Arthouse cinema deal will make chain's co-founder Lyn Goleby a multi-millionaire
Cineworld has snapped up the arthouse cinema chain Picturehouse, owner of the Ritzy cinema in south London and the Phoenix in Oxford, in a deal worth £47.3m.
The deal â€" which will make Picturehouse's co-founder Lyn Goleby a multimillionaire â€" unites two very different cinema chains, with Picturehouse's films catering for an older, more highbrow audience while Cineworld's mass-market multiplexes tend to attract 18- to 24-year-olds interested in the latest 3D blockbusters.
Cinemagoers at the Clapham Picture House, south London, on Thursday night did not welcome the news. Rachel Smith, who lives locally and takes her children to the cinema, feared it would become less independent. "I think it's awful," she said. "Cineworld is big and faceless and cold. The Ritzy and the Picture House are not like that at all. The staff have really good film knowledge and are warm and personable."
Another filmgoer, Rupert Jermyn, said: "Cineworld is not local, it does not have a good vibe. The Ritzy and Picture House are local cinemas. If they take the informal vibe from the picture house and inject it into Cineworld it would make it retro and cool and less like a supermarket."
The multiplex giant, which runs 80 cinemas nationwide, stressed nothing would change at Picturehouse under the new ownership. It pledged to run Picturehouse as a separate entity, with all 750 staff staying on. Goleby will also remain as managing director with the rest of the Picturehouse management team, including its programming director, Clare Binns, a key figure in the UK film industry who worked her way up from an usher at the Brixton Ritzy, south London.
But Cineworld's financial clout will enable the indie chain, Britain's biggest independent, to open 10 cinemas from 2014.
The news coincided with the opening of Picturehouse's 21st cinema, The Duke's at the Komedia cabaret venue in Brighton.
Cineworld's finance chief, Philip Bowcock, said: "We're not coming in as a big corporate giant saying 'you're going to do xyz'. We're going to keep the quirkiness. It's a very different customer set â€" a little bit older, more discerning, more experienced. To lose that would be to lose the raison d'être of Picturehouse."
The deal includes the distribution arm Picturehouse Entertainment, which launched in 2010 with the £200,000 grossing My Afternoons With Margueritte and the bittersweet comedy Liberal Arts, which was released recently.
Goleby, who founded the Picturehouse chain with Tony Jones with the opening of the Phoenix in Oxford in 1989, is expected to pick up a multimillion-pound windfall as one of the main shareholders in the parent group, City Screen. Jones is retiring from Picturehouse but is working on the Cambridge film festival, which Picturehouse runs. The other shareholders are Albion Ventures, a venture capital firm, which said it made a capital gain of £6.5m from the £12.5m sale of its share, and Arts Alliance.
Goleby has known the Cineworld boss, Stephen Wiener, for a long time. He said: "We recognise Picturehouse is valued by its customers and we look forward to supporting the business through the next phase of its development."
The UK cinema market is now dominated by three players â€" Odeon & UCI, Vue and Cineworld â€" which control 70% between them. Private equity-owned Vue bought a rival, Apollo, for £20m in May while the financier Guy Hands bought Odeon and UCI in 2004 and merged them to create Britain's biggest operator.
Picturehouse had sales of £30.3m last year and a pretax profit of £2.5m. Bowcock believes the acquisition will create value for Cineworld shareholders. "It's profitable, there is demand for it. The population is getting older and people are spending more money on leisure time."
Cineworld will be able to tap into Picturehouse's purchasing power and vice versa. "For example, Lyn [Goleby] buys alcohol cheaper than we do," said Bowcock.
Cineworld, which employs 4,000 people, has raised £16m by issuing new shares to fund the deal, and Goleby has put £1m of her money into the share placing.
City analysts said the move made sense for Cineworld. Investec analyst Steve Liechti said: "This looks an interesting move into the high value, older demographic, individual/arthouse cinema market and adds a new growth segment. We believe Cineworld can add material value to Picturehouse given its balance sheet strength and buying power."
Mergers and acquisitionsFilm industryJulia Kolleweguardian.co.uk © 2012 Guardian News and Media Limited or its affiliated companies. All rights reserved. | Use of this content is subject to our Terms & Conditions | More Feeds
Source: http://www.guardian.co.uk/business/2012/dec/06/cineworld-buys-picturehouse
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