As if the struggles at the Nine Network
were not enough, the PBL boardroom and executive suite have another
problem of their own making to contend with – growing losses in the 50%
owned movie group, Hoyts.
For shareholders it’s another related party transaction that’s gone bad, to add to the One.Tel adventure back in 2001.
50% stake in Hoyts was bought from Kerry Packer’s Consolidated Press
earlier this year in conjunction with West Australian newspapers. WAN
put up cash of around $173 million. PBL paid for its stake in more
shares to Cons Press and the Packers.
At the time Crikey reckoned the deal was too rich (here), and now there’s confirmation
that Hoyts, along with its major competitor, Greater Union, have been
hit by a rather large slump. Slashing prices on the best days of the
week is always a sign a business is under pressure. Hoyts has cut its
prices from $15.50 to $8.50 this weekend, while Greater Union is
cutting its Tuesday prices to $5. Hoyts says it will cut its prices for
any movie, any session from Thursday to Sunday.
Of course the
loading on its (and GU’s) outrageously priced food won’t fall, but
Hoyts and GU have been forced to reverse their ban on food being
brought into their movie houses by patrons in an attempt to attract
There’s that old adage around the market that you
should be wary when Kerry Packer is selling an asset because there
won’t be much value left in it. Only the bunnies at WAN will feel the
pain, having paid over real cash. Not a great deal by CEO Ian Law.