U.K.'s Picturehouse Cinemas Forced to Sell Three Locations Ahead of Proposed Cineworld Acquisition
British competition authorities required the sale as part of the $76 million planned deal despite protests from both companies, claiming they offer different experiences.
LONDON – Art house movie theater operator Picturehouse Cinemas is being forced to sell three key locations in its chain in order to get the group's acquisition by Cineworld, the U.K.'s second largest exhibition chain, past the British competition authorities.
The Competition Commission published its final decision on Oct. 8 on the $76 million proposed acquisition of City Screen Group, the Picturehouse parent, which insisted the deal would result in a substantial lessening of competition in three areas where there is a Cineworld movie house and a Picturehouse theater.
Picturehouse, the smaller acquisition target, has been forced to sell sites in Aberdeen, Bury St. Edmunds and Cambridge.
Cineworld Group CEO Stephen Wiener had argued long and hard that the two exhibition chains are "fundamentally different businesses that could operate in the same area."
Picturehouse reacted with dismay at the Commission's final decision, also arguing differences: Cineworld is a multiplex experience whereas Picturehouses are more boutique, with cafes, bars and, in some places, club nights, in addition to cinema screens offering art house and indie fare alongside hand-picked Hollywood blockbusters.
"We are disappointed that in these three locations we have been unable to convince the Competition Commission that Cineworld and Picturehouse are two fundamentally different businesses that could operate in the same area," Picturehouse management said in a statement.
"We continue to believe, as do a large number of our customers, that Cineworld and Picturehouse offer two very different cinema experiences and can operate side by side without diminishing choice or increasing prices as the Competition Commission have concluded," the statement continued. "This is therefore a very frustrating outcome."
After reviewing a range of financial and strategic considerations, Cineworld Group made the "difficult decision" to sell The Belmont Picturehouse in Aberdeen and Abbeygate Picturehouse in Bury St. Edmunds.
There is, as of yet, no decision from the parties over which movie theater site will be sold in Cambridge.
"We are still evaluating our options to determine whether the Arts Picturehouse or Cineworld will be sold and are reviewing a range of financial and strategic considerations," Picturehouse said. "We want to minimize this period of uncertainty for both Picturehouse and Cineworld staff and customers, and so we will do our best to make sure decisions are made as soon as possible. Any sale will include honoring of advance tickets or reimbursing customers if this is not possible."
Before the deal was struck, Cineworld operated 80 sites, of which 77 are multiplex sites with five screens or more.
The deal adds 21 sites and 60 screens to Cineworld's real estate and also Picturehouse Entertainment, the distribution arm operated by the group.