Grand vision for cinema

THE acquisition by Grand Cinemas last month of Greater Union’s Joondalup and Whitfords cinema complexes, and the completion of its Armadale cinema later this year, positions the independent cinema group as a forerunner in hard-top cinema ownership in WA.

By the end of the year the locally owned Grand Cinema group will have seven cinema sites, as many as WA’s biggest cinema operator, Hoyts.

Greater Union has divested its interest to manage its Morley site and Innaloo mega-cinema – the star of hard-top movie cinemas in WA and, as WA Business News understands, is the most profitable cinema complex site in WA.

Grand Cinemas has experienced steady growth since its inception in 1993. Its first cinema complex opened in Warwick in 1994, followed by Bunbury in 1996 and Currumbine in 1999.

Grand Cinemas now has 37 screens in WA and its managing director Alan Stiles said the cinema company had further growth potential.

“As a group we look at any opportunity that raises itself,” Mr Stiles said.

Greater Union approached Grand Cinemas to sell Grand its Joondalup and Whitfords cinemas, but Mr Stiles would not comment on the size of the transaction.

“We had a discussion about their approach to us and decided we could improve on the cinemas and we decided to do it,” he said.

“We came to an agreement that we would pay them over a period of eight years.

“For the big guys to come to an independent is a pleasant change.”

Mr Stiles said that, while the company did not have as many marketing dollars to spend as its national competitors, it gained promotional efficiencies through a marketing arm established six years ago.

The company is an affiliation between Grand and fellow independent cinema operator Ace Cinemas.

“We set up a group called Movie Masters. It means our position in terms of newspaper advertising and marketing costs are reduced and we have more to offer our clients in terms of promotion because they have more locations to offer,” Mr Stiles said.

Grand Cinemas is a family-run business with its first foray into the entertainment sector back in 1928, when the company was known as the Grand Theatre Company.

Grand Cinemas’ control of cinemas north of Innaloo will not only deliver advantages in-house (the Joondalup site is located just five minutes north of its existing Currumbine site) but also provide local cinema advertiser CINEads Australia with more screens to offer its advertisers.

CINEads produce still ads for small to medium business operators and has a commercial arrangement with Grand Cinemas to screen adverts before its movies.

CINEads managing director Tony Brooks said his company, which did not have an advertising arrangement with Greater Union, would benefit from Grand Cinemas’ growth.

“It’s worked out beautifully for us. It expands the northern corridor and makes it easier for our advertisers who want to buy multiple sites,” Mr Brooks said.

He said the cinema industry was looking positive for the year ahead with big name releases Harry Potter, Shrek 2, and Spiderman scheduled.

Mr Stiles agreed that the product line-up was good.

“We really do rely on the product,” he said.

But Mr Stiles said if lease costs continued to increase, the viability of smaller players was questionable.

“I think that if the rents get higher when their leases come up they will walk out of the cinemas.”