In the near future, we might not need so many apps in our phone to buy a movie ticket.
According to The Edge, entertainment company mm2 Asia is in talks to merge their cinema business with Golden Village cinemas. Mm2 Asia operates mainly under the Cathay brand.
Mm2 Asia runs 8 Cathay cinemas in Singapore and 14 in Malaysia.
Conversely, Orange Sky Golden Harvest Entertainment (Holdings) (OSGH) runs 14 Golden Village cinemas under their brand. In total, the Hong Kong company runs 35 cinemas across Singapore, Hong Kong and Taiwan.
This move will make them the biggest cinema operator in Singapore. Mm2 Asia also said that it will provide financial and operating stability in times of the pandemic.
Merger Terms
This proposed deal will need to overcome certain obstacles first.
It will need to be approved by mm2 Asia and OSGH shareholders, the SGX and Hong Kong exchange and relevant authorities. This includes the Competition and Consumer Commission of Singapore in relation to anti-trust issues.
After all, remember: they’ll become so big that competition might become almost non-existent.
Both parties are still negotiating financial terms.
In the last financial year, which ended in December 2019, OSGH’s local business generated $24.1 million in profit. This number was down from $25.9 million the year before, according to The Edge.
As for 2020, you can bet it’s going to be much, much lower.
How much lower? Read on.
Pandemic Affecting Business
It is no surprise that the cinema industry has taken a hit because of Covid-19. During the circuit-breaker period, cinemas were closed indefinitely and were only reopened in mid-July this year. Due to safe distancing measures, cinemas have also reduced their capacity and movie screenings. Good for us (more empty seats on the side to put your popcorn and bags) but bad for them.
And the numbers are reflective of this.
For the first six months of the year, Golden Village’s revenue was just $23.7 million, and made a loss of $2.92 million.
Mm2 Asia also noted that there have been disruptions movie and cinema businesses due to the rise of online content streaming platforms and video content.
According to a 2019 Limelight Networks report, Singaporeans watch an average of two hours and 35 minutes of online content in one sitting. There has also been an increased number of Singaporeans subscribing to streaming services. In 2018, only 48 per cent of Singaporeans were subscribed. However, this number rose to 64 per cent in 2019.
Which means that more than half of our society is currently subscribed to an online streaming service to get our content.
I mean…who isn’t?
To combat streaming services and the effects of the pandemic, this merger would create a stronger platform to operate the cinema business. Funding from new investors would help the combined business in their operating costs and strengthen its balance sheet.
Time to bring out the popcorn to watch this merger.
Featured Image: huntergol hp / Shutterstock.com
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