Bior, Ayen | Cinemark Holdings Inc.

Competing in a Small Market: Cinemarks Struggle Cinemark Holdings has two really big problems. One of them is public and the other is private. (snappy start) The Plano- based company is currently third in revenue in the theatre movie-theater market. [It is a competitive market of which most is controlled by three entities including Cinemark](sentence doesnt really add much; we already know there are three leaders, including Cinemark; this would only be worth doing if you can put a number on the percentage of the market controlled by the top three). As with any market, the competition to gain first place is complex. In this particular market, it is donetakes place in front of the big screens. Cinemarks competitions competitors have a lot in common in regards when it comes to the physical appearance of theatrestheaters (American usage), types of concessions and movies shown. The difference is evident in the numbers. AMC Entertainment Holdings Inc., a private company, is one of Cinemarks economic issuesrivals. The corporation ranks number two in the American theatre industry with their its (remember the stylesheet) most recent annual revenue at $2.6 billion, (dollar signs before all of these figures, please)according to NASDAQ. However, Regal Entertainment Group is the biggest competitor for both AMC and Cinemark. Its Its (no apostrophe when possessive) most recent 10K reveals its total revenue is $2.8 billion. Along with having higher numbers than AMC, Regal also beats Cinemarks $2.1 billion dollar total revenue mark for fiscal year 2012. Regal has consistently proven more successful, making Cinemark Holdings the third ranked theatre in the U.S. right after AMC. (these four grafs are WAY too drawn out and repetitive. All youre saying here is that Regal is No.1, with $2.8 billion in revenue, AMC is No. 2 at $2.6 billion, and Cinemark is No. 3 at $2.1 billion. That can be done in one quick sentence) The efficiency of each company also reveals a difference. Operating income for Cinemark is $308 million. This comes close to Regals $334 million. (But their revenues are very different. Heres where you have to do an operating profit margin calculationespecially since you mention efficiencywhich shows that Cinemark is more profitable:

2 14.7% compared to 12.0% for Regal. Thats pretty interesting.) (Looking at the most recent 10K, I cant see the numbers youre using. For the most recent year, fiscal 2012, total revenues were $2.5 billion, not $2.1 billion; and operating income was $384 million. That would give it an operating margin of more than 15%. ) Regals success comes from its size as well as its average ticket prices. (the next graf doesnt say anything about ticket prices, though) Regal has a total of 540 theatre locations representing with 6,880 screens in North America. On the other hand, Cinemark currently has 465 screens theaters and a total of 5,204 screens and a commitment to open up an additional 287 new screens within the next three years. (If those are really the numbers for Regal in North America, youre comparing apples and oranges: The Cinemark numbers are for North America and Latin America, not for North America only.) In their its(stylesheet!) most recent earnings call, Cinemark [attributes the rise in payroll.](what do you mean here?) Salaries and wages increased to $73.2 million for 2012 from $59.0 million for 2011 primarily due to new theatres, (is this significant? Did salaries and wages rise faster than revenues? Or is there some other reason this matters?) said Tim Warner, Cinemarks Chief chief Executive executive Officerofficer, during the call. And he assured listeners that the company is continuing to fight for the top spot. (Did he? The quote doesnt say this. Is overtaking Regal and AMC really the goal?) It was an incredible year for the industry, he said,. As as 2012 set a new record with an estimated $10.8 billion in domestic box office revenues, representing an increase of approximately 6.1% compared to 2011.(repunctuate to avoid sentence fragment in second half of quote.) [The problem with Cinemarks persistent third place could due to the fact that it is not a present as Regal.](this repeats ideas already stated, and its essentially circular, or self-evident: Cinemark is third because its smaller than Regal.) The markets competitive nature might be reason for Cinemarks mission to add more theatres and screens in the U.S. Attendance has also made AMC competitive in the past year. It currently generates 34.5 unique visitors every year, exemplifying a 19% rise (over what periodfrom when to when? And this figure doesnt tell us much unless you also give Cinemarks attendance growth rate).

Bior, Ayen | Cinemark Holdings Inc. At the same time, Regal brings in over 50 percent more attendees than Cinemark. The number one franchise saw approximately 216 million people walk into its theatres last year, while Cinemark only saw 100 million. [A variance in revenue may come from each companys average ticket price, which shows a difference of $2.18 with Regals average ticket priced at $8.90.] (This idea belongs higher up, as noted. And its a little unclear. Is Regals average price $2.18 higher than Cinemarks? That would make Regals price almost a third higher than Cinemarks, which is remarkable. If thats true, why is it?) The complex results from the companys earnings in comparison to its competitors are the consequences of a complex equation with many moving parts. The numbers suggest it is harder to excel in this market. (doesnt say much) Depending on the newest movie, patrons will be driven to go to see it. Cinemark hopes that its commitment to expand its presence in North America by establishing more theatres while simultaneously [investing in new digital screens](first weve heard of this; too late in the story to bring up an idea like this; are you saying Cs price is lower because it doesnt have as many digital screens? Cant be: the 10K says theyre 100% digital in the US) may play a role in increasing ticket prices. This is a start. Youve begun to look at the numbers and are starting to sort out the competitive framework. You still dont have a storyline, though, and some of the numbers are wrong. In particular, your revenue and operating profit figures are off, as noted above. IF your numbers for Regal are correct, you have a couple of interesting things to explore. Why is Cinemarks average ticket price, which I see from the 10K is indeed $6.72, so much lower? Andagain assuming the figures for Regal are rightwhy is Cinemarks operating profit margin so much higher? Either of these two issues, which are somewhat contradictory, is worth exploring and might produce a storyline. Another less technical storyline would be to look at the prospects for the industry in the coming year: the theaters are highly dependent on the quality of movies coming out of Hollywood; whats the outlook for that in 2013? (I see one analyst has lowered his expectations for the industry because of this http://finance.yahoo.com/news/sector-snap-movie-theater-companies192328419.html) So you need to do some more work with the financials of both companies. And go back and read whats been written about the companiestake a look at the headlines on Yahoo!Finance, for

4 example. And you also need to some real reportingtheres none in here. Go to a theater, look around, talk to patrons and ticket takers. If your storyline becomes a comparison of Cinemark vs. Regal, go to a Regal, see if you can see how and why Regal charges more. Also, PLEASE remember to include a source list, with links to all documents and other sources.