The changing theater landscape

Major financial buyers were quick to spot an opportunity. In 1998, the average price of a screen stood at $700,000. By 2001, however, it had collapsed to $135,000, and several acquisitions were reportedly completed at well under $100,000 a screen. These acquisitions have concentrated assets in just a few hands (Exhibit 2). Anschutz, Apollo Advisors, Oaktree Capital Management, and Onex are not traditional industry insiders; they are financially savvy buyers that aim to maximize the value of their new assets. That could well mean still more consolidation, perhaps through the swapping of theater assets to create concentrated regional markets. Either way, the studios can bet that the new owners wonÍt hesitate to shake things up to increase their cash flow.

Source : The McKinsey Quarterly

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