Film-Tech Forum ARCHIVE: Mark Cuban buys interest in Carmike

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Posted by Scott Norwood (Member # 30) on 12-30-2008, 10:19 PM:

From the Associated Press via Business Week:

quote:

Mark Cuban, the billionaire owner of the Dallas Mavericks basketball team and co-owner of the Landmark Theaters cinema chain, has acquired a 9.4 percent stake in Carmike Cinemas Inc., according to a regulatory filing on Monday.

In the Securities and Exchange Commission filing, Cuban reported buying 1.2 million Carmike shares on the open market for roughly $2.8 million of his own funds. According to the filing, Cuban has been acquiring the shares through his personal investment account since mid-October.

Cuban, who has been controversial within the National Basketball Association -- racking up more than $1 million in fines for his behavior on the court -- has recently become the target of civil lawsuit alleging insider trading.

In November, federal regulators accused Cuban of using confidential information to bail out of an investment in search-engine company Mamma.com Inc. in 2004, avoiding about $750,000 in losses. Cuban has denied any wrongdoing.

Cuban is not facing jail time, but could be forced to pay a penalty of close to $3 million if he is found guilty.

According to the SEC's case, Cuban told his broker to sell his Mamma.com shares after the company's then-chief executive confidentially told him of a stock offering that would dilute the value of stock held by current investors.

Cuban owned a 6.3 percent stake in Mamma.com at that time and was the largest-known shareholder in the search-engine company. The Montreal-based company changed its name to Copernic Inc. in 2007 although the Web site remains known as Mamma.com.

In Monday's SEC filing, Cuban said he acquired his stake in Columbus, Ga.-based Carmike for investment purposes. He reserved his right to discuss the company's performance and strategic direction with Carmike's stockholders, officers or directors.

Cuban co-owns movie theater chain Landmark Theatres with Todd Wagner, who was his co-founder of the pioneering online audio streamer Audionet. The service, later named Broadcast.com, was sold by Cuban and Wagner to Yahoo! in 1999.

The Wagner/Cuban Cos. also include distribution company Magnolia Pictures, production company 2929 Productions, and high definition cable networks HDNet and HDNet Movies.

Carmike shares rose 29 cents to close at $2.32 Monday, after trading as low as $1.68 earlier in the session. The stock has traded between $1.37 and $11.37 during the past 52 weeks.

Does anyone know the real story here?

Personally, I wish that he'd put some money into Landmark before buying another chain....

Posted by Bobby Henderson (Member # 840) on 12-30-2008, 11:11 PM:

I saw the news about this yesterday morning on CNBC. Cuban bought a significant stake in Carmike, but not nearly enough to control the company. I'm wondering if it is enough to get him a seat on the board of directors.

I'm not sure just what to think about the stock purchase in terms of strategy. Cuban wouldn't merely be buying into the company because he thought the stock would be a good performer in the near or long term. There has to be another angle.

One angle could be a Carmike buyout or mere affiliation with Landmark Theatres. Most of the screens in Carmike's circuit are in small cities and towns. Landmark isn't a big chain, but has locations in some major cities.

The more obvious angle is a content distribution deal. Carmike still has, by far, the most digital cinema equipped movie theater screens out of any theater chain. We know how much Cuban likes digital cinema. Cuban also likes the idea of alternative means of distributing movies -like the pretty weird day and date strategy of putting movies on DVD, cable TV and movie theaters at the same time. If I can watch a movie like Splinter for next to nothing on HD Net Movies why would I pay a bunch of money to see it in the theater?

At any rate, it's difficult for independent movie productions to get on lots of movie theater screens. Carmike has a lot of screens that may be available to show 2929 Productions content. OTOH, it costs a lot to market movies too -especially to reach customers in smaller cities and towns like Carmike serves. Independent movies often do not do well at all in towns like Lawton, OK. Perhaps if enough people had HD Net and HD Net Movies and saw enough commercials for an upcoming flick they might go see it at the local Carmike. But that's only if the Carmike location is their only choice to see it. If small town viewers can stay planted on their butts in their living room and watch the same movie day and date on HD Net Movies they're just going to stay home.

Like I said, I'm not sure what to think about the strategy.

Posted by Mark Gulbrandsen (Member # 72) on 12-31-2008, 07:54 AM:

He also owns a number of Imax sites

Posted by Louis Bornwasser (Member # 3063) on 12-31-2008, 09:36 AM:

If 2.8 Million buys 9.4%, then Carmike is worth $29,780,000 . . . . . . . not that much! Louis

Posted by Tristan Lane (Member # 1169) on 12-31-2008, 11:32 AM:

Louis, I was just thinking the same thing.

Posted by Mark Gulbrandsen (Member # 72) on 12-31-2008, 11:34 AM:

I wouldn't give you a dime for any of Carmike! HE wolda been better off buying National Amusements.

Mark

Posted by Louis Bornwasser (Member # 3063) on 12-31-2008, 01:18 PM:

Yeah, but that would cost REAL money (reputed $1b) Louis

Posted by Mark Gulbrandsen (Member # 72) on 12-31-2008, 01:48 PM:

There is an interesting tidbit about Sumners losses and its all because of CBS and hiz other looser media company Viacom. These two contributed the biggest part of the loss. He was also written up in the In Pictures: America's 25 Biggest Billionaire Losers .... He had to put National Amusements on the block to pay the banks because of the billions in Media losses. All I can say is he deserves what he's got comming!

Posted by Bobby Henderson (Member # 840) on 12-31-2008, 06:30 PM:

Time Warner Cable is set to ditch all the Viacom cable channels, possibly as soon as Jan 1. Viacom is wanting a price hike on the order of around 25¢ per month per customer from Time Warner.

With the economy in the toilet it's not exactly a great time to demand price hikes. A lot of cable/satellite TV customers who are not under contract are going to be tempted to cancel their pay TV service. A big price hike makes customer cancellations even more likely.

I still have just over a year to go under my current Dish Network contract. Word is E* is going to jack up their prices in February -or at least raise prices on new customers and increase prices for those who want to re-up to get more HD channels. I may just stick with my current DishHD "Absolute" package even if I don't get anymore HD channels added and then give E* the boot once my contract expires.

Posted by Jonathan Althaus (Member # 5042) on 12-31-2008, 06:41 PM:

And here in Dallas, Charter and our local ABC affiliate are going separate ways.

Posted by Chad Souder (Member # 343) on 12-31-2008, 06:51 PM:

This is bad, in my opinion. Cuban is in favor of Day-And-Date DVD releasing.

Posted by Aaron Mehocic (Member # 15) on 12-31-2008, 07:53 PM:

I've always considered Cuban to be a certifiable nutcase. He just wasting his time and money.

Posted by Scott Norwood (Member # 30) on 12-31-2008, 09:39 PM:

I think that Aaron is right about this. He hasn't exactly done much of anything with Landmark.

quote: Bobby Henderson

With the economy in the toilet it's not exactly a great time to demand price hikes. A lot of cable/satellite TV customers who are not under contract are going to be tempted to cancel their pay TV service. A big price hike makes customer cancellations even more likely.

True, but the cable companies are likely to cash in when/if the digital TV transition happens (currently scheduled for February). Customers who can't figure out how to use converter boxers, can't get good reception of the digital channels, or are simply misinformed will at least consider the possibility of subscribing to cable service.

Posted by Bobby Henderson (Member # 840) on 01-01-2009, 01:57 AM:

Unfortunately, all it will take to blow the stupid cable companies out of the water on that one is informing viewers on what they can do for receiving HDTV over the air. You do NOT need cable or satellite in order to receive great quality HD.

I have an old-assed half-broken from severe storms outside antenna that still receives all the channels in my TV viewing market. And I get the ABC affiliate OTA in HD with no problem. And it looks better in quality than anything I see via satellite.

The ABC affiliate is here in Lawton. But I still get the analog signals for NBC, CBS and FOX in Wichita Falls (over 50 miles away) over the same antenna. There's nothing special about that antenna. It isn't "digital" optimized or anything like that. I suspect when the Wichita Falls stations start broadcasting in HD at full power (sometime in January) I'll be able to pick up those HD channels OTA as well.

If I have any trouble receiving those channels I can spend a little money on a new antenna and end up getting even more HD channels over the air. I know a few people who can get all of the HD OTA channels from Oklahoma City as well as the Lawton, OK and Wichita Falls, TX market from an antenna here in Lawton.

With HDTV over the air, you pretty much either get it or you don't. When the signal comes in at a satisfactory level it looks every bit as good or even better than anything cable provides. The bit rate is better for one thing.

Carriers like Time Warner, Dish Network, Comcast, etc. need to think about that as do multimedia companies like Viacom, Rainbow and various others. Digital technology is giving viewers more and more options. I could ditch all of my satellite TV service and still see much of what I was missing via Hulu.com, Bit torrent downloads and other alternatives.

Cable TV providers and programmers do not have the same level of bargaining power they had years ago. They would be wise not to piss off their customer base. People like me will only be too happy to inform customers how they can do without cable.

Posted by Chad Souder (Member # 343) on 01-01-2009, 01:32 PM:

Isn't it kind of obvious that the people that are willing to spend the money for HD televisions and likely the sound system to go with them are also going to have cable or dish service? I just can't see too many houses with HD sets that would be happy with the 8 HD channels they can get over the air. At some point you're gonna need your Rescue Me fix. My cable company just added 10 more channels to my HD package. I would be able to get none of those channels over the air.

Posted by Scott D. Neff (Member # 185) on 01-01-2009, 01:40 PM:

My boss made it a regular routine to short sell Carmike stock, said it made him money every time.

As far as why Cuban bought stock in Carmike, I don't think it has to mean anything. I think for awhile in the 90's the Syufy's owned a small portion of AMC stock and the media got hold of it on a slow news day and started speculating on a Century-AMC merger.

Though if Cuban thinks he has the answers to Carmike's problems he may be angling to get in there and turn them around, who knows. Clearly Carmike needs some new energy as what they've been doing hasn't made much difference has it? (Trust me, I want to like Carmike, after National Amusements they're the second coming of GCC in their generic-ness).

Posted by Jesse Skeen (Member # 586) on 01-02-2009, 05:10 AM:

quote: Chad Souder
My cable company just added 10 more channels to my HD package. I would be able to get none of those channels over the air.

Too bad they all suck! [Razz]

Posted by Bobby Henderson (Member # 840) on 01-02-2009, 12:03 PM:

It's just a question of what people are willing to pay to receive cable programming in HD.

Right now I'm paying $55 per month for roughly 60 real national network channels in HD (but none in SD), my local channels in SD and several channels of HBO all in HD. I think that's a pretty good deal. To get the same HD channels from DirecTV I would be paying over $100 per month.

Dish Network isn't offering the DishHD Absolute package to any new customers, so anyone wanting all the same HD channels has to sign up for the TurboHD Gold package and have the Platinum package added. That's $50 per month. Add another $20 for the local channels and HBO. It's up to $70 per month. Then figure in the rate increases Dish plans to charge in February. That may have the bill jump to $80 or $90 per month. And this is all just HD-only packages. It doesn't figure in the SD channel packages like America's Top 250. It's real easy for a cable or satellite TV monthly bill to hit the $120 per month level.

At some point pay TV is just going to get too expensive. With so many shows available to watch for free via the Internet and so many series being available in box set form on DVD or Blu-ray it's not all that bad a hardship to do without pay TV entirely or just sign up for a basic package to cut costs.

Posted by Jason Black (Member # 684) on 01-03-2009, 12:01 PM:

Why not just start a thread about HD programming and reception since this thread has pretty much done a 180 from what it's title indicates?

Posted by Bobby Henderson (Member # 840) on 01-03-2009, 08:03 PM:

I think it took that route because of Mark Cuban's involvement with HD Net. Incidentally, HD Net and HD Net Movies are the only cable networks I've seen running ads for AccessIT and now lately Cinedigm and its 3D live broadcast of the BCS Championship Bowl game between the Oklahoma Sooners and Florida Gators. A lot of Carmike locations will be showing the game.

Posted by Dennis Benjamin (Member # 1137) on 01-05-2009, 11:35 AM:

quote: Aaron Mehocic
I've always considered Cuban to be a certifiable nutcase. He just wasting his time and money

I use to subscribe to his blog and agreed with most of his views on the Theatre Business in general.

How would people perceive you if you came into a whole bunch of money and bought a theatre chain? I know his background and how he became wealthy (Compuserve or something), so on a business level he has (or had) his act together for quite sometime.

I guess I like him because I respect his attempt to right some wrongs in the business world. If I ever became wealthy, I would probably be a lot like him in that I would take my business personally. Meaning that - what I do for a living is a passion both professionally and personally. I get that from him. As far as his recent troubles in the stock market world, we will see how that pans out.

I think anything happening to Carmike is a positive thing. That company has needed serious help for many years. Maybe he can bring some of his passion for the theatre business to them, because that is something most people at Carmike lack.

Posted by Scott Jentsch (Member # 1681) on 01-05-2009, 08:47 PM:

I think it's easier to dismiss someone than it is to carefully consider the ideas he raises and see if anything might have an application. I'm not saying that this is Aaron's situation, but it sounds like it might be.

Cuban made his money by being in the right place at the right time with the right product. Another year later, and he might not have gotten anything for Broadcast.com! But the fact remains that he did make a lot of money and instead of buying an island and never coming back, he's invested his money into several ventures that he seems to believe in.

I read his blog, and while I don't always agree with his viewpoints, I think he has some valid observations that people in the business tend to dismiss because they don't want to think what it might do to their standard way of doing things.

He had an idea that day-and-date releases, or at least cross-pollination between theaters, TV, and DVD sales might work to improve overall revenue of movies. So, instead of issue a press release that meant nothing, he went about taking control of all the elements necessary to give it a try. Maybe the efforts that have been done to date haven't been successful, I don't know, but I admire his willingness to put his money where his mouth is.

I don't think that his investment in Carmike and Carmike's investment in Digital Cinema is coincidence. What other theater chain has made such a large investment in terms of their overall business? The upcoming Cinedigm events will be shown in Carmike theaters, which includes the NBA All-Star Game. Cuban's investment in the Dallas Mavericks NBA team plays into the possibilities opened up by theaters becoming outlets for hosting sporting events.

If he does nothing but shake things up in the industry a little as a result of his investment, that's a good thing all by itself! This industry needs some shaking up to wake it from its slumber.

Posted by Chad Souder (Member # 343) on 01-09-2009, 04:59 PM:

quote: Dennis Benjamin
I guess I like him because I respect his attempt to right some wrongs in the business world.

HUH?? The guy is being investigated for insider trading. He is what's wrong in the business world! Maybe he can get Martha Stewert's old cell.