RISING COSTS, TIGHT MARGINS
Addressing concerns from moviegoers about rising ticket prices, he pointed out that operators face mounting costs – primarily rent and manpower.
About half of the box office revenue goes to the studio, so the margin is tight, he said. “In fact, if you’re not selling concessions, you probably can’t make or make very little money.”
To bolster its financial position, mm2 Asia is in talks with various lenders and creditors for short-term working capital and to reschedule debt as it comes due. A partial or full divestment of its cinema business is also on the table, with increasing merger and acquisition activity signalling renewed interest in the sector.
Despite scepticism about mm2 Asia’s acquisition of Cathay, Mr Ang remains resolute.
“When we acquired the cinemas, they were profitable,” he said. “If we knew that COVID-19 was coming, then we probably wouldn’t have done it … but things happened and we have to work hard to solve the problem.”
While right-sizing and potential industry mergers may be necessary, he is confident in cinema’s staying power.
People are not ready to abandon the big screen and the unique experience it offers, Mr Ang said. As the number of cinemas declines, malls with theatres will gain a competitive advantage in future, he added.
More importantly, he will not give up without a fight.
“We’ve been managing (the situation) for the last few years, and we will continue to,” Mr Ang said. “At this point in time, we still want to push on.”
