Finnkino and Forum Cinemas changed owner

posted by Ing. Juraj Misun, PhD. on April 12, 2011 at 10:50 am

COAUTHOR: Ing. Ivana Hudakova, PhD., Department of Management, University of Economics in Bratislava

The Swedish venture capital company Ratos AB announced it has acquired 100 per cent of the shares of the film distribution and cinema company Finnkino Oy from the Finish media group Sanoma. For experts the transaction does not come as a big surprise. Sanoma tries to focus its activities on consumer and business-to-business media and Finnkino did not fit very well to this strategy.

Finnkino, established in 1986, has three business areas: cinema exhibition, theatrical distribution and DVD distribution and is active in Finland, Estonia, Latvia and Lithuania. Finnkino’s cinema operations use the brand FINNKINO in Finland and FORUM CINEMAS in the Baltic countries. Their common logo is a simple letter “f”. The biggest Finnkino theater is Tennispalatsi Helsinki with 14 screens and 2,696 seats. The company also operates the oldest Finnish movie theater MAXIM Cinema.

There are currently 25 theaters with 161 screens and approximately 30,000 seats. In the three Baltic countries, Forum Cinemas has 14,609 seats in 72 auditoriums and eleven theaters. The largest Forum Cinema is Citadele in Riga (Latvia) with 3,016 seats and 14 screens.

It is hardly to anticipate that something will be changed markedly for the customers. Both brands, ticket prices and also the service quality should not change. It can be expected that Ratos will try to reduce costs, to improve profitability and to buy another cinema operators, mainly in the Baltic countries with a higher anticipated growth of admissions. Estonia, Latvia and Lithuania had some of the highest GDP growth in the European Union before the global economic crisis hit them hard.

“The movie theatre market is showing positive development in the Nordic region… Admissions numbers per capita are still lower compared with the other Nordic countries, but with continued investments in new movie theatres and technology, both the number of visitors and revenue per visitor are expected to rise.” Ratos' CEO Arne Karlsson said.

Private equity companies do not buy cinema exhibition companies to hold them for a long time. Probably in five to ten years Finnkino will be sold either to another investment firm or to an established cinema company looking for expansion into the Northeastern Europe. If the CEO’s statement was meant seriously, new theaters should be built. The small and probably not very visible difference will be that these new theaters will be prepared for a quick rebranding. Instead of the corporate gold color, universal colors like blue, red and white will be dominant.

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