BoxOffice® Pro - April 2014

INTERNATIONAL EXHIBITION
WANDA’S ACQUISITION OF AMC TURNED THE DALIAN-BASED
COMPANY INTO THE WORLD’S LARGEST EXHIBITOR WITH MORE
THAN 6,200 SCREENS IN MORE THAN 500 LOCATIONS. THE CHINESE
COMPANY OWNS 80 PERCENT OF AMC AFTER RAISING $332 MILLION
IN AN INITIAL PUBLIC STOCK OFFERING IN DECEMBER.
In India, Cinepolis operates 14 cinemas
with 84 screens, according to company figures.
The company, the first international exhibitor
to enter the Indian market, said in November
that it plans to have 400 screens operating in
India by 2016.
“Cinepolis is substantial,” says Michael
Karagosian, founder of cinema chain adviser
MKPE Consulting. “If there’s a player that’s
trying to achieve the scale of these other guys,
it’s Cinepolis.”
India, with a robust cinema industry that
produces films in Hindi and several regional
languages, presents a unique challenge when it
comes to offering the right mix of movies. For
example, the company’s 15-screen multiplex in
Pune, which opened in November, offers U.S.
fare and Bollywood’s Hindi films as well as
movies filmed in regional languages including
Marathi, Telugu, Tamil, and Gujarati, the company
said in a press release. The Pune multiplex
also includes three VIP auditoriums where, for
a higher price, patrons can enjoy luxury seats
and upscale food and drinks.
Cinepolis also operates five luxury theaters
with 35 screens in the United States through its
Cinepolis USA subsidiary. The cinemas include
a restaurant and bar, plus food and beverage
service inside each auditorium. Patrons sit in
reclining leather seats and can call a waiter with
the push of a button. The company’s U.S. ambitions
and the market they serve are relatively
small, says Karagosian.
“They’re not trying to build a big footprint
here,” he says. “All they’re trying to do is build
a small luxury chain and that makes sense.
They’re establishing a name. They’re starting
out small, which allows them to become more
familiar with the U.S. market and become a
little more familiar with Hollywood, perhaps.”
Wanda’s acquisition of AMC turned the
Dalian-based company into the world’s largest
exhibitor with more than 6,200 screens in more
than 500 locations. The Chinese company
owns 80 percent of AMC after raising $332
million in an initial public stock offering in
December.
Understanding the AMC acquisition and
Wanda’s declared interest in further international
expansion requires a more complex
analysis than Cinemark’s and Cinepolis’s
revenue-driven plans, analysts say. Although the
United States remains by far the largest single
movie market, studios and exhibitors have
relied on higher ticket prices, helped by 3D
surcharges, to offset stagnant admissions. Since
the United States is hardly a growth market,
how does Wanda benefit?
One answer is that AMC gives Wanda a higher
profile, and greater influence, in Hollywood,
says Jones. Wanda further strengthened its ties to
the industry last year by donating $20 million toward
the construction of the Academy of Motion
Picture Arts and Sciences’ new museum.
Another reason for the acquisition may be
to learn how to operate in a larger market as
China moves toward surpassing the United
States as the world box office leader by 2020.
China’s government is looking to the “cultural
sector,” which includes movie production and
exhibition, to help spur consumer spending,
according to an Ernst & Young report.
“Getting to know the studios better and understanding
how to operate in a major market
are probable motivations,” Jones says. “After all,
China will soon be the biggest global market.”
Wanda has said its goal is to control a 20
percent share of the world market. To help
accomplish that, it has looked into acquisitions
in Europe and other parts of Asia, although no
additional deals have been struck so far.
“Although the China market has been growing
rapidly, China alone can’t help us reach this
goal as China can account for 15 percent in
the best case,” Wanda Chairman Wang Jianlin
told CNBC last year. “Therefore, we have to
conduct more M and A to reach the target.”
BOX OFFICE REVENUE IN ARGENTINA (IN MILLONS OF U.S. DOLLARS)
BOX OFFICE REVENUE IN BRIC COUNTRIES (IN MILLONS OF U.S. DOLLARS)
80 BoxOffice ® Pro The Business of Movies APRIL 2014