Tele Munchen topper eyeing exhib Cinemaxx
BERLIN — German media veteran Herbert Kloiber is expanding into the exhibition business.
Kloiber, whose Tele Munchen group owns licensing, production, distribution and television operations as well as one of the biggest film libraries in Germany, is looking to take a majority share in the financially wracked Cinemaxx, Germany’s second biggest multiplex chain.
With Germany’s box office in the doldrums and an overabundance of multiplexes around the country, Cinemaxx has continued to post losses and remains heavily in debt.
Kloiber told German financial daily Handelsblatt that he expected to have the deal completed by the end of this week.
Cinemaxx’s management declined to comment on the possible sale.
For Kloiber, it’s an opportune time to buy. Cinemaxx founder and chief exec Hans-Joachim Flebbe, who owns 32% of the exhib group, reportedly is looking to sell; fellow Cinemaxx shareholder Senator Entertainment is in insolvency, making it likely that its 25% stake in the exhib will be sold as well.
Kloiber, who recently made headlines by outbidding TV giant RTL for a major Warner Bros. film package valued at $220 million, has not specified which shares he is acquiring, although he could get a majority in the group from both Flebbe and Senator.
Cinemaxx’s current owners are under pressure to divest: Cinemaxx’s main creditor, Dresdner Bank, has written off some E20 million ($24 million) in loans to the exhib and is looking to transfer that credit to a foreign investment fund, which would welcome a new investor.
Cinemaxx, which owns 49 theaters with a total of 356 screens, posted a half-year loss of $11.6 million in 2003. Company is due to release its full 2003 results next month.
Despite a generally dismal outlook for the local exhib industry, Kloiber is optimistic, saying he expects 4%-5% growth at the local B.O. this year. Yet the domestic exhib market saw a 9% drop in the first quarter of 2004 compared to the same period last year.
Germany’s box office sustained a drop of more than 11% last year. In addition to a saturated multiplex market, the exhib sector has been hurt by poor performance by some major Hollywood films, stiff competition from the DVD industry and illegal downloading.