Bright lights, big City

Cinema City International (CCI), the largest operator of multiplex cinemas in the CEE region and Israel, is experiencing a growth spurt in Bulgaria and Romania, where it is currently constructing nearly 180 screens. The company is particularly active in Romania, where it established a subsidiary in 2006.

"We have a lot of hope for Romania, which we see as our second-biggest market after Poland. The number of our multiplex projects under development there has grown to 13, with a total of 140 screens in the pipeline," said Moshe Greidinger, CEO of CCI.

Southern belles

CCI deputy CFO Nisan Cohen added that the company's goal in Romania is to be the market leader. "Romanian cities lack modern cinema infrastructure and we practically don't have major competitors on the market. We are happy to use the experience and the contacts we acquired in Poland to grow in Romania," he said.

Besides Bucharest, where the cinema operator is developing four multiplexes, Cinema City is also  developing cinemas in eight other large cities. "This, however, is not the end of our expansion. We are constantly looking for new locations," said Greidinger. In addition, the company is not neglecting the other activities in its portfolio, such as in-cinema advertising, film distribution and real-estate development, which altogether accounted for 27 percent of the firm's revenues in H1 2007.

In Bulgaria, the company recently established a joint-venture with a local firm for the construction of an E11.25 (zł.42.40) million shopping center in Rousse. CCI is also involved in the construction of shopping malls in Sofia and Plovdiv. Once the projects are completed, the three major Bulgarian cities will host 25 new screens.

The leading role

Poland, however, remains CCI's key market, with more than 340 screens (both delivered and under construction) and a 48-percent share in the company's sales in 2006. "We still see lots of room for growth in Poland despite the large number of cinemas we already have here. We are now concentrating on secondary cities, but we will deliver new multiplexes in Kraków and Gdańsk," Cohen said.

According to Szymon Konop, head of consulting services at PMR, the mid-sized Polish cities (100,000-300,000 citizens) still have lots to offer due to the growing trend to construct shopping centers in smaller cities. "In [these cities] a multiplex has fewer screens, but is still a profitable investment and CCI is already present in cities such as Sosnowiec and Rybnik," Konop said. "The only gray cloud I see is the growing popularity of the internet as a source for free but usually illegal movies," he added.

But Cohen is positive about the future. "The internet and DVDs are not our competitors. Going to the cinema is still one of the cheapest forms of entertainment and, as long as we maintain the high quality of our multiplexes, the number of visitors will increase," he said. "When we go to the cinema it's not just about the movie and, due to that fact, television and DVDs haven't replaced [it] so far," PMR's Konop said.

CCI's H1 2007 results seem to confirm this assessment. Cinema operations brought in E57.8 (zł.217.94) million, an increase of almost 22 percent compared to H1 2006. In the same period, the number of tickets sold increased by 11.6 percent to 9.24 million. "We are optimistic about our H2 2007 results, with more blockbusters being released and our cinema network rapidly developing," Greidinger concluded.