertainment industry is far from recession proof, news is out that Dolby Laboratories will be closing down its UK manufacturing operation. Some 60 people will lose their jobs from the shuttering of their UK manufacturing base. From BBC news website:

The company, which provides products for the cinema industry, is closing the manufacturing arm of its UK operation in Wootton Bassett in April.

It blamed “changing market conditions” for its decision to close the site which employs 170 people.

Dolby says other business activities at the site will be not be affected.

This is a bitter blow for a company that started in the UK and whose British operation still sees itself as the carrier of founder Ray Dolby’s torch, even when the man himself moved back to the UK and most of the company’s activities is out of San Francisco these days. But it would not be true Brit grit if they did not put a brave face on the decision and declared in their recent earning’s statement: “Having concluded a comprehensive consultation process with our UK employees, the proposal to close our UK manufacturing operation at Wootton Bassett and consolidate manufacturing operations at a single facility has been accepted.”

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Will digitization lead to cine-carnage in UK?

Derilict Hoxton cinemas

Derelict Hoxton cinema

Opinion pieces and leader column in UK media have been alive with the debate about whether the imminent switch to digital cinema (imminent, once the credit crunch is over, that is) will lead to death and carnage amongst the smaller cinemas on the British Isles.

The debate was triggered by a comment by the UK Film Council’s Peter Buckingham that whilst the UKFC had funded 240+ screens conversion to digital, the UK Government will not bail out at-risk cinemas (unlike at-risk banks, one hastens to add). From the Telegraph:

Peter Buckingham of the UK Film Council warned that 300 independent cinemas – many in rural areas – are in series danger of closing because they can’t afford the transition.

“If they haven’t got digital they aren’t going to have anything to show in five years time,” he told The Times. “I don’t know what Plan B is – there is no public money available.”

The major multiplexes, which account for about 85 per cent of film takings, have so far refused to use their economies of scale to help smaller cinemas convert. The UK Film Council estimates it would cost £50 million to update all the vulnerable cinemas.

Derelict Catform cinemas

Derelict Catford cinema

Pretty grim outlook. But over in the Independent, John Walsh argues that we have been here before:

The death of the nation’s independent cinemas has been predicted so often that hearing the news of another imminent demise is like seeing another re-run of The Great Escape. Britain’s old movie palaces have been heading the way of the stegosaurus for half a century, scuppered by television, bingo parlours, dwindling visitor numbers, too many crap movies chasing too few screens, and the rise of the all-conquering DVD. But I still wipe away a tear on hearing that the switch from celluloid to digital projectors and servers may drive smaller cinemas out of business.

A very measured assesment was offered by Screen International’s always-worth-reading editor Mike Gubbins, writing in The Times (‘The inability to evolve has darkened screens before’), with the first paragraph particularly worth pondering:

The switch to digital cinema has barely touched the consciousness of the public. Some may be aware of the hype surrounding 3D, while others may have seen an opera screened at the local cinema, but this is not a demand-led transformation.

The industry debate between those in favour, who hope to see greater choice, and opponents who fear more efficient domination of the Hollywood studios has rarely reached the public domain.

But the digital divide might become an ugly reality if large numbers of cinemas close. Stroll along any high street and see if you can spot the ornate frontage that was once a cinema.

For a sad reminder of previous cinemas that are now gone, visit Derelictlondon.com’s cinema page.

UK cinema tickets under the spotlight

Which? logo Consumer magazine/analysts Which? has taken a long and hard look at UK cinemas and ticket prices – and found a low to be un-satisfied about. From Chanel 4 news’ website:

Cinema tickets can cost anything from £3.50 to more than £12 per adult, a new report has found.

The facilities, cleanliness, comfort and ease of access to UK cinemas also varies greatly, according to Which? magazine.

Refreshments on sale are often limited in range, unhealthy and expensive, a panel of the consumer group’s members said.

Food and drink sold at cinemas scored the lowest satisfaction rating of any aspect of the cinema experience, with just 7% of the 864 Which? respondents saying they were “very satisfied” with it.

This should be serious food for thought for UK exhibitors, particularly big chains, which people are less likely to have a high opinion of than smaller local independents.

Interestingly three out of ten cinema patrons claim sound and picture quality was a factor of enjoyment, but the complaint was usually about sound being too loud, not about prints being scratched or projector light bulbs dim. Not surprisingly, London had the highest prices. But if it is cheap tickets you are after, head to City Cinema in Newport where peak time adult tickets in cost just £3.50 ($7.00).

Cineworld Goes 3D with Real D

CineworldCineworld Group PLC announced on Tuesday that it has signed a deal with Real D and that the 3D technology will initially be deployed in 30 of its 72 theater locations, starting with the November 16th release of ‘Beowulf‘. In their press release announcing the agreement, Cineworld also hinted that they were working on negotiating virtual print fees directly with distributors, saying that they were finalizing “deals with studios on the business terms of digital deployment.”

Cineworld Cinemas is one of the largest exhibitors in the United Kingdom, weighing in at 753 screens across England and Ireland, and claims to have the largest “portfolio” of digital screens in the country. Certainly, based on the press release quote provided by, Steve Weiner, the companies CEO, it seems as if Cineworld is definitely thinking big when it comes to digital cinema and 3D projection:

We could see as many as 100 Real D screens once our digital platform is in place.

Maybe not such a bad idea since, as their release goes on to point out, DreamWorks Animation SKG will be releasing all of their films in 3D starting in 2009 and filmmaker George Lucas will be remastering all of his Star Wars films for re-release in 3D.

Real D president, Joseph Peixoto, also was quoted in the press announcement, and seemed quite excited to be expanding his companies technology outside North America:

This marks an important step in Real D’s international expansion. Cineworld has the largest digital estate of any cinema operator in the UK so it is a natural fit for us.

With lofty phrasing like “digital estate” and “digital platform” the press release was immediately picked up by quite a few media outlets, including The Hollywood Reporter.