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Case 1 Assignment: Major Issues Facing Cinemark Holdings (Essay Sample)


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Cinemark Holdings Case Study
Cinemark Holdings is one of the leading businesses in the movie sector, both in the United States and South America (Cinemark). The movie firm was established in 1984 by Roy Mitchell, who first constructed Movie Theaters in three locations; Texas, California, and Utah. Cinemark was one of the founders of the stadium seating design that started in the early 90s. Since its establishment, Cinemark has built several theaters in the United States and other Latin American nations as shown in figure 1 below (Cinemark). On top of constructing theatres, it has also acquired some other smaller theaters to add to its growing list. For instance, it purchased approximately a hundred theaters in Texas in 2006. Moreover, it absorbed Florida-based Muvico and Dallas-based Rave theaters in 2009 and 2012 respectively (Cinemark). Its headquarters are located in Plano, Texas, and it operates more than 465 theaters with over 5,000 screens in the United States and Latin America. Out of this, 148 theaters with 4,457 screens are located in the US, whereas a total of 1,106 screens are situated in South American countries (Chandrasekaran and Bedrosian 7). The main competitors of Cinemark Holdings include Regal Entertainment, AMC entertainment as well as other smaller movie businesses such as Netflix, satellite TV, and Hulu among others. By 2014, Cinemark holdings had employed over 6,000 workers and realized total revenue of $2.6 billion in the same year (Cinemark).
South AmericaLocationsScreensBrazil65516Colombia28144Argentina19168All Other Latin America48349Latin America Totals1601,177Fig.1 Cinemark's South American Operations (Cinemark)
Major Issues Facing Cinemark Holdings
Short-term Issues
Despite being the most prominent movie business in the United States and other South American countries and having enjoyed a prolonged period of success, Cinemark faces several challenges both internally and externally. One of the issues affecting cinema is the absence of robust organizational structure, whereby the company lacks the regional divisions despite having a chief operations officer. The poor organizational structure may have a drastic effect on the ability of the company to maximize opportunities in the market, which may lead to severe financial repercussions.
Also, the movie industry is under constant scrutiny by the legal agencies and has been receiving several formal inquiries (Barnes). For instance, three major cinema companies, Cinemark, AMC, and Regal were under investigations after the United States Department of Justice accused them of colluding with major film studios to reduce the number of theaters filming the blockbuster movies. The smaller independent theaters complained that they cannot show blockbuster movies until long after they have been released (Pasquine). Several complaints came from the independent theater owners who said that the major players in movie industry such as Cinemark, AMC and Regal had struck a deal with film producers to deny the smaller theaters right to show certain films within a given geographical location (Poppick). The part of the negotiation of this illegal deal as put forward by the complaints stated that the bigger theater should have exclusive rights to show movies in a particular geographical area, but another theater a few miles away cannot show the same film at the same time (Verrier). For instance, Cobb Theaters, a small company with about 20 theaters, sued AMC in one of Alabama federal courts for denying its competitors a fair competitive access to movies in order to muscle them out of business.
Long-term Issues
The sale of the movie tickets is experiencing a decline for the past couple of years (Menon). One particular instance confirms thi...

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