Co. sells interest to Terra Firma

MADRID — Warner Bros. has bid adios to exhibition in Spain.

It has sold its entire 33% stake in its cinema circuit joint venture, Warner Lusomundo Sogecable Cines de Espana, to U.K. private equity company Terra Firma Capital Partners.

Terra Firma has also bought Lusomundo’s 33% and half of Sogecable’s shareholding, giving it 83% of WLS, which has 12 multiplexes and 119 screens in Spain.

The three-way deal was confirmed Tuesday by a Terra Firma rep, who declined to disclose the price.

Sogecable filed a short note last week to the Madrid stock exchange confirming its sale of 16.7% of WLS to Terra Firma. It suggests that the deal’s value should be known, once Spanish antitrust authorities approve it.

Antitrust clearance should not be a problem in a largely fragmented Spanish exhib market.

Italy is the only other Euro country where Warner Bros. Intl. Cinemas has screens via its joint venture, Warner Village Cinemas. It exited the U.K. and Portugal in 2003 to focus on new cinema construction in China.

Squeezing exhibs’ margins, average yearly takings per screen in Spain have tumbled from 38,942 admissions in 2001 to 32,782 in 2004 as cinema construction has outpaced stop-start B.O. growth.

Terra Firma owner Guy Hands, a British financier, is the most bullish buyout player in European exhibition.

In 2004, Terra Firma bought Odeon Cinemas, the U.K.’s largest cinema chain, and then paid Viacom and Vivendi Universal $339.7 million for the European theaters in their 50/50 exhib venture, UCI Cinemas, which included Spanish exhib loop UCI-Cinesa.

With UCI-Cinesa and WLS, Terra Firma now has 324 screens in Spain, just nine fewer than Spain’s biggest circuit by screen count, Yelmo Cineplex.

A Warner Bros. spokesman declined to comment. But a person close to the company confirmed the sale, pending regulatory approval.

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