WB, Par file offer to buy theater circuit
Having filed for Chapter 11 bankruptcy protection last month, the Mann Theater chain appears to be headed back into stewardship by Cineamerica — the joint Paramount-Warner Bros. exhibition venture that operated the circuit from 1986-97.
Pending court approval, former WB distribution prexy Barry Reardon will be in charge of assessing the relative strengths of the operation and solidifying its presence.
Cineamerica, which remains a signatory on contracts for most of the Mann sites, apparently stepped back into the fray both for its legal protection and to ensure the viability of the chain’s high-profile locations in Hollywood and Westwood.
The 374-screen Mann operation was acquired by investment firm Warburg Pincus (since renamed Warburg Dillon Read) in 1997 for $165 million. In January of this year, the company engaged Bear Stearns & Co. to find a buyer for the foundering circuit and attracted mild interest from Pacific Theaters and an investment group led by former Mann CEO Jeff Lewine. Both groups had made bids said to be in the neighborhood of $85 million-$90 million in cash.
“I think Warburg had an inflated sense of Mann’s worth,” said a senior exec at a rival chain. “They bought when there was a feeling on Wall Street that exhibition was booming. But they never had the management in place to grow, and the entire operation became increasingly antiquated.”
According to an internal assessment of the chain’s 54 locations in California and Colorado made earlier this year, two-thirds were not profitable.
Warner Bros. and Paramount have filed their offer to reacquire the circuit with the bankruptcy court; approval may take as long as three months. It’s common knowledge, however, that the studios have retained Reardon, who is operating out of Burbank, Calif. Mann’s current operator, WestStar Cinemas, is based in Encino, Calif.
“Until the transition is approved by the court, there’s very little that can be done officially,” Reardon conceded from his Warner Bros. office. “Even after it OKs the change in ownership, it has approval of anything contractual.”
But another studio source said it would be a relatively simple matter to sign over the running of sites to another exhibitor. Reardon, who retired last year, confirmed that his deal would not involve the daily operations of the circuit. He characterized his role as that of a troubleshooter sent in to clean up the situation. If there are no serious delays with the court, consolidation of the chain could be completed in eight to 12 months.
Most Mann locations are expected to be sold, with the most likely interest coming from Edwards, Syufy and United Artists circuits. Cineamerica will likely retain only its sites in Westwood, Hollywood, Santa Monica and, possibly, the San Fernando Valley.