Sale of Megabox cinemas looms

JoongAng near buy of Korea's No. 3 circuit

BUSAN, South Korea -- South Korean media conglomerate JoongAng Ilbo is close to buying Megabox, the country’s No. 3 theater chain, from current owner Macquarie, the Australian banking group, industry sources gathered on the sidelines of the Pusan International Film Festival said on Tuesday.

Macquarie, which led the Korea Multiplex Investment Corp. into the July 2007 purchase of Megabox and its 12 theaters for $159 million, now is expected to lead the fund out at a loss after failing to find buyers for Megabox’s cinema properties, all but a few of which are “unattractive,” sources in the market said.

Media reports over the last several months have suggested such a sale to the 45-year-old
JoongAng Ilbo, a conservative newspaper and magazine publisher. On Tuesday, when asked when Macquarie might conclude its sale of Megabox, a Megabox spokeswoman, reached over the phone in Seoul, said, “soon.”

“All of us know about it, that something is going on, but nothing has been concluded yet,” the Megabox spokeswoman said, asking that her name not be used in print.

A JoongAng Ilbo policy and planning division official declined to comment. A spokeswoman for Macquarie Korea said the company would not comment on market speculation.

A source at a competing cinema chain that once considered buying Megabox from Macquarie, told The Hollywood Reporter on condition of anonymity, that “Macquarie’s been approaching everybody for two years, but its asking price has been too high.”

Megabox is the owner and operator of 110 screens nationwide, including Asia’s largest multiplex, the 16-screen theater at the COEX mall in Seoul. The COEX theater sold 4.5 million tickets in 2009, according to Megabox materials handed out at PIFF, the region’s largest annual film business gathering.

“The COEX theater and one other are the only sites that are attractive.  The other Megabox theaters are all unattractive,” the theater chain competitor who once looked at the assets for purchase said.

Korea’s theatrical exhibition business, which has about 2,000 screens to serve a nation of nearly 49 million people, is lead by CJ CGV, which has about 500 screens, followed by Lotte Cinema, which has about 400 screens.  Other exhibition companies include Primas Cinemas and Cinus Korea.

-- Park Soo-mee contributed to this report.
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