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ADAG puts BIG Cinemas on the block

Source : BUSINESS_STANDARD
Last Updated: Wed, Jul 09, 2014 04:03 hrs
Big Cinemas

Reliance MediaWorks (RMW), which controls BIG Cinemas, is in advanced talks with PVR and Inox Leisure to sell the theatre chain. Negotiations are on to merge the exhibition business into either of the buyers' companies.

RMW has also held talks with an undisclosed private equity (PE) player. If a deal with either of the two exhibition business companies is not clinched, the PE fund will invest in the business after the division is spun off as a separate company and listed on the stock exchange.



RMW was a public-listed company till a few months ago; it was de-listed only recently. RMW, which recently merged its film and media services business with Prime Focus, plans to replicate a similar model for the exhibition business as well. It is in talks to take a minority stake in the merged entity and a position on the board. However, it will not run the business as it expects to sell out within the next two years. This is in line with the group's strategy of exiting non-core businesses, in order to reduce the debt burden.

BIG CINEMA, BIG MONEY
  • RMW has been operating three divisions - film and media services, cinema chain across India and the US, and a television and content production called Big Synergy Media
  • The film and media services business has already been combined with Prime Focus
  • The Anil Ambani group is the third-largest entity in cinema screen business with 280 movie screens across India

When specifically asked on the talks, a Reliance Anil Dhirubhai Ambani Group spokesperson declined to comment. So did an Inox spokesperson. A PVR spokesperson said it will not comment on market speculation.

RMW has been operating three divisions - film and media services; cinema chain across India and the US; and a television and content production called Big Synergy Media.

The film and media services business has already been combined now with Prime Focus. This includes one million sq ft of facilities including studio facilities in Film City, Mumbai; a 30 per cent stake in renowned Hollywood visual effects company Digital Domain, widely acclaimed for its award winning work for Titanic and The Curious Case of Benjamin Button; and 100 per cent ownership of Los Angeles-based digital film restoration firm Lowry Digital, an Oscar winner for scientific and technical achievement in 2012.

The Anil Ambani group is the third largest player in cinema screen business with 280 movie screens across India. Ajay Bijli-promoted PVR is the largest player with more than 444 screens, while Inox is at the second position with over 316 screens across the country. In case the deal fructifies for Inox, it will become the largest player overtaking Bijli's empire. On the other hand, if Ajay Bijli manages to close the deal, he will be far ahead of any of his rivals in the game. Both PVR and Inox are not new to using the acquisition route. PVR, for instance, had made an aborted attempt to by real estate group DLF's exhibition business. However, last year PVR forked out Rs 395 crore to buy of Cinemax, which gave them 138 additional screens. On the other hand, Inox Leisure acquired a 43.28 per cent stake in Fame Cinemas from its promoter Shravan Shroff in 2010 after which it went for an open offer. The deal gave the company an additional 95 screens.

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