India’s leading multiplex chain PVR and the local unit of Mexican company Cinépolis are in advanced merger talks, potentially reshaping the country’s film exhibition industry that witnessed its first phase of consolidation over the past decade and a half.
Two people with direct knowledge of the negotiations told ET that the deal is “moving quickly toward fruition” and will result in the combined behemoth owning more than 1,200 screens. The number of screens run by the next biggest entity, INOX Leisure, is just about half of what the merged company would operate.
“While the finer details are being worked upon, Cinépolis will be the largest shareholder in the merged company, with around a 20% stake,” one of the two industry sources cited above told ET. “PVR promoters will own between 10% and 14%, but Ajay Bijli (CMD of PVR) will have complete management control for at least three years. Cinépolis will have board seats in the merged company.”
Another executive said the merger could be announced by the end of March.
“Both parties are moving quickly,” said the second executive cited above. “This merger will not require approval from the Competition Commission of India as the combined revenues of the two companies are well below Rs 1,000 crore due to Covid-led disruptions.”
The first phase of consolidation in India’s film exhibition industry began in the new millennium when a large number of single-screen facilities failed to match up to well-capitalised corporates that ran multiple screens — and films — at the same physical facility. Hundreds of single-screen facilities have since quit the industry that is now dominated by organised exhibitors such as PVR or INOX. That phase of consolidation coincided with the first expansion drive in organised film exhibition, with Anil Ambani buying out Adlabs films in 2005 and acquiring screens rapidly to launch Big Cinemas.
To be sure, PVR’s earlier acquisition of DT Cinemas from DLF had to undergo public scrutiny by the competition watchdog.
Ultimately, the panel approved the acquisition, subject to the exclusion of two properties from the proposed combination.
Email queries sent to PVR and Cinépolis India remained unanswered.
PVR currently has 846 screens in 176 cinemas in 71 cities in India and Sri Lanka, with an aggregate seating capacity of 182,000. Cinépolis India operates 417 screens in 93 properties at 61 locations, across 22 states.
Together, the merged company will operate 1,263 screens across 269 locations. In comparison, INOX Leisure operates 160 multiplexes and 675 screens in 72 cities.
Launched in 1997 by Ajay Bijli, PVR has expanded both organically and inorganically over the years to become India’s biggest multiplex player. In the past, it acquired Cinemax (138 screens) in November 2012, DT Cinemas (32 screens) in May 2016, and SPI Cinemas (76 screens) in August 2018.
The company also has around 100 screens under fit-outs currently, which could be launched in the next 12 months.
Cinépolis India, meanwhile, is a wholly-owned subsidiary of Cinépolis and is the first international exhibitor in India.
Founded in Mexico in 1971, Cinépolis is the world’s fourth-largest movie theatre circuit, operating nearly 7,000 screens across 863 properties in 18 countries.
In January 2015, Cinépolis acquired Fun Cinemas from the Essel Group, which operated 24 properties and 83 screens.
Film trade pundits believe that with multiplexes getting bigger, movie producers and distributors might find it difficult to dictate terms on film screenings. With their increased reach, film exhibitors will likely have a say in deciding revenue share models and content costs.
“Multiplexes have come a long way since their inception. PVR started with one property in Delhi in 1997 and now will be a behemoth with 1,200 screens across India, controlling almost half of the theatrical revenues in the country. The top two players — PVR and INOX — together will control 75% of revenues,” said one of the persons cited above.
INOX had joined the expansion race in 2007 by acquiring Calcutta Cine Pvt Ltd (CCPL) in a share-swap deal, gaining a foothold in the eastern parts of India.
The acquisition of CCPL (89 Cinemas) allowed the multiplex player to add nine properties in West Bengal and Assam, giving it a near-monopoly in the region.
Later, in 2010, it acquired the promoters’ stake in Fame India, adding 25 multiplexes with 94 screens to its kitty. In August 2014, it also acquired Satyam Cineplexes.
Meanwhile, Srikant Bhasi-owned Carnival Group became the third-largest chain by acquiring Big Cinemas from Anil Ambani and a few other smaller cinema chains in quick succession.
It owns more than 400 screens, but is currently debt-laden and has failed to repay its lenders, employees, vendors, and other creditors.
