February 19, 2017
From The Hollywood Reporter: New technology is shaking up the entertainment business, but John Fithian, president of the National Association of Theatre Owners, argues that box office is thriving even as TV and home video take a hit and streaming services up their investments. “Three-fourths of (those) interviewed are spending more evenings at home now. Slightly more than half are going to the movies less often, although formerly they were confirmed and in most cases very heavy moviegoers.” — U.S. News & World Report
New technology has upended the movie theater industry, disrupting production and distribution; movie theaters are dying.
You’d be forgiven if you thought I was talking about today, the internet and movie streaming services like Netflix and Amazon. The report above actually is from 1955, the disruptive technology was television, and the disruption was real. There were other factors, such as the Paramount Consent Decrees, which forced studios to divest their movie theater properties, but the body blow to theaters that television represented was a complete revolution in the entertainment ecosystem. Theaters no longer held a monopoly on recorded audio-visual entertainment, and box-office revenue hit bottom at $875 million in 1962, down 48 percent from 1946, with admissions off 78.5 percent. The box office would not return to 1946 levels until 1974.
But what about today? Have the internet and movie streaming to the home caused a fresh disruption in the theater industry?
Despite a fairly constant drumbeat of impending doom and decline facing the cinema industry, the reality is otherwise. Since 2004 — following two rather anomalous years that peaked at over 1.5 billion admissions — movie admissions have moved up and down over a fairly narrow range, from 1.27 billion to 1.48 billion annually. Some of that fluctuation is a reflection of the movies in the marketplace, and some is surely because of increased competition from the home market.
January 25, 2017
From Variety.com: AMC, the U.S. theater chain controlled by China’s Dalian Wanda group, is to pay $929 million for Nordic Cinema Group. The company is the largest cinema operator in seven countries in the Nordic and Baltic regions.
The deal follows AMC’s acquisition last year of Odeon-UCI, the largest cinema operator in Western Europe. AMC said that the two European chains will be operated together.
AMC is buying Nordic in a transaction from private equity firm Bridgepoint and Swedish media group Bonnier Holding. The transaction is to be an all-cash affair worth $929 million (SEK8.25 billion), and the deal is subject to approval from the European Union.
Nordic has 68 theaters in 50 large and medium cities, comprising 463 screens and 68,000 seats. The company also holds substantial minority stakes in another 50 theaters with 201 screens.
Acquiring the group is part of Wanda Chairman Wang Jianlin’s stated goal of owning 20% of the world’s movie screens. He believes that will give his company significant negotiating power in discussions with the world’s leading film distributors, most notably the six Hollywood majors. Prior to the Nordic deal, Wanda controlled some 12% of global screens through AMC and its separately listed Wanda Cinema line, which has cinemas in China and also owns Australia’s No. 2 operator, Hoyts group.
AMC also recently agreed with the U.S. Department of Justice on the terms of its proposed takeover of the North American Carmike chain; the deal was closed before Christmas.
“For the third time in the past 12 months, we believe we have discovered a substantial acquisition that gives AMC yet another opportunity to further expand and diversify our geographic reach and more firmly establish AMC as the undisputed leader in movie exhibition worldwide,” AMC CEO and President Adam Aron said in a statement of the Nordic Group acquisition.
“It has been our observation that Nordic is extremely well-run with a modern up-to-date theater circuit that in our opinion offers tremendous value potential for AMC over the foreseeable future. We are also excited by the growth potential of Nordic as it moves forward with 10 theaters already in development or redevelopment. We have been impressed with Nordic’s talented leadership team, and further believe that their added expertise will be invaluable to us in helping to drive AMC’s progress across Europe.”
AMC said that it will achieve additional economies of scale and save about $5 million in costs per year.
Reactions to the acquisition from local players have been for the most part muted.
Thor Sigurjonsson, general manager of Scanbox, one of Scandinavia’s top distribution outfits whose slate of releases include “Lion,” “Gold” and “Molly’s Game,” said the AMC pickup was “not a huge surprise.”
“It’s a natural consolidation of the business, and we welcome a true cinema player to the market. We’ve had great relations with Nordic Cinema Group and hope to continue to do so moving forward,” said Sigurjonsson, whose company, Scanbox, operates in Finland, Denmark and Sweden as well as Norway via Norse Filmdisturjbution.
Michael Porseryd, CEO of SF Studios, another Scandinavian heavyweight operating across the Nordics, said his company “has had a long and successful partnership with Nordic Cinema Group and their very professional team and hopes SF Studios’s close relationship with Nordic Cinema Group will continue in the future.” SF Studios’s slate include “Borg/McEnroe” with Shia LaBeouf.
December 22, 2016
From ABC News: Federal regulators gave conditional approval Tuesday to movie-theater chain AMC Entertainment Holdings Inc.’s $1.2 billion buyout of smaller rival Carmike Cinemas Inc., making AMC the biggest U.S. movie theater operator.
The U.S. Department of Justice said its approval hinges on Leawood, Kansas-based AMC selling theaters in 15 local markets in nine states where it competes with Carmike.
AMC also has to divest most of its holdings in National CineMedia, a cinema advertising company, and transfer 24 theaters to a rival theater ad company, Screenvision LLC.
The Justice Department said the deal, which requires court approval, would lead to higher prices for moviegoers without such conditions.
AMC, which was bought by Chinese conglomerate Dalian Wanda Group in 2012, called Tuesday’s action “the final regulatory hurdle” in its push for Carmike, adding in a statement that it expects to complete the transaction “expeditiously.” It did not elaborate.
“Needless to say, we are in a good mood in Leawood, Kansas,” Adam Aron, AMC’s chief executive and president, said during a conference call Tuesday with reporters and analysts. “Today is a glorious day and another great day for AMC.”
Aron said 15 to 20 theaters would be sold off, most all of them from the Carmike network.
AMC, already the world’s biggest theater operator, operated roughly 388 theaters with a total of 5,295 screens in 33 states and the District of Columbia as of the end of September. Its U.S. box office revenues were about $1.9 billion last year.
Carmike, based in Columbus, Georgia, has 271 theaters with a combined 2,917 screens in 41 states. Carmike’s 2015 U.S. box office revenues were roughly $490 million.
The local markets where AMC must sell off theaters are in Alabama, Florida, Georgia, Illinois, Minnesota, New Jersey, Oklahoma, Pennsylvania and Wisconsin.
The deal includes $585 million in cash and $250 million in AMC’s Class A common stock. AMC is also assuming about $367 million in debt in the deal.
AMC shares rose 25 cents to $33.45 on Tuesday. Shares of Carmike closed at $33.40, up 15 cents.
November 30, 2016
From The Wrap: AMC Entertainment Inc., the parent of AMC Theatres, is now the biggest movie theater chain in the world, after the company announced that it has completed its acquisition of Europe’s Odeon & UCI Cinemas in a $1.2 billion deal.
With the addition of Odeon, Europe’s No. 1 exhibitor, AMC now operates 636 theatres with 7,623 screens across eight countries. AMC intends to rename the chain to Odeon Cinemas Group.
Odeon CEO Paul Donovan will be departing, with former chief financial officer Mark Way becoming president of AMC Europe and managing director of Odeon Cinemas Group. Ian Shepherd has been named executive vice president of AMC Europe and chief operating officer of Odeon Cinemas Group. Odeon will be a wholly-owned subsidiary of AMC, maintaining its headquarters in London.
China’s Dalian Wanda Group — whose founder and CEO Wang Jianlin is China’s richest man — bought AMC for $2.6 billion in 2012, and has continued to expand its theatrical holdings. Wanda operates 187 cinemas in China with 1,657 screens — including 117 Imax theaters. The company is IMAX’s biggest consumer worldwide.
Last month, shareholders of Carmike Cinemas, the U.S.’s fourth largest chain, approved a $1.2 billion offer by AMC to acquire the exhibitor, which would also have made it the world’s biggest even without Odeon & UCI. That deal is pending Justice Department approval.
Wanda’s Hollywood shopping spree has hardly been restricted to movie theaters. This year, the Chinese conglomerate acquired “Jurassic World” production company Legendary Entertainment for $3.5 billion and Dick Clark Productions for $1 billion.
November 23, 2016
Los Angeles, CA – Siblings clash over control of L.A.-based movie theater chain Reading International
From The Los Angeles Times: Los Angeles-based movie theater chain Reading International Inc. has dozens of cinemas around the world, major real estate holdings, and a nearly 200-year history with roots in the railroad and coal business.
But the future of the storied company has been clouded by an extraordinary family drama that is playing out in court. The three children of Reading’s late chief executive, James J. Cotter Sr., are waging a battle for control of the company, a feud that is reminiscent of the discord that created chaos at the media giant Viacom Inc. this year. Unlike the Viacom case, however, this dispute has largely gone unnoticed in Hollywood.
The son, James Cotter Jr., sued the company’s directors last year after he was ousted as CEO in what he calls a “massive power grab” by his sisters, Ellen Cotter and Margaret Cotter. The sisters are also dueling with the brother in Los Angeles court over their father’s controlling stake. Both cases are pending.
Compounding matters, the siblings are also clashing over whether to entertain a $400-million offer to buy Reading. James Cotter Jr. has accused the company led by his sisters of giving short shrift to an offer from Paul Heth, the CEO of a major Russian theater chain, to buy the company for $17 a share. The company maintains the price is inadequate.
The court battles have weighed on Reading’s stock, which trades at about $15 a share, virtually unchanged from a year ago. A shareholder lawsuit was settled earlier this year, but investors remain anxious about the infighting and uncertainty over Reading’s direction.
“I think a more independent board would be more aggressive in seeking objective advice from knowledgeable bankers, rather than from Cotter’s daughters, who are spending millions against their younger brother fighting to control the entity,” said Andrew Shapiro, an investor whose firm Lawndale Capital Management in Mill Valley, Calif., has long owned Reading stock (it holds about 7% of non-voting shares).
As with Sumner Redstone’s Viacom — in which the company’s CEO was ousted after clashing with the mogul’s daughter, Shari — the infighting at Reading International highlights the perils that sometimes confront family-controlled publicly traded companies. James Cotter Sr. owned 70% of Reading’s Class B voting shares, leaving non-voting Class A shareholders with virtually no say in how the company operates.
“It’s designed to preserve family control in perpetuity, but sometimes the person you pick in perpetuity doesn’t work out or the family doesn’t work out,” said Charles Elson, a corporate governance expert at the University of Delaware. “So the other shareholders are essentially stuck in the middle.”
Billionaire Mark Cuban owns about 12% of the voting shares, but has mostly stayed on the sidelines of the various disputes.
The Cotter siblings and Cuban declined to comment for this story. Reading also would not comment.
Reading operates 57 theaters and 465 screens in the U.S., Australia and New Zealand, including numerous locations in San Diego and Hawaii, and employs about 2,300 people. The company also owns live theaters — including the Orpheum and Minetta Lane in Manhattan, and the Royal George in Chicago — and other commercial properties.
Launched in 1833 as the Philadelphia & Reading Railroad Co., the business was created to move anthracite coal mined in Pennsylvania. But after World War II, railroad companies and the coal market declined, leading Reading to declare Chapter 11 bankruptcy in 1971.
James J. Cotter Sr., a Los Angeles businessman, took control of the Reading name (made famous in the Monopoly board game) in the 1980s. Later, Reading began to acquire and develop real estate, focusing on properties with cinemas and live theater venues.
Cotter Sr. resigned as CEO and chairman in August 2014 because of declining health, leaving son James Cotter Jr. in charge. Cotter Sr. died in September 2014 at age 76.
Shortly thereafter, his two daughters went to court, alleging their brother improperly convinced their father to add him to a trust that would control the voting shares of the company. Ellen and Margaret Cotter said in court papers that James Cotter Jr. unduly influenced their father while he was in the hospital after suffering a fall in his home. The daughters said their father lacked “the knowledge and understanding necessary” to make such financial decisions.
The daughters contend that after their dad was admitted to the hospital, their brother convinced an estate attorney to draft an amendment to the trust that made him a co-trustee. They allege he lied to Margaret by saying the changes were made based on videos he took of their father expressing his wishes.
Distressed over her father’s failing health, Margaret tried to convince her father to sign the amendment, the daughters’ petition said. Cotter Sr. signed the amendment only after Margaret begged and “tears were shed,“ according to the petition.
Cotter Jr. struck back with his own petition, calling the allegations against him “nonsense” and “fictional.” He said his father was “in full control of his faculties” when he signed the amendment to the trust and accused his sisters of “abusing their power… and breaching their duties.” He further contended his sisters tried to prevent him from selling his Reading stock, in order to “choke off” funds and force him to settle. Cotter Jr. owned about 16% of Reading’s shares as of April 2016, according to a regulatory filing.
In June 2015, the company’s board of directors fired Cotter Jr. for undisclosed reasons and put Ellen Cotter in charge. Cotter Jr. quickly sued his sisters and other Reading directors, accusing them of staging a “boardroom coup” to wrest away control of the company. He said in court documents that his sisters, and company directors loyal to them, had him forced out because he refused an ultimatum to give up his claim to the trust.
He also accused the sisters of choosing their own financial interests over the well-being of the company and trying to use Reading resources to pay for personal expenses, including an expensive Thanksgiving dinner for Ellen, the company’s CEO; Margaret, its vice chair; and their mother.
The company said in a regulatory filing that “numerous of the factual allegations included in the complaint are inaccurate and untrue,” and vowed to “vigorously defend” against the claims. A trial date in the case has not been set.
All the squabbling has created unease among investors. “The biggest issue is who gets to call the shots,” said B. Riley media analyst Eric Wold, the only analyst who covers Reading’s stock. “It’s been a distraction.… I’d love for them to settle this."
Further clouding matters is whether Reading should be sold. In a May 31 letter, Heth offered to buy Reading for $17 a share, a 35% premium above the stock price at the time, but the board rejected the bid.
A rebuffed Heth in September sent another letter saying he was “disappointed” that Ellen Cotter had not engaged him in talks about his all-cash offer, financed by prominent investment firms TPG Capital and the Santo Domingo Group.
Heth, best known as the CEO of Karo Film Group in Russia, told The Times that he wants to buy small theater chains in North America and retrofit them in the image of his high-end cinemas overseas.
“Reading has the footprint I’m looking for,” Heth said. “I respect what the family’s done, but I and my team can take it to the next level. I think there’s a lot I can do with it.”
Ellen Cotter said in a recent earnings call that the board met in June and November to review Heth’s proposal and determined that shareholders would be better off if the company remained independent. “We don’t believe that the pursuit of a short term premium to market through a sales process is the best way to realize the value in our company,” she said.
Investors interviewed by The Times agreed that Heth’s offer was low, but said the board needs to entertain offers.
“I agree with the company that $17 greatly underestimates its value, but I don’t agree with the company not being willing to engage with a serious party interest,” said Jonathan Glaser, whose Los Angeles firm JMG Capital Management owns Reading shares.
JMG was part of an investor group that sued Reading last year for breach of fiduciary duty after Cotter Jr. was fired. The funds later withdrew their complaint and the case was settled.
Notwithstanding the legal skirmishes, Reading’s business has been growing. Revenue in the quarter ended Sept. 30 jumped 23% to $71.3 million compared with the same period a year earlier. Profit was $3.9 million, up from $327,000 in the prior-year quarter.
Reading has had some success renovating its theaters in San Diego and elsewhere by improving food and beverage options, seating and other amenities. The company also expects to generate substantial cash flow from a six-story retail and office development in Manhattan that will replace an off-Broadway theater. The project is projected to open in 2018.
B. Riley analyst Wold, whose price target for Reading is $26, said the company ’s movie theater and real estate businesses are showing signs of strength, despite its relatively small size and ongoing court battles.
“There’s clear indication that there is value,” Wold said. “It does put pressure on management to deliver more value for shareholders.”
Story link: http://www.latimes.com/business/hollywood/la-fi-ct-reading-international-drama-20161109-story.html
November 14, 2016
From The Wall Street Journal: The sleepy movie-theater industry rarely is a player in big-ticket deals. But after working for months to get skeptical investors on board, AMC Entertainment Holdings Inc. appears poised to win shareholder approval for an acquisition that would make it the largest exhibitor in the world.
AMC, which currently is the second-biggest theater chain in the U.S., plans to pay $1.2 billion to acquire Carmike Cinemas Inc., a tie-up that Carmike shareholders are expected to vote on Tuesday. The initial deal, announced in March, was met with investor backlash and forced a delay of the vote.
Meanwhile, AMC Chief Executive Adam Aron is pursuing a second acquisition that would expand the company to Europe. The deal is expected to close by the end of the year.
October 25, 2016
From The Wrap: AMC Entertainment Holdings, the parent company of cinema chain AMC Theatres, announced in a Thursday filing that it would issue $1.4 billion in new debt to finance two billion-dollar acquisitions it has agreed on this year.
In July, AMC — which is owned by Chinese entertainment giant Dalian Wanda Group — agreed to buy British theater chain Odeon & UCI in a deal valued at $1.2 billion. That same month, the board of Carmike Cinemas, the U.S.’ fourth-largest exhibitor, agreed to accept AMC’s second and sweetened offer for $1.2 billion.
The Carmike acquisition would make AMC the country’s biggest theatrical exhibitor, passing current No. 1 Regal Cinemas. Combined, Odeon and Carmike control more than 5,000 screens, and completing both deals would make AMC parent Wanda — which also owns China’s biggest theater chain — the first exhibitor to manage more than 10,000 screens worldwide.
August 29, 2016
Hollywood Reporter: Summer Box-Office Wrap: Why Hollywood’s on Red Alert Despite Near-Record Revenue
From The Hollywood Reporter: The sequelitis virus infected a number of big-budget franchise installments, except for a precious few (think ‘Captain America: Civil War’ and ‘Finding Dory’), while horror also helped save the day and Disney dominated.
Even though there’s still a week to go before the summer season ends on Labor Day, the verdict is in: Box-office revenue in North America should clock in at $4.5 billion, predicts comScore. That’s the second-best showing ever, behind only 2013’s $4.8 billion and up one percent over last year.
So why is Hollywood on red alert? Blame it on the sequelitis virus, which hit the U.S. particularly hard.
On the one hand, moviegoers in the U.S. and across the oceans turned out in force for Marvel Studio’s franchise installment Captain America: Civil War and Pixar’s sequel Finding Dory — they delivered Disney the summer’s two top-grossing films worldwide with $1.52 billion and $929.1 million, respectively. But the same moviegoers largely rejected a number of other big-budget sequels, reboots and remakes. One genre that’s been immune to the disease is horror, helping to deliver a number of solid doubles and triples that boosted the bottom line.
In terms of attendance, 518 million people went to the movies this summer in North America, according to early projections. That’s down roughly 3 percent from last year, but up from a dismal showing in 2014, when 497 million consumers bought tickets. However, the 518 million is behind summer 2013 (585 million) and summer 2012 (539 million).
Heading into summer, no studio executive could have imagined that STX Entertainment’s $20 million Bad Moms, an R-rated comedy that has grossed $95 million to date in North America, or Universal’s $5 million horror sequel The Purge: Anarchy ($79 million) would domestically out-gross the $170 million sequel Alice Through the Looking Glass starring Johnny Depp, which earned just $77 million in North America.
July 12, 2016
From The Wrap:
AMC Theatres announced deal to acquire London-based Odeon & UCI Cinemas Group
China-controlled AMC Entertainment continues its global expansion, announcing plans on Tuesday to acquire Europe’s largest movie theater chain for $1.2 billion.
London-based Odeon & UCI Cinemas Group has been in the hands of Guy Hands’ Terra Firma private equity outfit.
AMC, which is also finalizing its acquisition of Georgia-based U.S. exhibitor Carmike, announced it would pay 75 percent in cash and 25 percent in stock for Odeon. The companies expect to complete the deal by the end of the year. Odeon & UCI oversee 242 theaters and 2,236 screens, selling 90 million tickets annually, according to MarketWatch.
With the acquisitions, AMC’s holdings would include 627 theaters and 7,600-plus screens in eight countries.
“While we acknowledge that there are some uncertainties related to Brexit, we are encouraged that current currency rates are highly favorable to AMC with the pound falling to a three decade low versus the dollar,” AMC CEO Adam Aron said in a statement.
October 20, 2015
Enjoy some wonderful movies from silent film stars like Buster Keaton, Charlie Chaplin, Louise Brooks & Mary Pickford. You can find more great old movies to enjoy free on site like Fandor and Open Culture’s 101 Free Silent Films: The Great Classics including Charlie Chaplin’s two rel parody of Bizet’s Carmen.