Movie theater operator Cinemark Holdings Inc is hoping for rave reviews from investors for its upcoming initial public offering. Analysts said the third-largest movie theatre chain could see a surge in profit if the summer season has as many blockbusters as the film industry expects.
But movie theatres went through a wave of bankruptcies in 2001, and could suffer again if economic growth slows or DVDs cut further into their business. Cinemark operates 4,488 screens in almost 400 theatres in the United States and Latin America.
The Plano, Texas-based company has already had a taste of success in the initial public offering markets. National CineMedia Inc, an in-theatre advertising company which Cinemark owns with two partners, went public in February with an $882 million deal.
That IPO was the largest of the year in terms of value. Shares closed its first day up 22 percent at $25.67 and traded Friday at $26.62. Movie theatre operators AMC Entertainment Inc and Regal Entertainment Group are Cinemark's partners in National CineMedia. Cinemark aims to raise $504 million if shares price at the midpoint of a forecast range in an IPO scheduled for April 23.
Movie theater operators face greater competition from the Internet, video games and the spread of large-screen, high-definition TV and digital video recorders. A burst in movie theater construction in the late 1990s was quickly followed by a series of bankruptcies by theater operators in 2000 and 2001, including Carmike Cinemas Inc, and Regal Entertainment among others.
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