Showing films is where Cinemark Holdings really makes its mark. The third-largest movie exhibitor in the US (following Regal Entertainment and AMC) has more than 5,200 screens in some 460 theaters in the US and Latin America. Cinemark operates its multiplex theaters in smaller cities and suburban areas of major metropolitan markets. Some larger theaters operate under the Tinseltown name; others are "discount" theaters showing no first-run films. About 85% of its first-run auditoriums feature stadium seating. The company prefers to build new theaters in midsized markets or in suburbs of major cities where the Cinemark theater is the only game in town.
Cinemark operates theaters in 39 US states, as well as Argentina, Brazil, Mexico, and 10 other Latin American countries. The company is investing more than $60 million in Latin American markets, with a focus on constructing theaters in growing urban markets.
Despite a down economy, people still flocked to the movies in 2010, and hits such as the record-breaking Avatar, as well as Toy Story 3, Alice in Wonderland, and Harry Potter and the Deathly Hallows: Part 1, were a boon for Cinemark. Revenues and net income increased in 2010 thanks to an overall increase in attendance and an increase in average ticket price. In particular, Cinemark capitalized on the increased popularity of 3D, and was able to charge more for tickets to 3D movies. At the close of 2011 the company reported that more than 50% of its domestic screens were 3D capable.
Its adoption of the 3D format is just one way in which Cinemark focuses on being one of the most modern and technologically advanced movie chains. The company has developed a large screen digital format, XD Extreme Digital Cinema, or XD. The format includes wall-to-wall and ceiling-to-floor screens, wrap-around sound, and can play any available digital print. Cinemark has XD screens in more than 50 theatres. The company expanded on this concept with the launch of its first NextGen Cinema location in the Dallas area in 2010. NextGen is a high-tech movie theater that houses XD screens, the latest projectors and sound systems, and other cutting edge amenities.
The company is able to finance many of its technological advancements by forming partnerships with the other major theater chains. National CineMedia, a joint venture with Regal Entertainment and AMC Entertainment, delivers digital advertising, pre-recorded concerts, meetings, sporting events, and other non-film entertainment content. In addition, it is continuing to roll-out digital cinema through its Digital Cinema Implementation Partners, another joint venture between Cinemark, Regal, and AMC.
Mergers and Acquisitions
Cinemark USA, a wholly owned subsidiary of Cinemark, and Rave Real Property Holdco, an affiliate of Rave Cinemas, entered into an asset purchase agreement in 2012 in which Cinemark will acquire most of Rave's assets, consisting of 32 theaters and more than 480 screens in 12 states. The purchase price is $240 million. This acquisition would further enhance Cinemark's domestic footprint, especially adding presence in the New England market.
Madison Dearborn Capital Partners owns about a third of Cinemark; chairman and former CEO Lee Roy Mitchell and the Mitchell Special Trust collectively own about 11%. Members of the Syufy family, the founders of Century Theatres, hold a 5% stake. – less