Case study
In 1979 Garth Drabinsky and Nathan Taylor formed Cineplex. From early on Cineplex saw itself as a niche player. They used small screens to show specialty movies and they employed this strategy not to challenge major chains, but to compliment them. Cineplex did well primarily because of their concept for carefully planned use of shared facilities. With this success they began to expand across Canada with a very rapid rate of expansion. During this expansion however they amassed a 21 million-dollar debt. Also, distributors became reluctant to supply Cineplex for fear of alienating the two largest Canadian chains. In 1983 to avoid bankruptcy, Cineplex reduced its debt by selling off some of its recently purchased assets. Darbinsky also took legal action to win back access to major releases. Son after this time he also purchased the Odeon chain so that he would be able to bid for early runs of movies. This gave Cineplex a major position in the industry. Through Darthbinsky's relentless tactics Cineplex Odeon was the second largest motion picture chain with 1,800 screens in over 500 locations. Now that Darthinsky owned one of North America's major theater chains he sought to change the movie goin
5 million in refurbishment and construction of new theaters. 22891 (very poor)Long-term debt to equity ratio - 81. Loss of market share due to increase in competition and the increasing number of screens in markets. Drabinsky endeavored to use the size of his chain to obtain added clout with film studious and distributors. 85Many of their financial ratios are significantly insignificant with profits being negative. Karp believed Cineplex was capable of running a theater chain twice as big. Karp should continue to pay down as much debt as possible and aggressively seek merger opportunities immediately. g experience by changing the layout and atmosphere of the theaters to attract even more moviegoers. Vertical integration into the production industry as regulations had been relaxed. Alan Karp assumed the leadership role and immediately began to cut costs and divest some of Cineplex Odeon's assets. Alliances or mergers to expand coverage. Employ a no growth strategy and focus on current markets. Analysts believe however that with the current state of affairs Karp could not turn the company around.
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Acceptance Essays
