Combinations in Multiplex Film Markets: Big Cinemas (Reliance Media Division) and Carniwal Films Combination

Big Cinemas (Reliance Media Division) and Carniwal Films Combination

On 24^th March 2015, CCI gave its approval to the acquisition of Big Cinemas, a division of  Reliance MediaWorks Ltd, by Carnival Films Pvt. Ltd. On 15 December, Carnival Films, backed by a Kochi-based commodity trader, agreed to acquire a 100% stake in multiplex operator Big Cinemas for around Rs.700 crore.

It has been stated in the notice that 88 cinemas

(72 multiplexes and 16 single screen cinemas) operated by Reliance Media having 238 screens are proposed to be transferred by Reliance Media to CVPL (“Transferred Business”); and b) pursuant to the SPA, Carnival will acquire 98 percent of the share capital of CVPL whereas a director of Carnival will acquire the remaining 2 percent of its share capital.

Relevant Market

It is noted that pursuant to the proposed combination, there are overlaps between Carnival, Stargaze and Reliance Media with respect to the multiplexes in seven cities namely Indore, Mumbai, Dindigul, Ghaziabad, Dehradun, Raipur and Ajmer.

The Commission is of the opinion that the proposed combination is not likely to have an appreciable adverse effect on competition in India and therefore, the Commission hereby approves the combination.

CCI noted that the acquisition would result in overlaps between Carnival and Reliance MediaWorks, with respect to the multiplexes in seven cities—Indore, Mumbai, Dindigul, Ghaziabad, Dehradun, Raipur and Ajmer.

In Indore, Mumbai, Ghaziabad, Dehradun, Raipur and Ajmer, competition concerns may not arise as there are other multiplexes in addition to cinemas operated by Carnival and Reliance MediaWorks in these cities, exerting competitive constraints on the acquirer.

The Carnival-Big Cinemas deal was the fourth transaction in the movie exhibition business last year, as multiplex operators went for consolidation, partly to increase their bargaining power with film producers and distributors, and to gain a bigger share of box office receipts in India’s Rs.9,200 crore movie industry.

Inox Leisure Ltd, India’s second largest multiplex operator, acquired Delhi-based Satyam Cineplexes Ltd for nearly Rs.240 crore, paying Rs.182 crore in cash and taking over its debt in a deal that expanded Inox’s presence to 50 cities, with 91 multiplexes and 358 screens.

Housing Development and Infrastructure Ltd (HDIL) sold its multiplex business Broadway Cinemas to Carnival Cinemas, and Mexican multiplex chain Cinepolis bought Fun Cinemas, the multiplex chain promoted by Essel Group through E-City Ventures. Reliance Group companies have sued HT Media Ltd, Mint’s publisher, and nine others in the Bombay High court over a 2 October 2014 front-page story that they have disputed.

HT Media is contesting the case.