| US chain AMC Entertainment bought Odeon cinemas last year at a cost of £921 million. At the time Adam Aron, AMC’s chief executive, described it as a “once-in-a-generation opportunity to acquire Europe’s leading cinema chain and create the world’s biggest and best theatre operator”. |
Part of the attraction was the impact of a weak currency following the Brexit vote as the pound fell to a thirty year low against the dollar.
The assumption was that Brexit would have no impact on cinema attendance.
Despite the optimism, profits at Odeon Cinemas have fallen by more than half and attendance has dropped by 4 million seats.
The reported figures are full-year profits before tax of £9.9m for 2016, compared to £21.6m in the previous year, turnover increased by £2m to £220m.
Significantly the company’s attendance figures fell from 172m in 2015 to 168m, and it warned of the risk of “an increase in the availability of pirated films”.
Odeon also embarked on a heavy investment plan, with more than £25m spent on additional sites and maintenance of its estate.
It said the cinema sector remained steady last year, despite the decrease in attendance. Films such as Rogue One, Fantastic Beasts and Where to Find Them and Bridget Jones’ Baby were particularly strong performers.
Odeon said its principal risk was lower attendance, and warned of continuing volatility which is largely dependent on production from Hollywood.
It added: “An increase in the availability of pirated films, changes to customer film viewing habits or the level of competition from other exhibitors may also have an impact on attendance”.
However, it said it does not fear the impact of the growing interest in home cinema equipment and online film viewing.
“Similar concerns were expressed in previous decades with the introduction of TV, video cassettes and DVDs,” the company said.
“The directors believe that cinema provides a different and better film experience than home entertainment.”
AMC is owned by Chinese conglomerate Dalian Wanda.