The Australian Competition and Consumer Commission (ACCC) has stepped in to protect cinema owners not part of the country's exhibition troika,
The issue in question is the future of cinema advertising or, more specifically, of the only national provider of these services, Val Morgan.
Village, Hoyts and Greater Union, which control over 60% of screens and 75% of all cinema revenues, were ordered back to the drawing board by the ACCC after they presented a proposal to jointly acquire Val Morgan. The reworked plan was this week accepted by the competition watchdog.
The exhibition giants have agreed to a set of undertakings which include two of them divesting their stake in Val Morgan within 18 months, existing contracts with other cinemas being honoured, and new contracts being offered on fair terms to existing customers.
"The undertakings should ensure that, in addition to preserving cinema screen advertising in Australia, competition will remain in the cinema industry," said outgoing ACCC chair, Professor Allan Fels. "Without the acquisition it was likely that Val Morgan would have been placed into administration, and that this important source of revenue for cinema exhibitors would disappear."
The extent of Val Morgan's woes became very clear in September when parent company, the publicly listed Television & Media Services (TMS), revealed an annual loss of A$75.9m, principally because of A$67.5m in write-downs attributable to Val Morgan, a company owned privately for its first 96 years.
High cinema rents and lower than expected advertising revenue are being blamed for Val Morgan's troubles but perhaps it grew too fast: "Our ambition is to become the biggest player in the business, but big for big's sake is not our aim," executive chair Terry Savage told Screen International a year ago. He added that two or three international companies would dominate the screen advertising business within the next few years.