Sky City to spend $49.5m buying cinemas

Casino operator Sky City Entertainment Group is to spend nearly $50 million buying out partner Village Roadshow's share of their cinema business in this country and Fiji.

Sky City will move from 50 per cent to 100 per cent ownership of the Village Sky City Cinemas operation in New Zealand.

Sky City will also buy Village's 25 per cent holding in Rialto Cinemas, taking its holding to 50 per cent, and Village's 33.3 per cent interest in Village Cinemas Fiji, taking the Sky City interest to 66.7 per cent.

Sky City said payments for the $49.5m deal would be spread over 12 months, with the purchase to be funded with proceeds from the sale of the Sky City Metro Centre in downtown Auckland.

The sale process for the metro centre was yet to start but it was expected to be worth more than Sky City was paying for the cinemas.

The cinema purchase followed Village's decision to exit the New Zealand and Fijian business.

Sky City said the purchase was consistent with its broader entertainment positioning. It showed the company's confidence in the future of cinema in New Zealand.

The Village Sky City Cinemas joint venture operates 69 cinema screens, most in greater Auckland.

A further 15 screens, including a nine-screen complex at Queensgate in Lower Hutt, were due to open this year. Revenues from the New Zealand cinema operations were $54m for the year to June 2005.

Village Rialto operates 22 cinema screens and generated revenues of $8.7m in the 2005 financial year.

Village Cinemas Fiji operates 10 cinema screens in Suva and Lautoka, with revenues for the year to June 2005 of $F7.8m ($7.09m).

The transaction did not include the 25 per cent interest Sky City and Village each held in Vista Entertainment.

Sky City shares were up 4c in early afternoon trading to $5.32.

Village Roadshow yesterday said it would acquire all of Warner Bros' interests in their jointly-owned Australian theme parks in a deal valued at A$254m ($307.3m).

- NZPA