- The Washington Times - Tuesday, June 21, 2005

Movie theater chain AMC Entertainment Inc. yesterday announced a plan to buy Loews Cineplex Entertainment Corp., which would bolster the second-largest movie chain in the country.

After the purchase, AMC Entertainment would own or manage about 450 theaters and 5,900 screens in the world — 20 theaters are in the Washington area.

Federal regulators must approve the deal, which the companies expect to be completed in six to nine months. Regulators may tell the merged company to close some of its theaters to ease antitrust concerns.

Both AMC Entertainment and Loews officials said it is too early to speculate on whether theaters will be closed and expressed hope all of the theaters remain open. Financial details were not disclosed.

Ray Schleinkofer, an industry analyst with Sturdivant & Co. in New Jersey, said the companies probably will have to close a few theaters — and the curtains are more likely to close on the older cinemas.

But he pointed out that both companies have made efforts to stabilize the number of screens they own and he does not expect the closing of too many theaters.

The Loews theme song, played before its movies, may even be in jeopardy. Mr. McCauley said it would be up to the officials who would draw up integration plans to determine which practices would be continued.

Although the merger would solidify AMC Entertainment’s second-place ranking, Matthew Harrigan, an analyst with Janco Partners Inc. in Colorado, does not expect the deal to heavily influence the industry’s largest company, Regal Cinemas.

According to the company, Regal owns about 18 percent of the nation’s cinemas. Sturdivant & Co. estimates that the new AMC Entertainment will have a 13 percent market share.

AMC Entertainment’s acquisition of 221 theaters will help it create a national brand, Mr. Harrigan said. Neither he nor his company has business connections to the theater companies. “It’s a merger that makes sense.”

Both companies had blueprints of spending money up front to build better-quality theaters in costly downtown areas, making the merger a good strategy, Mr. Schleinkofer said. Building in urban areas brings more people and more revenue than if they had built in suburban or rural areas.

Sturdivant & Co. does not conduct any business with the movie theater companies.

The merger’s announcement comes after 17 straight weeks of declining movie ticket sales, a trend both analysts blamed on poor movies. Mr. Harrigan of Janco Partners expects sales to pick up in the latter part of 2005 when more appealing movies are expected to be released.

Almost three-fourths of U.S. residents say they would rather watch movies at home than in theaters, an Associated Press-America Online poll said last week.

Loews’ and AMC Entertainment’s parent companies would merge under Marquee Holdings Inc. as part of the plan. Affiliates of J.P. Morgan Partners LLC in New York and Apollo Management LP of Ottawa, Canada, bought AMC Entertainment in December for $2 billion.

The current stockholders of Loews’ parent company, including affiliates of investment companies Carlyle Group in the District, Bain Capital LLC in Boston and Spectrum Equity Investors in Boston, would hold about 40 percent of the new company stock, the companies said.

The new company, AMC Entertainment, would be operated from Kansas City, Mo.

In late 2003, the companies — both of which were under different ownership — announced talks of a merger that never materialized.


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