Welcome to BigScreenBiz.com

Is there anything in this country which will still be owned by Americans?

Wanda Group Buys AMC

I guess this was easier for the current owners to cash out than taking AMC stock public once again. I imagine it would have been more difficult to find schmucks to buy the public stock offering a second time - after the first time when they got a lot of AMC employees to buy the first public stock offering and then squeezed those AMC employees out by calling in that stock for pennies on the dollar in order to take it private once again.
I note that the press release says that current AMC management will remain in place. This probably amounts to a windfall for upper level management in that not only do the privledged sell their stock but those with employment contracts containing 'change of control' provisions get paid (often hundreds of thousands of dollars) for the balance of time remaining on their employment contracts (since there is a new owner and thus a 'change of control' has occurred) all the while still actually keeping the same job but technically for a new employer.


Wonder if this means that AMC theatres will now sell overpriced eggrolls at the concession stands?

2nd after Regal...18,000 employees, 5325 screens, 347 theatres, the busiest theatre in North America Empire 25 in NYC, and I guess I just do not know what to think about Chinese ownership. Why is it okay to deal with China but not Cuba?

This can not be good news for Regal. The money AMC now has available is enormous .

So will they now become known as CMC? Somehow "American" Multi Cinema just doesn't seem appropriate anymore.

According to an article today (Tues May 22, 2012) the purchase by Wanda could set the stage for a string of similar moves by Chinese investment firms of theatre and other US entertainment properties.

Translation: Look for other major theatre chains to be sold to the Chinese as these theatre owners try to get out from under the crushing debt caused by the digital conversion process.

More Deals To Come?


BTW: It isnt just the Chinese looking to buy and it is not just theatres that the overseas investment firms are looking to purchase. Knowing how much we as a country are in distress the foreign companies are on a buying spree. In March of this year Parques Reunidos (the Spanish owned firm that controls much of the amusement parks abroad) bought Pittsburgh Pa amusement park Kennywood. And last year (2011) Parques Reunidos bought Dutch Wonderland in Lancaster PA. Parques Reunidos has also purchased nearly a dozen water parks here in the US in last couple of years.

I just did a little math. In very round figures, Wanda Group is paying nearly $500,000 per screen, or almost $7,000,000 per theater with the average AMC location having 15 screens.

I'm sure some locations will be worth the price, but I wonder just how many. It's going to be a while before Wanda sees a profit on this one. AMC's SEC filing from March of last year showed an annual loss of nearly $123,000.( www.investor.amctheaters.com/secfiling.c...ngID=1047469-11-5643 ) Their best year in the last five was back in 2007 when they showed a profit of $134,000. They lost money in 2 of 5 years shown in the report.

Now, I suspect that many corporations do not necessarily seek to show a big profit on their financial statements, but since AMC has been for sale nearly since the last group of owners bought them, it would seem that they would want to show as much profit as possible on their financial statements. If I looked more closely, I would probably see that their current loss and recent low profits or losses in other years relate to all they've spent to acquire Kerasotes and equip many, many screens with digital. However, I believe I also see that most of these expenses are represented as debt and not business expenses. Since their debt is so high, it means that it is not likely that they can generate significant profit anytime soon.

Wanda has stated that they plan to put another $500,000,000 into upgrading theaters. So, if their purchase of AMC is about making profit, they must be in it for the long haul. My reaction is that they are trying to build a bridge between the U.S. and China for importation of American titles to their theaters. I did read that they plan to apply for importation licenses to make that possible. Currently, China allows only a very limited number of American films to be imported to their country. If they can successfully link the two exhibition markets and get the movies flowing into their country, then profits seem much more likely to flow from their Chinese locations than from those in America.