The two movie theater chains hope a merger will let them compete better with market leader Regal Entertainment.
AMC Entertainment and Loews Cineplex will complete a merger that will create a single company with 5,900 screens. The combined company hopes to regain some market share from Regal, as well as negotiate better terms with the various Hollywood studios for showing their films.
Box office sales have dropped 7 percent over last year, according to the New York Daily News, even with the debut of George Lucas’ final piece of the Star Wars saga, Episode III: Revenge of the Sith.
“This certainly increases their influence with the studios,” said Raymond Schleinkofer, an analyst with Sturdivant & Co. who follows the movie theater business. “You have always thought in the back of your mind that they would fit nicely together if a merger was ever done.”
While AMC and Loews have primarily built their theaters in big cities, Regal has followed people on their exodus to the suburbs. By placing their movie houses near shopping centers, Regal has been successful in leading the field.
Regal’s 17 percent share of the market would then be followed by the combined AMC and Loews’ 13 percent. But there may be antitrust issues the merger would have to overcome before it would be approved.
Regulators may be concerned that a combined company, with less competition, would increase ticket prices as a result. AMC and Loews could be required to sell off some theaters, as happened when Sony bought Loews in 1998.
Then, Loews had to sell theaters in Manhattan and in Chicago to placate antitrust regulators.
David Utter is a staff writer for murdok covering technology and business. Email him here.
