Cineworld aims to reign in Spain after cinema deal

Cinema operator Cineworld unveiled its first overseas expansion yesterday after agreeing to buy Spain’s fifth-biggest movie chain.

Cineworld, which has 78 sites in the UK, is to buy Cinesur Circuito Sanchez-Ramade for an undisclosed sum. Cineworld believes Cinesur, which has 136 screens in its 11 multiplex sites, has the potential to expand further because the Spanish market is largely serviced by smaller operators.

Chief executive Stephen Wiener said the Spanish watch nearly as many films per head as in the UK and the market, which is already worth 800 million euros (£699.9m) a year, has good growth prospects.

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The acquisition marks a significant step in the growth of Cineworld, which was founded by Mr Wiener in 1995 and was floated on the stock market in 2006, making it the only publicly listed cinema company.

It said it sold more tickets than any other chain last year.

Cineworld saw the number of movie-goers dip to 47.2 million in 2010, from 48.2 million the previous year, although this figure was deflated by December’s Arctic weather conditions.

Despite the fall in admissions, the company recently reported a 0.3 per cent increase in pre-tax profits to £30.4m in the year to December 30, as revenues lifted 4.8 per cent to £342.8m.

This was driven by a 5.9 per cent increase in ticket prices to an average of £4.99, which helped box office revenues rise 4 per cent at £235.8m.

But the company, which last year bought the cinema at London’s O2 Arena, said it expected a strong line-up of films, including the new Harry Potter and Pirates of the Caribbean offerings, to help boost revenues in 2011.

Lindsey Kerrigan, an analyst at Panmure Gordon, expects the acquisition to boost the company’s earnings in 2012. Stripping out yesterday’s announcement, she expects pre-tax profits will rise by 6 per cent to £37.4m in 2011 and to £41.9m in 2012.

n Poker and sports betting company Bwin.party yesterday warned new gambling restrictions proposed by Germany would destroy competition.

The company’s shares, which started trading in the FTSE 250 Index on Monday following the merger of PartyGaming and Bwin, plunged 15 per cent after German federal states said private firms bidding for seven national betting licences would face a 16.7 per cent tax on turnover.

Gaming industry analysts said it may be impossible to run a profitable business with duties so high.

Norbert Teufelberger, co-chief executive of Bwin.party, which generates nearly a quarter of its revenues from Germany, said: “A proposed tax rate of 16 per cent on the stakes placed in sports betting would make it impossible to offer a competitive product.”