AMC Theatres may have the second-most screens in America, but one small theatre chain says it won’t be shut out. “By its acts, practices, and conduct, over the past 4-5 years and continuing today, AMC has engaged in a course of conduct that amounts to monopolization and/or unlawful exercise of monopoly power,” says Cobb Theatres in an antitrust complaint filed in federal court in Georgia this week. In the 42-page filing (read it here) requesting a jury trial, Cobb wants AMC — which has more than 5,000 screens in about 350 theatres nationwide — stopped via injunction from continuing its alleged behavior that started in 2009. Cobb also seeks an award equal to three times the damages it says it has suffered, legal fees, and all profits AMC made from supposedly preventing Cobb access to films like Sony’s The Amazing Spider-Man.
Mincing no words, the smaller chain cites a “ruthless campaign” and accuses AMC of using “its worldwide and national circuit power and its market power in a substantial number of geographic markets to coerce film distributors” to stop Cobb being able to play major movies. Directly or through joint ownership, Cobb has 19 theatres situated in Georgia, Florida, Virginia and Colorado for a total of 231 screens. Read More »
While Hollywood continues figuring out how to do business in China, and execs remain cautious, there is a sense that 2013 was a tipping point in the complex relationship between the world’s two box office leaders. As Hollywood’s focus turns to maximizing global grosses, the town is increasingly looking for ways to cozy up to the territory that adds 10 theaters a day to service its 1.3B+ population. And China is also strongly courting Hollywood. In September, Wanda’s Wang Jianlin unveiled ambitious plans to bring the industry closer to the Mainland and emphasized China’s place at the center of the global biz, urging players to cooperate for a piece of the pie. Then, at November’s U.S./China Film Summit in L.A., China Film Co-Production Company’s Zhang Xun offered, “We have a huge market and we want to share it with you.” Here’s a look at some of the key happenings in China in 2013 and a taste of what to look out for in the coming year:
Related: China’s Wanda & Hollywood: How Much Is Real? How Much Is Real Estate?
China Box Office Hits $3B+: Hollywood Improves While Local Films Dominate; What Does End Of 2013 Hold In Store?
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Exhibition chains have done pretty well on Wall Street this year, so this planned stock offering may interest investors who want additional opportunities to bet on the industry. But the sale of 18.4M shares at between $18 and $20 a share won’t dramatically change AMC Entertainment — aside from putting it back under analysts’ microscopes. The No. 2 theater chain disclosed its IPO plan in August; today’s filing adds several details. It wants to trade on the New York stock Exchange under the symbol “AMC.” It expects to net $322.6M after paying underwriting expenses, and will use cash from the stock sale to retire some debt and for undefined “general corporate purposes.” It especially wants to ditch some 8.75% Senior Fixed Rate Notes that mature in 2019. AMC currently carries a lot of debt — about $2.2B — and warns that “if interest rates increase, we may be unable to meet our debt service obligations.” China’s Wanda Group, which paid more than $2.6B for AMC last year, will retain control. It’s selling Class A stock that entitles owners to one vote per share, and will keep the Class B stock with three votes per share. When the IPO is complete, Class A owners will control 7.8% of the votes while Class B holders have 92.2%. Read More »
Was the Dalian Wanda Group just whetting its Hollywood appetite with the $2.6B acquisition of AMC Entertainment? The president of the Chinese property developer has hinted as much in a recent interview with Reuters. According to the news agency, Wang Jianlin said that Wanda can spend as much as $5B a year on foreign acquisitions and would be prepared to pay more than $5B for a single acquisition, if the right opportunity avails itself. Although he did not specify which firms or assets his company is eyeing, he told Reuters that the focus will continue to be on hospitality and entertainment. In September last year, Wanda closed its $2.6B purchase of AMC, making it the world’s biggest owner of movie theaters. In June, it signaled it would acquire a majority stake in yacht maker Sunseeker International whose boats have appeared in at least four James Bond movies. It also has plans to build five-star luxury hotels in London and New York, investing more than $2B. Wanda also said today that it will hold the opening ceremonies for its new $4.9B film studio in Qingdao later this month. The company currently owns 72 Wanda Plazas and 40 five-star hotels in China, 6,000 movie screens, 62 department stores and 68 karaoke centers, according to Reuters.
Anil Ambani’s sprawling Indian conglomerate Reliance and China’s Wanda Group have announced plans to create long-term joint ventures in cinema exhibition in India and the United States, Reuters reports. Plans also call for Reliance and Wanda to build real estate projects in India involving a combined area of about 20 million square feet across a pair of locations in Navi Mumbai and Hyderabad. Wanda Group earlier this year became the world’s biggest owner of movie theaters when it acquired U.S. chain AMC Entertainment for $2.6 billion. It has about 1,000 screens in China and 5,890 in the U.S. from AMC. Wanda says it plans to spend $10 billion in North America over the next decade. Reliance currently operates 254 screens in India and 170 screens across the U.S., according to Film Business Asia. Reliance also has invested in DreamWorks Studios and has backed a 10-episode pirate project for NBC. Wanda Cinema Circuit was yesterday named Exhibitor of the Year at the annual CineAsia convention in Hong Kong. Reliance’s facilities and post-production unit Mediaworks recently partnered with China’s Galloping Horse to acquire the U.S. effects house Digital Domain. Mediaworks has a 30% stake and Galloping Horse 70%.
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The soft results in an SEC filing this evening are consistent with some of the numbers we’ve seen elsewhere for the quarter — but with a lot of financial noise resulting from Wanda Group’s $2.7B acquisition of the No. 2 U.S. theater chain at the end of August. AMC says that it had $33.2M in net earnings for the quarter that ended in September, up from a $10.2M loss in the period a year ago, on revenues of $650.2M, -3.1%. But the profit figure was inflated by a $39M gain from the sale or closing of its theaters in Canada and the UK. (That covers proceeds from the sales as well as the write-off of long-term lease liabilities.) Admission revenue came in at $460M (-4.2%) as the number of tickets sold at the theaters owned at the end of the quarter fell 5.3% to nearly 49M. AMC had better luck with concessions, which generated revenues of $182.5M, (+1.9%). AMC reports that financial advisers and consultants were paid $32.3M in “success fees” for their work on the deal with Wanda.
Wanda says its acquisition of AMC Entertainment should close at the end of August. The $2.6B deal — mostly from Wanda’s assumption of AMC debt — was cleared by the Committee on Foreign Investment in the U.S. and the Federal Trade Commission as well as China’s National Development and Reform Commission, Ministry of Commerce, and State Administration of Foreign Exchange. The company’s betting on U.S. exhibition at a time when the industry’s prospects are murky — and not simply due to last week’d tragedy in Aurora, Colo. Things look good now: Stock prices for chains including Carmike, Cinemark, and Regal have outperformed the overall market over the last few years — including over the last 12 months and year-to-date in 2012. Investors have been impressed by theaters’ ability to keep raising prices for tickets and concessions even as the number of admissions has either remained flat or declined. But consumers are starting to push back. For example, many chains have had to lower their pric- hike expectations for 3D movies. Studios also haven’t abandoned their hope to offer recently released movies on VOD, which theater owners say could cut into their sales.
Related: China’s Wanda Group Agrees To Pay $2.6B For AMC Entertainment
Here’s the release from Wanda and AMC: Read More »
Don’t rule out the possibility that China’s Dalian Wanda Group will eye the U.S. movie production business now that it has agreed to pay $2.6B for AMC Entertainment. The exhibition chain’s also considering allowing texting during some showtimes. AMC chief Gerry Lopez, 52, says all kinds of things can happen these days, and especially following his blockbuster deal last week with Wanda’s billionaire chief Wang Jianlin. It’s Wang’s first major foray outside of his country, as well as the biggest buyout by a Chinese company of a U.S. entity. If approved by government officials, Wanda will pick up the No. 2 movie chain — whose initials used to stand for American Multi-Cinema — with 5,034 screens at 346 theaters in the U.S. and Canada.
The deal cures AMC’s biggest headache. It needed to pay off its private equity owners: J.P. Morgan, Apollo Management, Bain Capital, The Carlyle Group, and Spectrum Equity. The company had hoped to go public but that effort stalled as AMC continued to spill red ink. In the 52 weeks that ended in March it generated a net loss of $82M — an improvement from the $122.9M loss in the same period ending a year ago — on revenues of $2.6B, up 6.7%. Wanda’s purchase price includes the assumption of AMC’s $2.2B in debt, which required the chain to pay about $160M in interest in its latest fiscal year.
What happens now? Deadline Executive Editor David Lieberman spoke with Lopez, a former Starbucks exec, about AMC’s plans with Wanda and other hot-button issues in exhibition. This interview was edited for length and clarity: Read More »
About $2B in the purchase price comes from Wanda’s assumption of AMC’s debt, I’m told. The deal is expected to close in a few months after it’s approved by anti-trust officials and the federal Committee on Foreign Investment in the United States. In the meantime, AMC will keep alive its application at the SEC to go public — even though the company has done little to move it along. Wanda sees its acquisition of AMC as an opportunity to secure a foothold in the U.S., learn industry best practices, and strengthen its relationship with IMAX. The deal calls for AMC management to remain in charge of the U.S. operation at the company headquarters in Kansas City. Wanda’s deep pockets also should enable debt-laden AMC to make needed renovations, and possibly give it the ability to acquire theaters.
Here’s the announcement: Read More »
AMC, owner of North America’s second-biggest movie theater chain, has been in on-and-off discussions with Chinese giant Wanda for over a year, The New York Times reports. The talks, which have recently heated up, concern a straight acquisition or the purchase of a “significant stake” in the company, the newspaper says. Along with owning 730 local movie screens (47 are IMAX), Wanda has interests in luxury hotels, tourism investment and department stores and has annual income of $17B. Chairman Wang Jianlin recently said the company intended to increase its investment in cultural industries. AMC has roughly 350 theaters with 5,050 screens and is currently held by a group of investment firms including Apollo, JPMorgan, Bain Capital and the Carlyle Group. A deal would put a current value of about $1.5B on AMC, The Times estimates. Read More »