Film-Tech Forum ARCHIVE: Wanda Group has essentially gone bust

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Posted by Mark Gulbrandsen (Member # 72) on 09-28-2017, 02:17 PM:

Wanda Group Down The Drain???

So what happens? Does the Chinese government bail them out? Do they just disappear? On average according to reports AMC sells just 92 tickets per screen per day average. That's just not sustainable even for the short term.

Mark

Posted by Martin McCaffery (Member # 37) on 09-28-2017, 02:34 PM:

From the story:

quote:
Wanda eventually merged its Wanda Media company with its cinema business in July, but Legendary wasn’t part of that reorganization. A day before that, Wanda dumped its theme parks and 76 hotels in a $9.3 billion deal intended to reduce its debt after its multi-year acquisition spree.

So, doesn't look like Legendary will take it down. I recall reading elsewhere that the Chinese Gov't has quit extending credit to Wanda. Now it is probably a question of how much they love owning AMC. We could see it put up for sale, or they go all in to make it make money. Fun times ahead.

Posted by Justin Hamaker (Member # 2165) on 09-28-2017, 03:22 PM:

quote: Mark Gulbrandsen
On average according to reports AMC sells just 92 tickets per screen per day average

Averaging 92 tickets per screen per day is actually a very good number. In a 15 screen theatre that would work out to 9660 tickets in a week. If that's an average across an entire year - including the very slow weeks, then it should be very profitable.

Posted by Marcel Birgelen (Member # 6801) on 09-28-2017, 04:10 PM:

Look at Legendary Pictures... They bought it for $3.5B.

I mean, what the actual f...? Legendary Pictures is just a production company, an empty shell. They don't own squat, they don't have a studio, they don't have any meaningful IP. They just bank on the pictures they co-produce.

Wanda's operating mode looks like this: They got those huge bundles of cash and then they put it all in the toilet. Once they started flushing, they realized the drain wasn't big enough to handle all the cash they were trying to flush. So, in order to fix that, they didn't only buy a bigger drain, but a bigger toilet too. After they got the bigger toilet, they decided they weren't done yet, they needed a golden lever too... You know, once the cash actually ran out, they realized the vortex they created at the bottom of the toilet just kept on sucking. So, what did they do? They decided to buy a large German chain obviously, because... Swallow that! You big bad cash sucking toilet vortex.

quote: Justin Hamaker
Averaging 92 tickets per screen per day is actually a very good number. In a 15 screen theatre that would work out to 9660 tickets in a week. If that's an average across an entire year - including the very slow weeks, then it should be very profitable.

It really depends on your operating overheads. If you just look at AMC for example and not their other worldwide operations and at their property. Many of it in prime locations. What do you think they pay for property leases alone? You really need to sell more than ~92 tickets/auditorium/day... or you'll float too.

For Wanda, the red balloon is on the horizon...

Posted by Terry Monohan (Member # 8285) on 10-03-2017, 03:45 AM:

Watch old Regal Theatres make a play for AMC as they have bought many other in trouble cinema companies like UA & Edwards. They get them for pennies on the dollar. Regal will ruin the nice AMC chain that still has masking ect in most of their cinemas plus knows how to project things the correct way for scope.

Posted by Mark Ogden (Member # 43) on 10-03-2017, 06:28 AM:

^ Not gonna happen. The resulting company would be too close to both a monopoly and a monopsony. I doubt the FTC would ever allow it.

Posted by Martin McCaffery (Member # 37) on 10-03-2017, 09:37 AM:

^Without getting involved in a forbidden topic, I doubt the current administration cares about monopoly.

Posted by Bobby Henderson (Member # 840) on 10-03-2017, 10:22 AM:

Regal may not even want to bother buying out AMC even if the opportunity was present to do so. Years ago Carmike landed itself in bankruptcy due largely in part to a theater buying binge that added too much to its operational overhead and debt load. Other chains, like AMC, have been in bankruptcy due to biting off more than they could chew. In AMC's case, it was a stadium seated theater building binge that did it.

The average customer probably couldn't give two farts if the theater he was going to visit was part of the biggest theater chain with the most screens. Honestly, who the hell cares about that except maybe a stock investor? And anyone buying stock is going to be looking into more details than whether a theater chain has the most screens. They might look at the company's possibly crushing debt load and walk away saying, "maybe I'll take another look after you've done enough cutting to become lean and mean again."

20 years ago it might have made sense to buy regional theater chains and buy out larger rivals to get bigger and bigger and then eventually be the biggest (but not best). Fewer theater chains could create an oligopoly where it would be easier to set even higher prices on tickets and concessions due to less competition.

But we're living in the now, not 20 years in the past. Price gouging is taking place in some aspects of movie-going. But thanks to extremely short theatrical release windows it's very easy for customers to wait out the theatrical run and save a ton of money watching at home in HD or 4K.

I think traditional global media companies are teetering in a very precarious position and it doesn't look like they're even aware of it. Every aspect of their business is under serious threat.

The movie studios the global media companies own are on a suicidal path with their obsession to shrink theatrical release windows down to day and date release. They think they're going to make more money by getting movies onto home video faster, but they forget they had a big hand in killing off the neighborhood video rental store. Physical media sales are in the toilet, thanks in part to the studios putting less effort than ever into DVD/Blu-ray/UHD releases. So now people just wait for movies to show up on Netflix or their illegal Kodi box.

Global media companies own a hell of a lot of cable TV networks -yet another thing that is on a suicidal path, thanks to endless carrier fee increases they've been handing to pay TV providers. The providers have been passing the increases along to consumers. The price gouging has resulted in an epidemic of cord cutting, especially in younger demographics more desirable to advertisers. I think a backlash against cable news networks is possible, thanks to what their emotional porn has done to our nation's political process. Netflix lets you escape both the price gouging and propaganda. Our local cable company (that also sells Internet & phone service) is openly preparing for cable TV as we know it to dry up and disappear. They're positioning themselves to provide high speed data service and let customers choose where they get their IPTV and movies.

Global media companies own a lot of music recording labels. The music industry is tiny in financial terms compared to what it was 30 years ago. Physical music sales are in the toilet. So many people just buy songs one at a time (lossy compressed at that) rather than buy an entire album. Walmart and Target are the only places in my city of 100,000 people that sells physical CDs anymore. Record stores, book stores and video stores are all but gone.

Companies like Amazon, Google and Apple are poised like buzzards circling above waiting to pick the bones of Viacom, Time-Warner, Comcast, Fox, etc. This outcome will really suck if it happens.

Posted by Monte L Fullmer (Member # 2797) on 10-06-2017, 05:03 PM:

Anything, I can see AMC being broken up to allow fair purchases to elude the monopoly czars of the FTC.