Village Force and Hoyts agree on split

By KARYN SCHERER

New Zealand's two main cinema chains have confirmed that they are getting divorced, a year after marrying without official approval.

After months of negotiations and in the face of legal threats from the Commerce Commission, Village Force and Hoyts said yesterday that they were dismantling the joint venture they set up last year to run two-thirds of the country's cinemas.

Around half-a-dozen staff lost their jobs when the chains merged last August.

Hoyts NZ's general manager, Chris Rawlings, did not return the Business Herald's calls, but it is understood Hoyts is looking for accounting and service staff. It is also believed to be considering moving back to its old offices, after moving in with Village Force last year.

The two companies said last year that the merger was necessary to ensure continued investment in a mature market.

Both companies said the courts would have upheld the alliance, but conceded the costs and hassles meant it wasn't worth battling the Commerce Commission over the issue.

The commission has allowed the two chains to continue their joint ownership of 12 cinemas in the Force Entertainment Centre in central Auckland, but it is understood that this is on the basis that Hoyts is not involved in their management.

The commission said last year it thought a merger would strengthen both companies' dominance of the industry, despite the fact they mostly operated in different cities.

Village Force chief executive Joe Moodabe said yesterday that defying the commission had been "more than a little bit costly" for both chains.

"There were so many uncertainties and frustrations and the cost as well, it's just time to say, 'We gave it a good shot and let's put it behind us.'

"Everybody's fed up with the whole thing now and wants to get on with life."

The issue of costs had not been settled, but both companies said they did not expect the move to have a "material impact" on their results.

Independent film distributors and exhibitors had strongly opposed the merger, saying it would give the combined company too much muscle.

Between them, Hoyts and Village Force - itself a joint venture between Australian-based Village Roadshow and New Zealand-based Force Corporation - are estimated to control more than two-thirds of all box office sales in New Zealand.

The president of the Motion Picture Exhibitors Association, Mark Christensen, said cinema operators were delighted the issue had been settled.

"The merger was opposed by the entire rest of the industry. It does preserve the more level playing field that has been the driving force behind the revitalisation of the NZ cinema exhibition industry."