Wednesday, January 20, 2010

PEU's Place in the Dark

Might your neighborhood movie theater be owned by a shadow banker? AMC Theaters bought out Kerasotes Showplace Theaters in a deal of private equity underwriters (PEU's). AMC is backed by:

CCMP Capital Partners
Apollo Management

Bain Capital

The Carlyle Group

Providence Equity Partners sold its stake in Kerasotes, as did the founding family. The combined company owns 400 theaters with over 5,500 screens.

How have PEU's infiltrated studio houses? In 2005 they funded a 25 picture project via Legend. Private equity helped fund Gran Torino, shot in Detroit. MGM is currently on the block. CNBC reported:

A dozen studios and private equity players signed non-disclosure agreements to evaluate the (MGM) deal... about six bids are expected.

PEU's have a stake in content and a chunk of downstream theater capacity. What impact might it have on movie content? Should a dark comedy make fun of greedy PEU's and their insider political connections, could it get made? How about play? It depends on when Carlyle and company flip their investment in AMC.