United Artists pulls plug on foreign expansion

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BOMBAY -- A changed focus has led U.S. entertain- ment giant United Artists to abandon plans to open a chain of multiplex cinemas in India and to pull the plug on similar joint ventures in Europe and the Asia-Pacific region.

The marketer's decision to concentrate on its home market of the U.S. was attributed as the primary reason for the pullout. The move will affect operations in Japan, the Philippines, Singapore, Indonesia and Australia, besides many European countries.

As a result, United Artists Theatre Circuit will soon sell its 50% share in an equal joint venture with Bombay-based Modi Entertainment Network a little more than a year after it gained Indian government approval for investing between $8.3 million and $9.7 million each for multiplexes and entertainment centers across India.

"UA has decided to withdraw from its worldwide multiplex operations, so where do we fit in? We are a very small cog in the wheel," says Purti Hajela, spokesman for Modi. She adds that Modi is talking to three or four marketers to buy UA's share and divide the responsibilities of building and then managing the multiplexes.

Modi is also negotiating with Stewart Blair, who headed United Artists Theatre Circuit until he timed his resignation last year to coincide with the marketer's changed focus. Mr. Blair's Pacific Media firm may be a likely partner, Ms. Hajela admits.

UA's withdrawal from the market follows a similar decision by Hollywood's Warner Bros. The studio's Warner Theatre International division last year refused to invest $58 million in India to open a chain of multiplexes, despite gaining approval from the Indian government, because of frustration with ambiguous assurances and obstacles put up by the Maharashtra state government.

Australia's Village Roadshow is currently the only foreign chain to successfully open a multiplex in India. It has tied up with New Delhi-based Priya group and recently inaugurated a Priya Village Roadshow multiplex in New Delhi. In a separate instance, an Indian investor late last year opened the Cinemax chain with one multiplex in New Delhi and the other in Bombay.

India boasts 13,000 cinemas to accommodate the estimated 900 movies produced each year. The local movie industry is reported to have fiscal revenues of $850 million.

Copyright January 1998, Crain Communications Inc.

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