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Vue Entertainment Holdings (UK) Limited / A3 Cinema Limited

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Vue Entertainment Holdings (UK) Limited / A3 Cinema Limited APPENDIX F Local competition 1. This appendix presents some of the evidence used for assessing the effects of the merger at the local level. Basingstoke 2. Table 1 indicates the closest cinemas to the former Ster Festival Place cinema in Basingstoke in terms of drive-time. It indicates also their number of screens and seats. This table (as the analogous ones for the other former Ster sites given below) shows all cinemas, including those with fewer than five screens. Table 1 also gives figures for cinemas beyond 20 minutes’ drive-time, as there are no cinemas other than the parties’ within the 20-minute range. Shares of ‘capacity’ are calculated for different drive-time cut-off points. TABLE 1 Capacity shares for Ster Basingstoke, 10-, 20- and 30-minute isochrones 10 and 20 minutes 30 minutes Travel time Shares of Shares Shares of Shares Competitors (mins) Screens Seats screens of seats screens of seats Ster Century, Basingstoke 10 2,116 50 47 29 29 Vue, Basingstoke 5 10 2,398 50 53 29 33 Vue-Ster combined 20 4,514 100 100 59 62 10 and 20 minutes totals 20 4,514 100 100 59 62 The Screen, Winchester 24 2 384 6 5 Odeon, Bracknell 27 10 2,160 29 30 Palace, Alton 28 2 170 6 2 30 minutes totals 34 7,228 100 100 Other cinemas cited by Vue as competitors Vue, Reading 33 10 1,873 Ambassadors Cinema, Woking 34 6 1,665 Showcase, Reading 34 12 2,975 Film theatre, Reading 37 1 409 Source: Vue data. 3. Table 1 shows that the former Ster and Vue Basingstoke cinemas are the only cinemas (including both multiplexes and non-multiplexes) within a 20-minute drive- time radius of the Ster site. According to Vue’s drive-time data, its own cinema is located within just 5 minutes’ drive-time from the former Ster site. The next multiplex competitor is located 27 minutes’ drive-time away in Bracknell. Population overlaps 4. Vue provided us with data on population overlaps produced by Experian between some of the former Ster sites and other cinemas. In practice, these overlaps consider the population estimate for the 20-minute isochrone of one cinema and then take the same estimate for the part of the isochrone that overlaps with the 20-minute isochrone centred on nearby cinemas. The percentages obtained by dividing the latter numbers by the former number are the overlaps. F1 5. It is important to note that these are calculated for 20-minute catchment areas, and the population in these areas is not weighted to reflect the distance from the cinemas. In general most of a cinema’s audience comes from nearer the cinema site. Given this, it is likely that population overlaps with cinemas relatively far away (in terms of their drive-time) may come from areas near the fringes of the isochrone and therefore less ‘dense’ in terms of cinema audience than the areas near the centre. This lower ‘density’ may be due to both a lower number of cinema goers and to a lower frequency of visits from customers located further away. 6. Therefore lower overlap percentages may overestimate (potentially in a significant way) the actual cinema audience overlaps. Population overlaps for Basingstoke are reproduced in Figure 1 and indicate that Vue shares the vast majority of the former Ster cinema’s potential customer base. FIGURE 1 Population overlaps—former Ster Festival Place, Basingstoke 100 90 80 70 60 50 Percentage 40 30 20 10 0 Vue Leisure Park, Odeon Bracknell Showcase Reading Ambassadors Cinema, Odeon Guildford Woking Basingstoke Multiplex cinemas Source: Vue. 7. The 20-minute isochrone for the Vue Basingstoke cinema contains 90 per cent of the population also residing in the 20-minute isochrone centred on the former Ster site. Other cinemas have much lower overlaps. Price trends 8. The Dodona report published price observations for Basingstoke. These are reproduced in Figure 2, where we have also added two observations for the pre- and post-merger prices. F2 FIGURE 2 Prices in Basingstoke over time 7 6.5 6 5.5 5 4.5 Sat night adult ticket prices (£) Vue 4 Ster 3.5 3 1995 June 1997 Aug 1998 Sept 1999 Nov 2001 Jan 2001 Dec 2002 Dec 2004 Jan pre-merger post merger (27/05/05) Points in time Source: Dodona Research. 9. This series shows the price at the Leisure Park site was dropped by £1 (or 18 per cent) after Ster’s entry. A little over one year later Vue’s price was raised again. However, while between 1995 and 2001 prices at the Vue Basingstoke cinema rose by 39 per cent (an average yearly growth rate of around 6.5 per cent), since Ster’s entry and until before the merger, prices at the Vue cinema rose by around 9.1 per cent (or around 2.3 per cent on average per year). 10. Since the acquisition Vue has raised prices at the former Ster Basingstoke site twice, and once at the Vue site. Until that point Ster had increased prices at an average rate of around 3.5 per cent a year between 2002 and May 2005. The post merger price changes bring the average yearly price increase over this period to 5.8 per cent. The second set of price changes formed part of Vue’s last yearly price review. In this context average ticket prices at Vue’s cinemas in Basingstoke rose by between [] per cent, compared with Vue’s circuit average of [] per cent. Edinburgh 11. Table 2 is analogous to Table 1 for the former Ster Edinburgh cinema and indicates the closest cinemas to the former Ster site in terms of drive-time. It indicates also their number of screens and seats. The table shows all cinemas, including those with fewer than five screens. This table only gives figures for cinemas within 20 minutes’ drive-time. Shares of ‘capacity’ are calculated for 10 and 20 minutes’ drive-time cut- off points. F3 TABLE 2 Capacity shares for the former Ster Edinburgh cinema isochrone 10 minutes 20 minutes Travel time Shares of Shares of Shares of Shares Cinemas (mins) Screens Seats screens seats screens of seats Former Ster Century, Edinburgh 10 2,116 17 18 15 15 Vue, Edinburgh 5 12 2,205 21 19 18 16 Cameo, Edinburgh 8 3 394 5 3 5 3 Odeon, Edinburgh 8 4 710 7 6 6 5 Cineworld, Edinburgh 8 13 3014 22 26 20 22 Dominion, Edinburgh 10 4 732 7 6 6 5 Odeon, Edinburgh 10 12 2,476 21 21 18 18 Vue-Ster combined 22 4,321 38 37 33 31 10 minutes totals 58 1,1647 100 100 88 85 Westside Plaza, Edinburgh 15 8 2,088 12 15 20 minutes totals 66 13,735 100 100 Source: Vue data. 12. In terms of drive-time, the table indicates that Vue is the closest cinema to the former Ster site. However, there are two other multiplexes within the 10-minute isochrone and a further three cinemas each with between three and four screens. Shares of capacity for the 10-minute isochrone indicate that the parties will have fewer than 40 per cent of screens and seats in the isochrone. There is one further multiplex competitor in the 10- to 20-minute range. 13. A distributor has reported that the parties will have market shares of around 50 per cent in BOR and in the distributor’s rental revenue in Edinburgh. Catchment and other data 14. Odeon provided us with postcode research for its two Edinburgh cinemas. This shows the percentage of the cinema’s internet bookings (around [] of total bookings) that comes from customers within different drive-time ranges. These are reproduced as Figures 3 and 4. FIGURE 3 Odeon Edinburgh Wester Hailes: distance decay—percentage of internet bookings by drive-time Source: Odeon. F4 15. Figure 3 indicates that [] per cent of the cinema bookings come from a 15-minute drive-time distance, while a 20-minute drive-time includes nearly [] per cent of bookings. However, in supplying this data, Odeon warned that the postcodes are the ones of the credit card billing address and therefore a small number of spurious results will be linked to people on vacation, or working near the cinema but living further away. In other words this data may underestimate the actual percentage of bookings coming from a closer range. Figure 4 shows a similar result for the Odeon Lothian Road cinema. FIGURE 4 Odeon Edinburgh Lothian Road: distance decay—percentage of internet bookings by drive-time Source: Odeon. 16. UCI also provided postcode data for Edinburgh in form of a map where its customers where plotted. Both the Odeon data and the UCI map appear to indicate that multiplex cinemas within a 10-minute radius from the former Ster site are likely to share most of their customer base. 17. However, Vue has informed us of having increased prices at the former Ster site post merger. The price increase relates not just to the adult ‘premium’ price which increase by 20p to £6, but also child, student and senior tickets, which increased all by between 30p and 40p. Leeds 18. Table 3 summarizes the information on competitors’ drive-times, screens, seats the isochrone centred on the former Ster site. The table only lists cinemas within 10 and 20 minutes as there are several multiplexes within this range. F5 TABLE 3 Capacity shares for ‘The Light’, former Ster, cinema Leeds, 10- and 20-minute isochrones 10 minutes 20 minutes Travel time Shares of Shares Shares of Shares Competitors (mins) Screens Seats screens of seats screens of seats ‘The Light’, former Ster cinema, Leeds 13 2,906 54 51 14 13 Vue Kirkstall Rd, Leeds 6 9 2,012 38 35 9 9 Hyde Park Picture House, Leeds 5 1 350 4 6 1 2 Cottage Road Cinema, Leeds 6 1 468 4 8 1 2 Vue-Ster combined 22 4,918 92 86 23 22 10 minutes totals 24 5,736 100 100 25 26 Showcase, Birstall 11 16 4,643 17 21 Odeon, Pudsey 12 13 3,086 14 14 Cineworld, Bradford 15 16 3,263 17 15 Cineworld, Wakefield 15 12 2,368 13 11 Cineworld, Castleford 16 14 2,900 15 13 30 minutes totals 95 21,996 100 100 Source: Vue data.
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