Cinema Industry Set For Further Consolidation

After a period of rapid consolidation early this decade, partly prompted by the wave of bankruptcies that hit US cinema chains in 2000-01, merger and acquisition activity in the industry has slowed. However, according to Exhibitor Rankings, an analysis by Dodona Research, 64 companies operating 200 or more screens now own 31,855, or 29%, of all cinema screens worldwide. This compares to 51 companies of similar size with 29,747 screens between them in 2004.

Whereas early in the decade the biggest acquisitions were in North America, more recently the focus of growth has shifted elsewhere, notably South Korea, where local circuits Lotte Cinema and CJ CGV have expanded rapidly since 2004. Other significant consolidators have been Cinebox in Spain, which merged with the Cines Abaco chain, Palace Cinemas in Central Europe, and Major Cineplex in Thailand.

By contrast, two Australia-based circuits, Village Roadshow and Hoyts have divested the bulk of their overseas cinemas to focus on their domestic markets.

The market to have seen the most radical change, however, is Canada. A series of transactions saw Loews, owner of the Cineplex Odeon circuit, broken up and its Canadian cinemas combined with Galaxy, while the combination's subsequent acquisition of the former market leading circuit, Famous Players, from Viacom was followed by a series of sales of cinemas demanded by Canada's competition authorities. Many of these cinemas were sold to Empire Cinemas, which more than doubled its screen count as a result.

Although the most dramatic changes have been outside the United States, this does not mean the US exhibition sector has lost its characteristic dynamism. During the period Cinemark acquired the 900-screen Century Theatres circuit, which was the world's tenth-largest in 2004, while the market continues to produce circuits showing rapid organic growth from new theatres: Rave Motion Pictures has more than doubled in size to move from fiftieth to twenty-eighth position, while Southern Theatres has come from nowhere to become the forty-eighth ranked circuit worldwide.

The largest circuits are Regal Entertainment Group (6,369 screens), Cinemark (4,645) AMC Entertainment (4,638), Carmike Cinemas (2,399) and, the largest European-based circuit, Odeon UCI (1,754). Latin America's largest circuit, Mexican-based Organizacion Ramirez Cinemas, comes next with 1,661 screens. Asia's biggest exhibitor is the Japanese film company, Toho, in seventeenth place with 563 screens.

Altogether, the Exhibitor Rankings database lists almost 300 exhibitors operating 20 screens or more spread across more than 50 countries. Dodona's Managing Director, Karsten Grummitt, says the company is steadily improving coverage, estimating that at least 95% of all circuits with 50-plus screens are already included. He offers this prediction: "We think that the medium term impact of the changeover to digital projection will benefit the largest circuits, at the same time as creating opportunities for innovation and even new theatre formats among more imaginative small circuits and independents. It is harder to see what is in it for medium-sized operators, so we expect the steady trend towards consolidation in the industry to continue".