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Entertainment Holdings Inc. will exit its equity partnership in Saudi Arabia, the cinema giant said Tuesday, leaving a market that was once considered the world’s final frontier for cinema but proved hard to dominate.
A subsidiary of the Saudi sovereign-wealth fund will acquire AMC’s equity stake in their joint venture, giving it 100% ownership, according to a joint statement from the subsidiary, Saudi Entertainment Ventures, and the American movie-theater chain. The Saudi firm will buy out AMC’s $30 million investment in the joint venture and take over operations in the kingdom, franchising the American brand, AMC said in a separate statement.
AMC had owned 10% of the joint venture and received fees for licensing its brand and for managing the partnership, The Wall Street Journal previously reported. The Saudi firm, known as Seven, will retain intellectual-property rights to the AMC brand in Saudi Arabia and focus on plans to invest $13 billion in developing 21 entertainment destinations across the kingdom, the two companies said.
AMC’s exit from Saudi Arabia illustrates how the kingdom remains a difficult place for international companies to operate in, despite changes under Crown Prince
Mohammed bin Salman
that have liberalized social norms and caused a glut of government investment into new industries. One of the prince’s changes was allowing new cinemas to open in 2017 after a decadeslong ban.
Even with the backing of the sovereign-wealth fund, AMC lagged behind competitors in rolling out theaters across the kingdom.
At that time, AMC vowed to open up to 50 theaters within five years, and as many as 100 by 2030. The American firm became the corporate face of one of the first major liberalization efforts initiated by Prince Mohammed, who as day-to-day ruler is seeking to open up the kingdom’s Islamic society and diversify its economy away from oil.
Even as other executives pulled deals in the kingdom after the killing in October 2018 of journalist Jamal Khashoggi, AMC said publicly it would continue to work there.
AMC CEO Adam Aron had said the pandemic had slowed the pace of theater openings.
Photo:
Whitney Curtis for The Wall Street Journal
The firm said Tuesday the joint venture currently operates 85 screens across its 13 cinemas in the kingdom. “We believe this announcement and agreement is the natural next step in the process as we achieved our objectives of the joint venture,” AMC Chief Executive
Adam Aron
said in the statement.
Mr. Aron previously told the Journal that the Covid-19 pandemic slowed the pace of its theater openings. The Journal reported that the joint venture also struggled with brand recognition in Saudi Arabia and fierce competition from local rivals, which built theaters at a faster clip.
Since the reopening of cinemas, the kingdom has organized music concerts, sports events and festivals.
In the joint statement, Seven Chairman
Abdullah Al-Dawood
said the partnership with AMC was crucial for the kingdom to develop knowledge and technical expertise to support the growth of the nascent entertainment industry.
Write to Rory Jones at Rory.Jones@wsj.com
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