Village Roadshow loses Warner Bros film distribution deal

Takeover target Village Roadshow has been dealt a blow with Warner Bros deciding against renewing its film distribution contract.

Robert Pattinson in the Warner Bros movie Tenet. Picture: Supplied.

Entertainment company Village Roadshow’s film distribution deal with Warner Bros. will cease at the end of the year after the US entertainment heavyweight decided against renewing its contract.

The group, which is being taken over by private equity group BGH Capital in a deal worth up to $487.5m, said its deal to distribute Warner’s films in Australia and New Zealand through its subsidiary Roadshow Films won’t be renewed when it expires on December 31.

Village’s cinemas are currently showing Warner’s blockbusters, but many other major releases have been pushed back until December or next year because of the coronavirus crisis.

Warner is yet to make a decision about the “potential expiry or extension of Roadshow’s contract” to distribute its products via home entertainment, which also expires at the end of December.

Village, which is 40 per cent owned by the Kirby family, said the underlying earnings contribution from the Warner film distribution deal wasn’t “material” in its fiscal 2020 results, and it doesn’t expect any material impairment or write down of assets from the contract expiring.

“Roadshow, outside of its historical relationship with Warner Bros., has been Australia’s largest independent film distributor. Roadshow will continue to distribute films produced by its many independent suppliers, including FilmNation, Village Roadshow Pictures, STX and the numerous Australian films it has always supported,“ Village said in a statement.

Village said it “maintains its excellent 40 plus year relationship” with the US group in its theme park business, where it operates the Warner Bros. Movie World theme park on the Gold Coast under an ongoing long-term licence. It doesn’t expect any material impact on other areas of its group.

The end of the Warner film distribution deal won’t have any impact on its takeover.

Separately, Village expects the majority of its businesses will qualify for the federal government’s JobKeeper 2.0 payments until at least December 31.

Village last month reported that its annual net loss ballooned to $117.4m from $6.6m a year earlier following the closure of its cinemas and theme parks from March as a result of the coronavirus crisis. All its parks and the majority of its near 60 cinemas, excluding Victoria, reopened in June and July at reduced capacity in line with social distancing rules.