NEW YORK — Time Warner Inc. and Viacom Inc. on Monday finally confirmed their plans to sell Cinamerica/Mann Theaters to a joint venture of investment firm Warburg Pincus and former Cinemaworld president Jeff Lewine for a price believed to be $165 million.
As reported (Daily Variety, Oct. 1), TW and Viacom said Monday they had signed a definitive agreement to sell the 374-screen circuit to the joint venture, known as WestStar Holdings. The price was not disclosed but sources confirmed the reported price of $165 million.
The sale represents a massive loss for Time Warner, one of whose predecessor companies — Warner Communications Inc. — paid $150 million for its 50% stake in 1988.
Since then, however, the circuit has come under heavy competition from new megaplexes. Cinamerica’s theaters are based in California and Colorado. In San Diego, megaplexes have sharply cut into Cinamerica’s revenues.
The price is believed to be more than eight times Cinamerica’s earnings before interest, taxes, depreciation and amortization. In addition, WestStar will have to put in more money to renovate the circuit. Details of the group’s plans for the circuit are not known and Lewine did not return calls.
Warburg Pincus is only the latest of a group of leveraged buyout firms to put money into theater exhibition. In recent weeks Kohlberg Kravis Roberts agreed to acquire Act III Theaters for $665 million and Hicks Muse Tate & Furst agreed to buy United Artists Theater Circuit for $850 million.
All the firms believe the industry is ripe for consolidation, although many observers question the prices being paid.
Viacom and Time Warner both plan to use the money raised from the sale for debt reduction. The companies said the deal was expected to close by the end of the year.