Competition Commission rules that Cineworld has to sell cinemas in Aberdeen, Bury St Edmunds and Cambridge, labelled a “frustrating outcome” by Picturehouse.
Cineworld Group is to sell three cinemas in Aberdeen, Bury St Edmunds and Cambridge after the Competition Commission ruled that its $76m (£47.3m) acquisition of Picturehouse Cinemas Ltd could mean higher prices for customers in these areas.
Cineworld, which operates 78 cinemas in the UK, bought Picturehouse Cinemas, which operates 21 cinemas, in December 2012. While Cineworld mainly operates large out-of-town cinemas, Picturehouse’s cinemas tend to be small cinemas located in city centres.
In its final report published today, the Competition Commission has concluded that the acquisition could lead to a substantial lessening of competition in the three areas where Cineworld and Picturehouse face limited competition, and that this could lead to higher prices for local cinema goers. This confirms the CC’s provisional findings which were published in August.
Cineworld will now be required to sell one of the cinemas it owns in each of these areas to an operator approved by the CC, who will not only be expected to continue running it as a cinema but will also need to demonstrate that they have the appropriate expertise and experience to do so.
Cineworld has decided to sell The Belmont Picturehouse in Aberdeen and Abbeygate Picturehouse in Bury St Edmunds but still has yet to make a decision on whether to sell the Arts Picturehouse in Cambridge or the city’s Cineworld cinema.
The ruling has come despite a petition containing 13,000 signatures that was sent to CC deputy chairman Alasdair Smith.
“Before we reached our final decision, we listened carefully to the many local filmgoers who wrote to us or signed a petition, expressing concern about a potential sale of Picturehouse cinemas, particularly in Bury St Edmunds and Cambridge,” said Smith.
“However, we are not doing anything that we think will jeopardize the future of any of the cinemas in question.
“We still believe that Cineworld and Picturehouse are in direct competition with each other. There is a considerable overlap between audiences and screenings at the two cinema groups.
“For example, both in Bury St Edmunds and Cambridge, about one-third of Picturehouse customers have been to Cineworld in the last 12 months and Picturehouse gets over half its revenue from films also shown at Cineworld.
“The sale of one of the cinemas in Aberdeen, Bury St Edmunds and Cambridge to a competing cinema operator will restore competition in these areas and protect customers’ interests.
“Cineworld will have the choice of selling any one of the cinemas it owns in the three areas. If it chooses to sell any of the Picturehouse cinemas, we are confident that a new owner will wish to build on their existing strengths.”
Cineworld “very disappointed”
Cineworld chief executive Stephen Wiener said: “We are very disappointed by the Competition Commission’s final decision to sell three of our cinemas.
“We will be selling these cinemas as going concerns and will be supporting our affected cinema teams through the sale. In the meantime, Cineworld Group continues to invest in and grow both Picturehouse and Cineworld estates.”
Picturehouse: “frustrating outcome”
A statement from Picturehouse said: “We continue to believe, as do a large number of our customers, that Cineworld and Picturehouse offer two very different cinema experiences and can operate side by side without diminishing choice or increasing prices as the Competition Commission have concluded.
“This is therefore a very frustrating outcome.
“Having carefully reviewed a range of financial and strategic considerations, Cineworld Group have made the difficult decision to sell The Belmont Picturehouse in Aberdeen and Abbeygate Picturehouse in Bury St. Edmunds.
No decision has yet been made as to which cinema we will sell in Cambridge.
“We are still evaluating our options to determine whether the Arts Picturehouse or Cineworld will be sold and are reviewing a range of financial and strategic considerations. We will provide an update on this as soon as a decision is made.”
Picturehouse added that it wanted to “minimise this period of uncertainty for both Picturehouse and Cineworld staff and customers” and will therefore make its decisions “as soon as possible”.