Film exhibitor INOX Leisure Ltd is in initial talks with Carnival and Miraj Cinemas to acquire their screens, two people said on condition of anonymity. The development comes days after media reported that PVR Cinemas was seeking to merge the local branch of Mexican theater chain Cinepolis with itself.
“When you’re competing, you can’t really agree to talk about rivals merging; you have to move yourself. INOX has sent feelers to both Carnival and Miraj although nothing has been finalized yet,” said one of the two people quoted above.
He said the conversations around these deals were a direct result of the pandemic devastating the theater industry.
The potential PVR-Cinepolis merger is also an obvious threat to INOX, he added.
India’s pandemic-ravaged film exhibition sector is also facing a challenge from the rise of video streaming websites such as Netflix, which is putting pressure on margins and forcing them to close cinemas.
If the talks are successful, INOX, which operates more than 600 cinemas in India, will add more than 400 screens from Carnival Cinemas and more than 100 screens from Miraj Group, he said.
While Carnival Group has interests in film production, food and real estate, Miraj Group manages hospitality, real estate, food and pipe and fittings businesses.
INOX Group is a conglomerate with interests in wind energy, renewable energy and specialty chemicals.
A deal with Miraj could make more sense for INOX than one with Carnival, which has a debt of ₹1,400 to 1,500 crore and failed to pay rent to developers and salary of his employees for some time.
“Consolidation is now a big part of the business, and everyone has been talking to everyone over the past few months. Although there is nothing on the table for us now, there is always a possibility of consolidation tomorrow,” said Amit Sharma, general manager of Miraj Cinemas, in an interview.
Carnival did not respond to questions from Mint. INOX declined to comment on the story, and a PVR spokesperson said news of a merger with Cinepolis was speculative.
The Indian multiplex industry is dominated by PVR with 846 screens, followed by INOX (675), Carnival Cinemas (450), Cinepolis (360) and Miraj Cinemas with 147 screens.
International markets such as the United States have many more multiplex operators. The largest company in the United States is AMC Entertainment, with 8,043 screens.
According to a recent report by media consultant Ormax, the cumulative box office gross for 2020 and 2021 in India was only ₹5,757 crore, almost 50% less than the country’s film industry brought in in 2019 alone.
In addition, box office revenue was also robbed of almost ₹580 crore from the release of 26 Hindi films directly to video streaming platforms between March 2020 and August 2021 alone when cinemas were closed.
Although theaters are seeing the first signs of recovery with attractive programming planned for the summer, there is no way to erase the losses of the past two years, trade experts have said, making it difficult to investment in new properties and easier. team up with rivals to increase the number of screens.
“Clearly the Bijlis no longer see value in the business, and this is the best way out. While they could have waited a while to see how things turn out, PVR is also at a disadvantage, thanks to its model of renting properties instead of owning the asset like INOX does,” a second undercover person pointed out. of anonymity. .
In such a scenario, the merger with Cinepolis India, a conservative and debt-free company since its inception, makes perfect sense. The 846 screens owned by PVR combined with Cinepolis’ 360 will enable the combined entity to have a 42% share of the multiplex segment and a 15% share of the overall cinema screen ecosystem in India, according to estimates by Karan Taurani, Senior Vice President, Elara Capital Ltd. The merged entity will have a box office revenue share (Hindi and English) of 35% after the merger.
A film producer and distributor pointed out that such deals would disadvantage filmmakers.
“Competition is always good for business. The combined entity will be able to dictate shows and screen times, and producers won’t have a choice. In a monopoly, they may even demand a higher share of box office revenue, more than the 50% that is standard right now,” the person said.
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