Profits will go into new territories
Add Portugal to the list of markets from which Warner Bros. is withdrawing as an exhib.
The studio is selling its 50% stake in the Portuguese circuit to its partner Lusomundo for 21 million euros ($22.3 million).
The deal, which is subject to regulatory approval by the country’s competition authority, is due to be unveiled today (Wednesday).
Launched in 1992, the loop comprises 105 screens at 13 sites, including two multiplexes which bowed in the past two weeks. Circuit accounts for about 40% of the territory’s B.O.
The sale is in line with Warner Bros. Intl. Theaters’ strategy of helping to develop exhibition in various territories, exiting when each market matures, and plowing the proceeds into seeding new markets.
Last week WB closed the deal to withdraw from its Australian joint venture with Village Roadshow and Greater Union. Warner and its partner Village are negotiating to sell their 336-screen U.K. loop to fledgling exhib SBC Intl.
The deal in Portugal differs as the cinemas will continue to trade under the Warner Lusomundo brand and Warner will assist in the design of future sites; WB will get a financial benefit from this arrangement.
“We are keen to continue our good, strong relationship with (Lusomundo parent) Portuguese Telecom,” WB Intl. Theaters prez Millard Ochs told Daily Variety.
Ochs added the sale “has no bearing on the profits of the business; all these (joint venture) businesses are profitable. It’s time to move on.”
He said the profits would be invested primarily in developing WB Theaters’ presence in China, where it is partnered in one multiplex in Shanghai and is awaiting official approval for the co-venture before further building.
Warner’s alliance with Lusomundo in Spain isn’t affected by the Portuguese transaction.
Since Warner Lusomundo was launched in 1992 the exhib sector in Portugal has undergone a revolution. The number of screens has mushroomed from 232 to approximately 580. Single screens have all but disappeared and the market is dominated by multiplexes. Admissions soared from 8 million in 1992 to 20-21 million. Average ticket prices have risen from euros 1.75 to 4 over this period.
Since 2000, the market has stabilized and the number of Warner Lusomundo screens is not likely to grow significantly; nor are there likely to be many more multiplexes built in Portugal, since the main urban centers are at saturation point. Admissions at Warner Lusomundo screens reached a peak in 2001 at 6.9 million and suffered a small drop in 2002 due to the slowdown of the Portuguese economy.
Asked about the state of negotiations in the U.K, Ochs said, ” . . .So far so good, but there’s no (set) date for closing.”
(Martin Dale in Lisbon contributed to this report)