UPDATE: Cineworld Signs 11-Screen O2 Multiplex Cinema Deal

25th Jun 2010 10:31

(Adds detail, analyst comment, share price) By Hannah Benjamin Of DOW JONES NEWSWIRES LONDON (Dow Jones)--U.K. cinema company Cineworld Group PLC (CINE.LN) Friday said it has signed a deal for an undisclosed sum to operate the 11-screen multiplex cinema at the O2 arena in London. Cineworld will start operating the cinema from Friday, after agreeing a 25-year lease with the Waterfront Limited Partnership, which is part of the Anschutz Entertainment Group. The cinema--which seats 2,844 people and houses London's largest cinema screen with seating for 770 people--is located inside the O2 arena, a live music venue that has seen thousands of people flock through its doors to watch concerts by the likes of Lady Gaga, Bon Jovi and the Spice Girls. The O2 cinema drew box office sales of about GBP4.1 million in 2009. "The O2 is not just the world's most popular music venue but also has a vibrant entertainment district, and we see this exciting agreement as a significant step in further developing The O2, and offering visitors the best in big screen entertainment," said David Campbell, Chief Executive of AEG Europe, which owns and operates the O2. Cineworld didn't disclose the financial terms of the deal, which it said are confidential, but its Chief Executive Steve Wiener said: "Not only does this transaction see us expand our London estate, in what is a thriving entertainment facility, but in doing so we will be involved with one of the leading entertainment operators in the world." Cineworld earlier this month announced a roll-out of digital projection facilities across its estate. It follows a 14% jump in the company's revenue in the 18 weeks to May 6, boosted by the hotly-anticipated release of 3D films Avatar and Alice in Wonderland. Altium Securities analysts Greg Feehely and Wayne Brown told clients in a note Friday that "the addition of this substantial high profile venue is a clear positive" for Cineworld. They noted that there is a strong slate of movies due for release in the second half of this year, including Shrek Forever After and Toy Story 3, both in 3D, as well as the latest Twilight Saga instalment and the Chronicles of Narnia: Voyage of the Dawn Treader. Feehely and Brown kept a "buy" rating and 230 pence price target on the stock. At 0913 GMT Cineworld shares were trading 3 pence, or 1.5%, higher at 200 pence, outperforming a 0.3% fall in the Dow Jones Smaller Companies index. -By Hannah Benjamin, Dow Jones Newswires; 44-20-7842-9298; [email protected] (END) Dow Jones Newswires June 25, 2010 05:31 ET (09:31 GMT)