Exhibs jostle for territory in Latin America

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MEXICO CITY -- As Mexico's exhibition sector hits its saturation point, the leading international circuits could be forced into a head-to-head struggle for growth opportunities in the rest of Latin America.

Cinepolis, Mexico's top theater chain with 1,425 screens, plans to invest $120 million in new cinemas next year. Most will go up in Mexico's underserved territories, but the circuit also will boost its presence in Central America. Currently, Cinepolis has only 75 screens in Panama, Costa Rica, Guatemala and El Salvador.

"We are going to open new complexes in Guatemala and Panama next year, and we are considering an opening in Honduras," Cinepolis CEO Alejandro Ramirez said.

Cinepolis also is looking to gain a foothold in South America, possibly in Brazil, which has the strongest growth potential in the region.

According to a report by the European Audiovisual Observatory, Colombia and Chile also have promising growth outlooks.

Mexico will finish the year with 3,762 screens, according to the National Film Chamber. Comparatively, Brazil has 2,100 and Argentina has slightly more than 1,000. Major players that contributed significantly to Mexico's development boom over the past decade were Cinepolis, Cinemex and Cinemark; all three outfits played a key role in propping up Mexico as Latin America's No. 1 boxoffice market, accounting for 44% of the region's total receipts.

The problem is that screens grew 10% this year, while admissions rose only 1.6%.

Miguel Angel Davila, CEO of Mexico City-based Cinemex, said that his company will build no new theaters in Mexico in 2007. "The problem is that screens are growing twice as fast as attendance, so we need to grow responsibly to avoid unnecessary cannibalism," he said.

Should Cinepolis move forward with plans to enter South America, it would go head-to-head with Texas-based Cinemark, which has nearly 1,000 screens in a dozen Latin American territories. Cinemark is Brazil's top exhibitor, and it has a significant presence in Mexico, Chile and Argentina. Brazil is particularly appealing because it has far fewer screens than Mexico but a much larger population.

Jean Pierre Leleu, Cinemark's director of programming in Mexico, said Cinemark multiplexes are going up at a much faster rate in Brazil than in Mexico. "That's because in Brazil the competition isn't as difficult as it is here in Mexico," he said. Cinemark will continue to expand throughout Latin America and is eyeing new markets in the Caribbean.

Adding to the competitive environment, a new player apparently is entering the market next year. An industry source said that Blockbuster will launch its first theater in Mexico in the spring. Blockbuster declined comment.

Monterrey-based MM Cinemas, recently acquired by Southern Cross and Morgan Stanley, plans to build 100 screens next year.
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