Warner pulls out of theatrical exhibition in Japan

The exhibition company will become a wholly-owned subsidiary of Aeon.

Aeon will finalise the transaction for an undisclosed amount at the end of February or beginning of March 2013 using cash reserves.

Warner Mycal will be absorbed into Aeon’s own Aeon Cinema chain, totaling 600 screens at 73 locations, surpassing Toho to make it the largest exhibitor in Japan.

Aeon is Japan and Asia’s largest retail conglomerate, focused on hypermarkets, supermarkets and convenience stores. It aims to further synergise its retail and entertainment businesses.

Warner Mycal chairman Jerry Black [pictured] commented on the deal: “We see this as a great opportunity to improve the customer experience at Aeon shopping centers by offering more kinds of visual entertainment, including music and sports events. We wholeheartedly thank Warner Brothers for their 21-year partnership.”

Warner partnered with Aeon (formerly known as Mycal) in 1993 to open Japan’s first multiplex in Ebina, Kanagawa prefecture. Steady multiplex construction drove year-on-year increases until the screen count had almost doubled to 3,412 by 2010, followed by a slight drop last year to 3,339.

In contrast, box office revenues have only increased marginally since that time, meaning a drop of over 40% per screen annually to a current average of $645,000.

To make up for the shortfall, exhibitors have been focusing more on ODS contents since 2008. With 3D accelerating the changeover to digital exhibition, Toho and other studios have recently set up ODS business units. Aside from pre-recorded musicals and other contents, multiplexes are being equipped with satellite and fibre-optic links to meet growing demand for live concerts.