IMAX Corporation (NASDAQ: IMAX; TSX: IMX) today announced that CJ CGV HOLDINGS, LTD, a subsidiary of CJ CGV Co. Ltd., the leading theatre exhibitor in Korea, and the number one exhibitor in Asia, has signed an agreement to install 15 digital IMAX® theatre systems in new locations planned for The People's Republic of China.
The deal marks IMAX's single largest theatre deal in Asia and expands its existing relationship with CJ CGV, which already operates 5 IMAX theatres in Korea, and comes on the heels of the joint venture arrangement between the two parties that was announced in March. With this announcement, CJ CGV now has committed to operating up to 35 IMAX theatres overall. The deal calls for CJ CGV to install the first 2 IMAX systems in 2011 with all remaining installations scheduled to be completed between 2012 and 2015.
Under the terms of the sale, the parties anticipate sharing in the box office of all 15 Chinese locations once installed. IMAX has had increasing success with revenue sharing deals in international markets in recent years. Today's announcement brings the total number of IMAX systems scheduled to be open in Greater China, IMAX's second largest market, to 96. The Company's announced number of theatre systems signings year-to-date has increased to 168 worldwide, which compares to 35 system signings in all of 2009.
"Our experience with the IMAX brand and business in Korea has proven to us that an effective method for us to grow our business in China is to include IMAX in new multiplex locations," said Mr. Kim Joo Hyung, CEO of CJ CGV. "We have been successful with our current IMAX theatres in Korea, and with IMAX's impressive film slate, which is targeted to include mainstream Chinese films, we are pleased to expand our IMAX footprint."
"CGV is one of the most successful and largest exhibitors in Asia, and entering a new agreement with them represents our confidence in their skills as a premier exhibition partner and in the strength of the Chinese exhibition market, which is expected to increase significantly in the coming years," said IMAX Chief Executive Officer Richard L. Gelfond. "We think this deal is also significant because, under the terms of the agreement, and for the first time in China, IMAX will trade a lower up-front fee than we receive in a typical sales deal in exchange for a larger share of the box office generated by the theatre, giving us increased participation in the growing box office in China, which has more than doubled in the country over the last two years."
"This deal represents the single largest IMAX commitment in Asia, and having it come from an existing customer reinforces the appeal of our business model," added Don Savant, IMAX's Senior Vice President and Managing Director, Asia Pacific. "CGV is now our third largest exhibitor partner worldwide, and they will continue to be a strong partner for us in the years ahead."