×

Momentum for exhibitor mergers

Cost of digital conversion, overseas interest will help generate more exhib M&A.

A surge of movie theater M&A launched by Wanda’s dramatic buy of AMC and followed by deals at Carmike, Cinemark and Regal should continue, Wall Streeters and insiders predict, with digital costs spurring more hookups among the top 30 circuits and interest from overseas.

Deals totaling well over $3 billion this year, inflated by Wanda’s $2.6 billion purchase of AMC in May, wound down last week with Regal’s $91 million acquisition of Great Escapes. That agreement closed fast as private owner the Ragain family wanted it done by year-end — one of many deals across industries spurred by uncertainty on tax policy as of Jan. 1.

The cost of digital conversion will spur more deals as smaller chains look to cash out if they can. The National Assn. of Theater Owners has estimated that 10%-20% of U.S. theaters won’t be able to convert and may close. In other cases, private equity firms are at the end of a typical three-to-five year investment cycle.

Rave Cinemas, which sold out to Cinemark and Carmike and unloaded four theaters to AMC, was owned by Towerbrook Capital and Boston Ventures. AMC was owned by a consortium including Apollo Management, Bain Capital and Carlyle Group.

“The whole transition to digital seems to be creating movement in M&A, and there’s also been a nice box office tailwind that tends to bring sellers off the bench,” said Regal CFO David Ownby. “We think the momentum will continue.”

He sees most deals occurring between the bigger players. “Beyond the top five circuits, the real opportunity is in the top 30-35 (chains) with the big guys buying them. Once you get down below that, it’s just a couple of theaters,” he said.

Private equity’s at the end of its investing life cycle, he said. Private families tend to sell when there’s generational change. The bigger the chain, the more leverage and economy of scale for studios’ rental fees and concessions.

Cinemark spent $240 million on 32 Rave theaters, strengthening its New England presence. Carmike’s deal for 16 theaters was worth $120 million. AMC bought a few Rave locations in the South and Southeast for an undisclosed amount.

“I feel left out,” joked Ownby.

The Rave carve-out shows one challenge for the biggest chains, which are pretty ubiquitous. Regal already operates in 43 of the top 50 U.S. markets. Execs say the other barrier is finding theaters they like. Rave locations have many all-digital screens with significant 3D capacity but not all chains do.

They may face competition from international buyers, who are eyeing also the space. In June, AMC sold four theaters in Quebec and Ontario to Canada’s Cineplex Odeon.

“We see additional acquisitions by foreign media companies in the U.S. We’ve talked to a number of them,” said Evan Klein, managing director of boutique investment bank Berkery Noyes, who repped Great Escapes in the Regal deal, describing interest by “leading exhibitors in leading countries” in Europe, South America and Asia.

Wanda chairman Wang Jianlin has already said he wants to add to his U.S. portfolio.

Klein cited synergies, in Canada and the U.S., and said overseas groups see “a great amount of knowledge” Stateside and assets at attractive prices. The reverse is also true. “Everything in Europe is for sale,” said one industry CEO. Busy circuits
Top 10 exhibition chains in the U.S.

1.Regal6,7772.AMC5,3363.Cinemark USA3,8254.Carmike Cinemas2,2685.Cineplex1,3476.Rave Motion Pictures9367.Marcus Theaters6688.Hollywood Theaters5469.National Amusements45010.Harkins Theaters429
– Source: NATO, Boxoffice.com

More Film

  • SONDRA LOCKESONDRA LOCKE - 1986

    Oscar Nominee Sondra Locke Dies at 74

    Actress and director Sondra Locke, who received a supporting actress Oscar nomination in her first movie role for “The Heart is a Lonely Hunter,” died Nov. 3 at 74. The Los Angeles County Public Health Department confirmed her death. She died due to breast and bone cancer, according to Radar Online, which reported that she [...]

  • Clint Eastwood and Alison Eastwood'The Mule'

    Clint Eastwood: Why Alison Eastwood Came Out of Acting Retirement for Her Dad

    Clint Eastwood’s daughter Alison Eastwood was done with acting after appearing in 2014’s “Finding Harmony.” Or so she thought. It was a Friday night and she and her husband were heading to dinner when her father’s producer Sam Moore called. “He [says], ‘You know, your dad wants you to do this film,” Alison recalls. “I [...]

  • 'Dead Women Walking' Review: Uncompromising, Powerful

    Film Review: 'Dead Women Walking'

    The sober and gripping “Dead Women Walking” focuses on the final days of a series of female inmates facing the death sentence. Divided into nine chapters, each inching its way inexorably closer to the moment of execution, the drama turns the fragmentation of its approach to a powerful advantage. Not only do the individual stories [...]

  • Sam Mendes

    Sam Mendes' World War I Drama '1917' Set for Awards-Season Launch on Christmas 2019

    Universal Pictures has given an awards-season release date of Dec. 25, 2019, to Sam Mendes’ World War I drama “1971.” Steven Spielberg’s Amblin Partners is producing “1917” through its DreamWorks Pictures brand. “1917” will open in limited release on Christmas Day then go wide two weeks later on Jan. 10, 2020. Mendes wrote the script [...]

  • Ventana Sur Queer Latin Film Panel

    Ventana Sur: Panel Talks Merits, Setbacks in Latin Queer Cinema

    BUENOS AIRES — Four venerable professionals from the cinema world joined on Monday evening for Queer Cinema In Latin America, a frank discussion on Latin America’s role within the queer filmscape for Ventana Sur’s Industry conference series held at the UCA campus in Buenos Aires. Touching on advancements in character arc and notable achievements in [...]

  • Jennifer Lopez

    Jennifer Lopez 'Absolutely' Wants to Direct Film and Television

    Jennifer Lopez epitomizes the phrase “she’s done it all” — but there’s still more that the superstar would like to do. Lopez recently directed her first music video, “Limitless,” the track featured on her new rom-com “Second Act,” and it seems the multi-hyphenate has caught the directing bug. “Absolutely, absolutely,” Lopez responded when asked by [...]

More From Our Brands

Access exclusive content