Mark Cuban’s strange moment

Landmark for sale as exhibition biz roils

More than just a smart observer of the media landscape, Mark Cuban fancies himself an astute seller of properties, getting his price at just the right time. That’s why he’s a billionaire.

But his seller’s savvy will certainly be put to the test following his disclosure Tuesday that he is seeking a buyer for his Landmark Theaters chain and indie film distribution company Magnolia. Big questions linger about the future of the exhibition biz, particularly in light of new premium VOD offerings from the studios. And in an increasingly challenging market for indie films, Magnolia has struggled to deliver a breakout hit.

The world might not have known of Mark Cuban had it not been for the sale of his to Yahoo in 1999 in the middle of the Internet boom. That transaction put the working-class kid from Pittsburgh into the eight-digit club; it allowed him to buy the Dallas Mavericks and perennially places him on the shortlist of potential buyers when sexy sports and media properties go on the block.

But Cuban has put his seller’s hat back on, first floating the idea of the Landmark/Magnolia sale publicly to Bloomberg News and confirming it late Tuesday to Variety and others. “We are evaluating the market. We will consider the offers,” he emailed. “If we don’t get what we want, we will walk away and keep running the businesses. Business is great.”

It’s been an open secret for some time that Cuban has been trying to sell Landmark and Magnolia, but he appears to be serious now, having hired investment bank Moelis & Co. to help conduct an auction. Moelis managing director and co-founder Navid Mahmoodzadegan is a prolific dealmaker with deep relationships in the entertainment and media businesses, splitting his time between L.A. and New York. He did not return calls seeking comment on Wednesday.

Landmark, which unspools mostly specialty films, operates 296 screens at 63 locations, with a showcase multiplex in West L.A. Cuban and partner Todd Wagner bought the chain in 2003 with the intent of creating a vertically integrated operation.

Magnolia, with releases including “I Am Love” and “Food, Inc.,” is known for releasing films on VOD before theatrical release.

Cuban’s 2006 move to break windows with films such as “Enron: The Rise and Fall” and Steven Soderbergh’s “Bubble” caused an outcry among exhibs just like the current VOD controversy that has spooked Wall Street. If investors remain worried about the future of film exhibition, it could affect future valuations.

Several distribs followed Magnolia’s lead with early VOD releases for specialty pics, introducing the era of multiplatform releases for smaller films.

What’s more, some analysts who follow public chains like Regal and Cinemark and soon AMC (it is planning an IPO) believe some studios will begin pushing for a 60% split with theaters vs. the current 50% or so split.

“Studios need to keep the exhibitors profitable (as exhibition remains an important part of the movie industry),” BTIG analyst Rich Greenfield blogged recently. “However, exhibitors may need to curtail regular dividends and will need to forget about special dividends in the future.”

In these murky times Cuban may decide it is better to hold — for now — than to sell.

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