Malaysia’s largest movie theater operator Golden Screen Cinemas is to acquire the country’s third largest player MBO, which last year filed for a creditor’s voluntary winding-up agreement as a result of the coronavirus’ negative impact on business. The move comes at a time when many of Malaysia’s cinemas are poised to reopen after the latest COVID shutdown.
GSC said that it will acquire the majority of the assets of MBO, which was previously backed by private equity firm Navis. It offered no financial details, but said that the purchase would likely be completed by the end of June.
MBO had operated 27 complexes across 10 states, though some of these were quickly hit by Malaysia’s lockdown measures, known as movement control orders. GSC operates 344 screens in 34 locations in Malaysia, though is understood to have permanently shuttered two multiplexes. It also operates 108 screens in 18 locations in Vietnam through a partnership with Galaxy Studio.
Malaysia’s on-off MCOs caused by multiple waves of the virus have played havoc with the country’s cinema industry. A week ago the chairman of the Malaysian Association of Film Exhibitors Mohd Ghazali Mohd Seth said that more than a quarter of cinemas had closed permanently, and that the sector was close to collapse. Year-on-year revenues were down 90% and sector losses in 2020 amounted to more than RM500 million ($124 million).
On Tuesday, the government said that capital territory Kuala Lumpur and the most populous states Selangor, Johor and Penang states would see their MCOs downgraded from Friday. The National Film Development Corporation (FINAS) said on its website that filming production and cinema operations can restart under those conditions.
“We view the Covid-19 pandemic as a temporary setback and are confident that once the pandemic has passed, audiences deprived of out-of-home-entertainment will return to the cinemas with a vengeance, consistent with what we have seen happen in other regions,” said a statement quoting GSC CEO Koh Mei Lee. She pointed to the example of the mainland China market where the Luna New Year season produced box office records.
“Despite the present challenging business environment, this acquisition is strategic, and will help accelerate the brand’s growth and strengthen its market leadership position,” said GSC in the statement. GSC is part of the publicly-listed PPB group. “We are confident that the acquisition of MBO cinema assets, together with the impending rollout of the vaccine, will help accelerate our recovery from this pandemic.”
Malaysia reported 1,555 new virus cases on Tuesday, the lowest daily infection reported this year. According to data from Johns Hopkins University the country has incurred a cumulative total of 304,135 cases and 1,145 virus-related deaths.