Loews-Cineplex Odeon Deal Gets OK
WASHINGTON (AP) _ The Justice Department approved the merger of Loews Theatres and Cineplex Odeon Corp. after winning their agreement Thursday to sell 25 movie theaters in metropolitan Chicago and New York’s borough of Manhattan.
``This is a big win for moviegoing consumers,″ said Assistant Attorney General Joel I. Klein, head of the department’s antitrust division.
The government said the original deal would have driven up movie-ticket prices and reduced the quality of first-run theaters in both cities, where the two companies run the first and second largest chains.
Joined by the attorneys general of New York and Illinois, Klein’s division filed a lawsuit Thursday in U.S. District Court in New York to block the merger. At the same time, the prosecutors filed the divestiture agreement, which would settle that lawsuit if the court approves it as expected.
The theaters to be sold include such prominent houses as the Ziegfeld and the Chelsea in Manhattan and 600 North Michigan and the Watertower in Chicago.
``This divestiture completely restores the competition that would have been lost,″ Klein said. ``Under the settlement, the merged firm will not be any larger in either market than the leading firm was before the transaction.″
Named as defendants were LTM Holdings Inc., which does business as Loews Theatres; Sony Corp., which is the parent company of LTM; Cineplex Odeon Corp., and J.E. Seagram Corp. which is the parent company of Universal Studios, Inc., the largest Cineplex Odeon shareholder.
The government said that, without divestiture, the merged company would have 67 percent of the Manhattan first-run movie market and 77 percent of the metro Chicago market.
The defendants agreed to sell 14 Manhattan theaters and 11 in the Chicago area to a buyer or buyers who are acceptable to the Justice Department and will continue to operate them as movie theaters. In both cities, the divestitures represent slightly more than the leading firm in each city would be acquiring in both the number of screens and revenue.
The theaters to be sold include 13 Cineplex Odeon and one Sony-Loews house in Manhattan, and eight Cineplex Odeon theaters and three Sony-Loews theaters in the Chicago area.
The merged company is to be called Loews Cineplex Entertainment Corp. Sony Pictures Entertainment Inc. will own 51 percent; Universal Studios Inc. will own 26 percent; the Charles Rosner Bronfman Family Trust and related parties will own 10 percent, and the other Cineplex Odeon shareholders will own 13 percent.
Headquartered in Toronto, Canada, Cineplex Odeon Corp. is one of the largest movie theater chains in North America with 1,723 screens at 312 sites, including 911 screens at 175 locations in the United States and the remainder in Canada and Europe. It had revenues of $500 million in 1996.
An indirect wholly owned subsidiary of Sony Corporation of America, LTM Holdings, or Loews Theatres, operates one of the largest chains in the United States under the Loews Theatres and Sony Theatres marquees. It has 1,035 screens at 139 locations in 16 states and revenue of $375 million for the fiscal year ending Feb. 28.