Refocusing on its core production and distribution activities, Luc Besson’s EuropaCorp has entered into exclusive negotiations with Cinemas Gaumont-Pathe, France’s biggest exhibition chain, for the sale of Europacorp’s three-year-old exhibition business.
Aiming to drive into a premium end of the exhibition business, EuropaCorp launched its cinema theater investment in October 2013 at its Aeroville 12-screen multiplex in Tremblay-de-France, near Charles de Gaulle Airport, staging a glitzy premiere of “Malavita,” with Michelle Pfeiffer, Robert de Niro and Dianna Agron walking the red carpet.
Operating rather than owning the multiplex, EuropaCorp rented it from a real estate company, Unibail-Rodamco. It aimed to turn a profit on its investment Dolby Atmos sound and 4K 3D projectors, plus offer of gourmet food and a platter of Petrofina salmon and champagne for a $33.80 ticket price.
Move formed part of “a diversification strategy” allowing EuropaCorp “to generate recurrent revenues with very limited risk,” said Christophe Lambert, then EuropaCorp CEO. Listed on the Paris stock exchange, EuropaCorp has battled for years to explain the volatility of the film business to investors. In such context, recurrent revenues have an especial attraction.
Three years on, however, the cinema management business has failed to turn significant profits.
Operating Aeroville generates about €7.5 million [$8.4 million] in revenues, which means EuropaCorp more or less breaks even, according to the month or year, said Pavel Govciyan, an analyst at Natixis, a French bank.
“EuropaCorp wants to grow internationally, focusing units film and TV production and distribution. Exhibition is a very domestic and not very relevant business, which takes up management time,” he added.
Talks between EuropaCorp and Gaumont-Pathe also take in operation of a multiplex in Marseille’s La Joliette urban development zone.
EuropaCorp’s unveiling of its exhibition business divestment comes just a day after it announced that Mark Gao’s Fundamental Films had acquired a 27.9% stake in the company, becoming its second biggest shareholder after Luc Besson, who has a 31.58% stake in EuropaCorp via his Front Line investment company.
“This capital increase will enhance EuropaCorp’s ability to produce and distribute English-language films and TV series around the world,” Besson said in a statement Thursday of the Fundamental Films deal.