As Hollywood gears up for an expected blockbuster summer season, two of the biggest movie theater chains are offering a rare double feature: themselves.
In an initial public offering last week, exhibitor Cinemark Holdings Inc. sold shares worth $532 million. AMC Entertainment Inc. plans to launch an even bigger IPO this week, estimated at as much as $789 million. Both are owned by private equity investors aiming to take advantage of favorable market and industry conditions to lock in some healthy returns.
The stock offerings are timed as studio movie pipelines are loaded with franchise titles including Friday's "Spider-Man 3." Coming soon after are such expected blockbusters as "Shrek the Third," "Pirates of the Caribbean: At World's End" and "Harry Potter and the Order of the Phoenix."
The IPOs also signal renewed investor appetite for an industry that for decades has weathered doomsday predictions. Even today, cinemas face a new round of long-term skepticism with the proliferation of high-definition TV, video games, high-speed Internet and the quick release of DVDs.
Longer term, analysts expect digital 3-D and other innovative programming to help theaters attract crowds.
"Yes, there are a ton of other things people can do with their time, but this will be a viable industry for a long time," said Karen Berckmann, an analyst with Moody's Investors Service. "People will want to sit in a theater and watch a movie on the big screen with other people no matter how good their home entertainment systems get."
The two IPOs come on the heels of theater advertising network National CineMedia Inc., which went public in February and has seen its shares surge more than 20%. The industry's bellwether Regal Entertainment Group, the nation's largest movie theater chain, went public in 2002 and has been generating steady profit.
"The financial community's strong interest reflects confidence in the long-term growth of the theater business," said John Fithian, president of the National Assn. of Theatre Owners. "In the short term it's always cyclical, but in the long run this is a growth industry."
Some cautious analysts say the latest IPOs could turn out better for the well-heeled private equity investors cashing in than for average investors. Cinemark and AMC, they note, lost money last year even as movie ticket sales bounced back from the box-office slump of 2005, when attendance slid for the third straight year.
