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AMC Entertainment Inc. and Loews Cineplex Entertainment Corporation to Merge

Kansas City, Missouri and New York, New York - June 21, 2005 - AMC Entertainment Inc. and Loews Cineplex Entertainment Corporation, two of the world's leading theatrical exhibition companies, announced today that they have entered into a definitive merger agreement that would result in the combination of their businesses and the merger of AMC Entertainment Inc. and Loews Cineplex Entertainment Corporation. The merger agreement also provides for the merger of their respective holding companies, Marquee Holdings Inc. and LCE Holdings, Inc., with Marquee Holdings Inc., which is controlled by affiliates of J.P. Morgan Partners, LLC and Apollo Management, L.P., continuing as the holding company for the merged businesses. The current stockholders of LCE Holdings, Inc., including affiliates of Bain Capital Partners, The Carlyle Group and Spectrum Equity Investors, would hold approximately 40% of the outstanding capital stock of the continuing holding company.

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Makes me a bit grumpy here in Boston where Loews dominates and the only non-Loews multiplex in Boston proper is an AMC...

--jhawk
 

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Posted by Dominic Espinosa (Member # 2122) on 06-21-2005, 11:12 AM:
 
It was only a matter of time given the preasure REG is putting on the other chains.
I'm wondering what will happen to Century and wheter or not I'll see a day I trade in my CW polo shirts for Regals.
 

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Posted by Jeremy Jorgenson (Member # 2989) on 06-21-2005, 11:38 AM:
 
I guess I'll have to reword my résumé once again. (having worked for Cineplex Odeon, Loews and AMC)
 

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Posted by Monte L Fullmer (Member # 2797) on 06-21-2005, 12:21 PM:
 
I ued to work for EDWARDS (Damn, I miss that company...they knew their stuff...) when the announcement came across of the Anshutz buying the interests of the three circuit's (Regal, EDWARDS, and United Artists) Chpt 11 orders, thus making a new company of REG, I figured that even with this buyout, that the operations would stay the same. WRONG! Regal, being the largest of the three, was given authority to be the one in charge of operations, (which some of us were given warnings on their operational tactics if we wanted to leave or not, and if we left, we would be given a severance package) but with this new management style, a lot of UA and EDW's people left. Course, with this merger became the largest circuit in the States.

Now, with this AMC/LCE merger, wonder if this new circuit of AMC Entertainment will also begin to gobble up smaller circuits, just to keep in the competition with REG as the largest circuit. For AMCE will have to gobble up at least another 1200 screens to overshoot REG to be the biggest.

..getting kinda scary on what's goings on in the theatre business world - a new theme of "just want to be the biggest, not the best?"

One can also see the huge increase of home theatre sales with this as well.....

-Monte

[ 06-21-2005, 02:59 PM: Message edited by: Monte L Fullmer ]
 

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Posted by Jeremy Jorgenson (Member # 2989) on 06-21-2005, 01:06 PM:
 
re: biggest / not best

reminds me of the banking world in the past decade or so.
 

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Posted by Scott Norwood (Member # 30) on 06-21-2005, 02:35 PM:
 
It will be interesting to see what this means for the smaller Loews theatres (e.g. the Uptown in DC and the Harvard Square in Cambridge, MA.). Since buying out GCC, AMC has closed or sold several of the smaller (fewer than ten screens) houses that they purchased, since their business model (such as it is) tends to be focused more on theatres with large numbers of screens.

What will happen to the Loews name? It would be a shame to see one of the great names in exhibition history be scrapped.

Personally, I tend to think that the consolidation that has been happening in this business is a Bad Thing (tm) (r) (c) for consumers, leading to fewer choices and higher prices, but it may actually be good for independent exhibitors who can find a niche that the industry behemoths aren't interested in or able to fill.
 

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Posted by Jeremy Jorgenson (Member # 2989) on 06-21-2005, 03:19 PM:
 
That's a good point I hadn't thought about. With more and more uniformity, a theatre with a different 'agenda' would certainly make an impression on some of the moviegoers, hopefully a good impression.

As to the Loews name, I would hope that it would be similar to what Regal did, in allowing Edwards and United Artists keep their names (well, from what I've seen, though I imagine there may have been some that have changed), especially with a name like "Loews" ... but then again, one never knows.
 

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Posted by Stephen LaPadula (Member # 3050) on 06-21-2005, 03:36 PM:
 
I'm wondering what this means in terms of a monopoly on some markets. For example, between AMC and Loews on Manhattan alone they own about 75% of the screens (there are 11 Loews, including the Michael Johnson totaling just under 100 screens and the 25 screens from AMC) With only 29 Regal/UA screens and a hand full of much smaller companies, most or which aren't 1st run so they don't count anyway. I imagine that either the Empire or E-Walk, probably E-Walk would have to be sold, possibly others??
I think there is a similar situation in Boston and DC with AMC and Loews dominating those markets... although I'm not very familiar with those cities.
Does anyone else know of any other cities perhaps Chicago or anywhere else that there are mostly AMCs and Loews?
 

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Posted by Monte L Fullmer (Member # 2797) on 06-21-2005, 03:50 PM:
 
..in the conractural clause with the REG consolation is that after 5 years of the merger (which was in 2002), the names of EDWARDS Cinemas, United Artists Theatres, and Regal Cinemas can be officaly changed to whatever the corporation elects to change to.

..probably be the same with the AMC/LCE merger - probably a designated year probation before officially changing the names on the theatres within this organization.

-Monte
 

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Posted by Dan Suomi (Member # 2585) on 06-21-2005, 04:00 PM:
 
In Chicago, there are mostly Lowes and AMC, with a few Century, one Regal, A couple of Marcus and Cinemark. With this new merger Chicago will be mostly AMC. Makes me wonder what about this country's monopoly laws. I think AMC will now have 90% of the market share in Chicago. I wonder if all Lowes theatres will now be renamed to AMC?
 

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Posted by Darryl Spicer (Member # 711) on 06-21-2005, 05:50 PM:
 
As far as monopoly laws I am not sure exactly how they work. But, there may be the issue of the fact that movie theatres fall under entertainment and there are many formss of entertainment such as video stores, cable tv, broadcast television and so on. So long as there are other ways to get your entertainment the government is not going to say much about it. Now if complaints are made vthat one can not get buildiung permits and such to buildd a theatre or someone within the theatre organization tries to find ways to prevent someone from building in a perticular area then the laws may apply.

What will be interesting is after everyone figures out that we just had the worst year at the box office since 1985. What will those over sized companies do then? Start closing more screenss and scrambleing around trying to avid bankruptcy.
 

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Posted by Bobby Henderson (Member # 840) on 06-21-2005, 07:42 PM:
 
Unfortunately, consolodation of this sort may be a necessary evil. The way I see it, the big film distribution companies have been giving the exhibition industry a very raw deal. Perhaps if there are two titan-sized chains they might have enough clout between themselves to carve out better deals and get Hollywood to reverse some of its obvious anti-theater tactics (shortened theatrical vs. home release windows, better versions of the movie on DVD, etc.).

This merger won't lead to any quality improvements in theaters. If anything, the cost cutting is going to continue. With less and less competition there won't be much pressure to build new locations with lots of nice stuff. Home theater technology will be the only "equalizer" in that equation.

I agree about an opportunity being present for smaller circuits and indie theaters to showcase more independent film product and foreign films. This strategy may only work in larger cities where a larger market base of very educated film fans is present. It's tough to promote a foreign film or indie flick in a city like where I live and have significant attendance numbers. In the end, we get the movies we deserve. The general public in the United States clearly prefers to be spoonfed the same old shitty big budget slop. They're voting for that kind of product with their dollars.
 

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Posted by Mark Pierce (Member # 3196) on 06-21-2005, 09:19 PM:
 
Somewhat on the topic...

Diddn't Lowes just buy Famous Players in Canada? If they did that pretty much means that AMC owns Canadian cinema now.
 

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Posted by Jeff Knoll (Member # 1145) on 06-21-2005, 10:21 PM:
 
No, it is a coincidence that it happened within days of the Canadian merger, but the Canadian arm of the Loews Cineplex organization was purchased by the Canadian investment group that owned the small market exhibitor Galaxy Theatres. It is Cineplex Galaxy that is in the process of purchasing Famous to make our own super-monopoly.

As part of the new Canadian merger/aquisition, they are required to divest themselves of 35 location comprising 284 screens in 17 cities representing annual revenue of $100 million. I would be willing to bet the the new AMC will be writing a cheque to stengthen their presence in the Great White North.
 

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Posted by Scott D. Neff (Member # 185) on 06-21-2005, 10:28 PM:
 
According to the article in Variety, I took it to mean that all the theatres would operate as AMC houses.

I think where Regal was concerned, it would have cost too much money and confused too many people to turn the UA and Edwards signs into REG signs. From what AMC did with the GCC signs, I wouldn't be surprised if they spend the millions to update all their signage.

*starts a sign company in Loews heavy markets!*
 

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Posted by John T. Hendrickson, Jr (Member # 849) on 06-22-2005, 06:02 PM:
 
I think Bobby Henderson's comments are right on the money. Two big chains with wide geographic coverage could simply tell a distrib "we will not comply with your terms, and we will not play this picture." Question becomes, are there enough independents left to override this tactic? The distributors better hope so, because I'm betting that this merger makes them nervous.

Second point. Yes, there will have to be some divestitures, especially in big markets, to satisfy the anti-trust laws, so Stephen LaPadula's comments are on the money with this issue.

I'll play devils's advocate. What if these two biggest chains target a specific release to make a point? Here's a hypothetical situation. Let's say it's November and Warner Bros. is throwing out off the wall terms for Harry Potter. The big boys say, "okay, to hell with your terms, we aren't going to play your picture." What then? Makes for an interesting scenario, doesn't it? Also makes me damned glad I'm not a theater owner. I'll leave this to the heavyweights to sort out.
 

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Posted by Joseph L. Kleiman (Member # 3097) on 06-22-2005, 06:59 PM:
 
Back in 2001, the "old" Regal Cinemas circuit threatened not to show "Rush Hour 2" or the second "Lord of the Rings" film because New Line was switching to a "firm-term" release model, rather than the traditional ad-hoc, performance related profit split. If I recall, Regal, which at the time controlled 18% of the screens in the US, came to a resolution on only one of the two films.

Another issue that hasn't been brought up is the effect the mergers will have on digital system deployments. A number of analysts I've spoken with have pointed out that in the past week, we not only have seen the US and Canadian mergers, but two major announcements by digital cinema companies as well. Yesterday AIX and Christie announced a joint venture to install 2500 digital systems in the US within two years, with the first 200 installed by the end of this year. Today, Barco and Kodak announced a joint deal. As with most equipment purchases, the more a company buys, the lower per unit price they are able to leverage. This means that because AMC and Galaxy have increased their number of screens, they can obtain a lower per-screen price for transitioning to digital. On top of that, the more projectors that are manufactured means the overall cost for everyone will reduce, thereby benefiting other circuits wanting to transition.
 

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Posted by Darryl Spicer (Member # 711) on 06-22-2005, 07:21 PM:
 
Reuters

LOS ANGELES (Reuters) - Two movie industry companies on Tuesday unveiled a plan to finance digital projectors for cinemas, offering a potential break in a stalemate between theater owners and movie studios over who will pay for the expensive new technology.
Distribution software maker Access Integrated Technologies Inc and projection equipment provider Christie Digital Systems formed Christie/AIX to offer digital projection systems to theaters that pay the cost of installation and sign a long-term contract for maintenance and service.

Movie studios would pay Christie/AIX a "virtual print fee" for every digital film file the new venture releases to the digitally-equipped theaters.

For theater owners, the cost of the 10-year contract would be roughly equal to installation and maintenance for a current film projector, and for studios the "virtual print" expense for a digital movie would be about the same as a film print, the companies said.

"The design is to make this essentially cost neutral" for theater owners and studios, said Bud Mayo, chief executive of Access Integrated Technologies.

Fees from installation and maintenance contracts and from the virtual prints would give Christie/AIX a return on its investment, Mayo said.

For several years, the roll-out of new digital projection systems has stalled over technology specifications and the issue of who would pay the $100,000 or more per system to install digital projections in theaters. Technology standards are mostly complete, but funding remains a sticking point.

For consumers, digital cinema offers a better picture over a movie's run in theaters. Studios save on their distribution costs and theaters might make money from national advertising and alternative uses for theaters.

Mayo said Christie/AIX has backing from large institutions. "More than one" major studio has agreed to term sheets and several national theater chains had signed agreements in principle for system deliveries, the companies said.

However, Mayo would not disclose financial backers, studios or theater chains until agreements were final.

Industry sources looked on with interest, but awaited more details.

Charles Swartz, executive director of the Entertainment Technology Center at the University of Southern California, said there are still some technology issues to be worked on for computer network servers needed for digital cinema systems.

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and for studios the "virtual print" expense for a digital movie would be about the same as a film print

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How can this save the studios any money if the cost is going to be about the same as a film print.

Even if theatres installed these units I still don't see how it's going to increase attendance anymore than it is now unless Hollywood stands up and stops making shit. People don't pay attention to what is projecting the image to the screen when it comes to making a decision on what movie to see and what not to see. They base it on what the movie is and if it is any good or not.
 

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Posted by Scott Norwood (Member # 30) on 06-22-2005, 07:48 PM:
 
Agreed--if the cost of installing and operating is going to be the same as that of 35mm, then what would be the point of installing it, especially since long-term reliability and maintenance issues (as well as availability of program material) are unknowns?

I can understand why film distributors would want DLP if they could save on printing costs and I could understand why theatre owners would want it if the distributors offered better terms on "digital prints," but I don't understand the appeal of a "cost neutral" approach, especially since 35mm still offers better quality.
 

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Posted by Darryl Spicer (Member # 711) on 06-22-2005, 08:00 PM:
 
Reuters

BRUSSELS (Reuters) - Belgium's Barco (BARBt.BR: Quote, Profile, Research) and Eastman Kodak (EK.N: Quote, Profile, Research) have formed a strategic alliance to sell digital projection systems to movie theaters and seek to capture a big part of a new market potentially worth billions of euros.

Barco and Kodak will sell, install and service the systems, which are set to replace 35-mm film projectors and revolutionise the way movies are screened, they said in a joint statement on Wednesday.

Barco will provide the projectors, while Kodak will offer the servers and software.

"We want to be ready for when the digital cinema market starts to explode," Barco Chief Executive Martin De Prycker told a news conference.

Citing industry figures, De Prycker valued the market's potential at 5 billion euros ($6.1 billion).

"For us, this is a huge opportunity."

Stephan Paridean, general manager at Barco's division responsible for digital cinema, expected demand for the technology to rise as more movies are made in the format.

"By 2007, it should really take off," he told reporters.

Kodak shares were up 0.16 percent at $27.77 in New York, while Barco ended up 0.33 percent at 61.65 euros in Brussels.

Digital projection promises better picture quality for movie-goers and lower distribution costs for studios.

But roll-out of the technology has been slow, because the industry has yet to agree on a common standard as well as a business model to help theaters cover the purchasing costs.

POTENTIAL BOOST TO REVENUES

Kodak is undergoing a dramatic transition toward digital cameras and services as it moves away from its traditional film business, which is in decline. Its officials were not available for further comment on this latest initiative.

As one of three licensees of DLP Cinema, a projection system based on a microchip made by U.S. semiconductor maker Texas Instruments (TXN.N: Quote, Profile, Research) , Barco has a 45 to 50 percent share of the new market worldwide, according to De Prycker.

It is already working with Kodak at three multiplexes in the United States, and its projectors are being used at European theaters to show the latest instalment of the "Star Wars" series.

Christie and NEC (6701.T: Quote, Profile, Research) are the other DLP Cinema licensees.

De Prycker forecast Barco's market share would fall to 30 to 35 percent in the long run, which could still lead to annual revenues of up to 200 million euros ($244 million).

Barco's digital projection division currently makes up about 2 percent of its total annual revenues of more than 600 million euros.

De Prycker said Barco and Kodak would still be able to sell their products and services separately despite the alliance.

quote: Joseph L. Kleiman

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Yesterday AIX and Christie announced a joint venture to install 2500 digital systems in the US within two years, with the first 200 installed by the end of this year

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quote: Stephen LaPadula

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I'm wondering what this means in terms of a monopoly on some markets. For example, between AMC and Loews on Manhattan alone they own about 75% of the screens (there are 11 Loews, including the Michael Johnson totaling just under 100 screens and the 25 screens from AMC) With only 29 Regal/UA screens and a hand full of much smaller companies, most or which aren't 1st run so they don't count anyway. I imagine that either the Empire or E-Walk, probably E-Walk would have to be sold, possibly others??

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quote: Mike Croaro

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What is "Radient Theatre Management systems?" Can some explain.

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quote: Dennis Benjamin

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GREED is an EVIL thing.

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