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Credit deflation and the reflation cycle to come (part 2)


spunko

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Democorruptcy

Anybody else surprised by the figures bandied about for cinemas? Is there really so much money in it when streaming over the internet is increasing? £1.64b for 165 cinemas with 1,695 screens

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Britain's Cineworld Group Plc said on Monday it will buy Canada's Cineplex Inc for $2.1 billion (1.64 billion pounds), including debt, making it the largest cinema operator in North America.

Cineworld has offered to buy Toronto-based Cineplex for C$34 per share, a premium of 42% to the Canadian firm's closing price of C$24.01 on Friday.

The deal, which comes nearly two years after Cineworld bought U.S.-based Regal cinemas for $3.6 billion in February 2018, will add 165 cinemas and 1,695 screens to the company's existing global network of 9,498 screens across 786 sites.

https://www.hl.co.uk/news/2019/12/16/cineworld-to-buy-canadas-cineplex-for-$2.1-billion?

 

 

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GOAU - Interesting mining royalty and streaming ETF for those ( @Harley ?) looking for likely candidates in this area. Not available in the UK as far as I can see sadly but looks like it’s outperformed both GDX and GDXJ, confirming talk on this thread that it could be good play on gold along with the miners. 

“30% of GOAU is spread between Franco, Wheaton and Royal Gold (RGLD), the leaders in the royalty industry.”

https://www.kitco.com/commentaries/2019-07-26/Gold-ETF-That-Makes-a-Difference.html

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1 minute ago, Democorruptcy said:

Anybody else surprised by the figures bandied about for cinemas? Is there really so much money in it when streaming over the internet is increasing? £1.64b for 165 cinemas with 1,695 screens

 

Me and the partner go on a two for one from comparethemarket on a Tues or Weds and its £5 for both of us,thats £2.50 each.Normal prices here are £5 .We tend to go to the Chinese buffet thats £7.99 eat as much as you want so its a night out including all the food for £21.

However when there i notice all the younger people seem to have huge drinks,huge popcorn and lots of other things that must have huge profit margins.I guess they make the money on that.

Cinemas now also have very low staff costs,all the screens are controlled digital etc and that means more screens with smaller amounts in them.That also means they can use lots of different space and get cheaper rents.

I wouldnt buy Cineworld due to debt levels,but i can see what they are doing.Once they control a massive part of the market they will have huge say with the film studios,maybe even to affect release dates etc.They can also then kill off other competition by pricing to destroy in different areas.

If cash falls though those debt levels will destroy them.

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14 minutes ago, DurhamBorn said:

Me and the partner go on a two for one from comparethemarket on a Tues or Weds and its £5 for both of us,thats £2.50 each.Normal prices here are £5 .We tend to go to the Chinese buffet thats £7.99 eat as much as you want so its a night out including all the food for £21.

However when there i notice all the younger people seem to have huge drinks,huge popcorn and lots of other things that must have huge profit margins.I guess they make the money on that.

Cinemas now also have very low staff costs,all the screens are controlled digital etc and that means more screens with smaller amounts in them.That also means they can use lots of different space and get cheaper rents.

I wouldnt buy Cineworld due to debt levels,but i can see what they are doing.Once they control a massive part of the market they will have huge say with the film studios,maybe even to affect release dates etc.They can also then kill off other competition by pricing to destroy in different areas.

If cash falls though those debt levels will destroy them.

I have always seen cinemas as one of those little luxuries people will pay for during a recession so they do ok in a downturn

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4 minutes ago, stockton said:

I have always seen cinemas as one of those little luxuries people will pay for during a recession so they do ok in a downturn

Yeah they are very very cheap now as well.I paid more in 1987 to get in i think.

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1 minute ago, DurhamBorn said:

Yeah they are very very cheap now as well.I paid more in 1987 to get in i think.

They are hit and miss I find.

Middlesbrough is about £15 (roughly)

Hartlepool is about £8 (again rough est)

We go to hartlepool, it's cheaper and quieter.

Middlesbrough one always seems to be busy

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Went to the cinema for the first time in ages a few weeks ago. I was surprised by how relatively cheap it was. Must have been getting on for half the price of the last time I went. A fiver I think. Obviously they fleeced me for the popcorn but I took my own drink.

Toy Story 4, it was xD

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19 minutes ago, stockton said:

They are hit and miss I find.

Middlesbrough is about £15 (roughly)

Hartlepool is about £8 (again rough est)

We go to hartlepool, it's cheaper and quieter.

Middlesbrough one always seems to be busy

Hartlepool Vue is £5 stockton.Or £2.50 each when you have the 2 for 1 app.We use that one quite a bit if we fancy the £3.80 fish and chips in Youngs in Seaton O.oThe new Odeon in Durham is nearly £10,but on 2 for 1 its cheap enough as its really nice,especially if having an afternoon in Durham.

I only use the Darlington Vue if its after 6pm as you have to pay parking before that.I have a map with the free parking marked on it iv built up over the years but my partner complains,especially if we have to climb over a couple of fences on the way xD 

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11 hours ago, Sasquatch said:

Regarding the state pension, don't assume that HMRC is competent! I recently checked my NI record and I had one year (13/14) that was missing one week and therefore was excluded from my overall record. It was a 100% HMRC cock up but I had to phone them and then ultimately pay another £3 (!) to complete the year.

How many weeks did you need for it to qualify, and how did you find out how many you had paid?

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12 hours ago, Tdog said:

Its meant to be 6 years but i managed to pay 1 of the years from a decade ago. This was just a few months ago.

But would the payment have been lower if you had paid it within the 6 year period?...my understanding is that this is the case, unless HMRC is blagging it.

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Democorruptcy
13 minutes ago, DurhamBorn said:

Hartlepool Vue is £5 stockton.Or £2.50 each when you have the 2 for 1 app.We use that one quite a bit if we fancy the £3.80 fish and chips in Youngs in Seaton O.oThe new Odeon in Durham is nearly £10,but on 2 for 1 its cheap enough as its really nice,especially if having an afternoon in Durham.

I only use the Darlington Vue if its after 6pm as you have to pay parking before that.I have a map with the free parking marked on it iv built up over the years but my partner complains,especially if we have to climb over a couple of fences on the way xD 

Last few times I've been to the cinema was an Odeon £3 Silver Screen inc a hot drink and biscuits. Tue/Thu morning or afternoon. Not brand new releases but films just a few weeks old. The Silver Screen is aimed at old folk but anybody can go. I got points on my reward card for those visits and used it for a film newly released. There were 4 of us in a large cinema for that. One woman left after a phone call after 10 minutes, another left after 2 hours about 15 mins from the end. As I walked out with the remaining woman I asked her if she like it and she said yes, I said I did but won't put anyone off by saying half of the audience left before the end!

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8 hours ago, DurhamBorn said:

I agree on that and think its certain at some point.I dont live too far away from Hadrians Wall.Most people think it was built buy the Romans to keep the northern tribes out.It was really built though to give the legions something to do because Hadrian worried about idle hands thinking about taking over.

We have a crazy situation now where people working full time are not much better off (or worse off in many cases) than people doing nothing.That cant last.Its likely the welfare pie will be spread more so that those doing nothing will have to do something,and those doing the most will be able to do a bit less.

 

Given the choice between JMD`s `Universal Basic Income` approach and Hadrian`s I would opt for the latter, to stop all you hairy Northerners from `rapeing and pillaging` our womenfolk...on second thoughts, perhaps he could build it a little further South this time given some of the reputations on this site...how about South of Stoke?! :-)

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1 hour ago, DurhamBorn said:

I wouldnt buy Cineworld due to debt levels

Yep, the reason I didn't buy a few weeks back when they started trending up technically (funny that)!

Cinemas are dirty places around me, apart from a small boutique one.  Crap on the floor, etc.  We avoid dirty places like that, cafes, etc.

Don't look very recession proof to me given the prices and alternative viewing options (like pizza, projector, stream around a mates with some friends).

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Bricks & Mortar
2 hours ago, Harley said:

Don't look very recession proof to me given the prices and alternative viewing options (like pizza, projector, stream around a mates with some friends).

In 2009, I needed a part time job.  Applied all over town, and ended up in the Audi garage, in a deep recession.  You'd think they'd be struggling.  But it was a non-stop precession of bankers and finance types trading in porsches, lambos and ferarris for Audi.

I'll guess the cinema is something you can trade your weekly entertainment down to.  I reckon they can do a lot with special offers as well in a recession- just get films with cheaper royalties.

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7 hours ago, Bricks & Mortar said:

In 2009, I needed a part time job.  Applied all over town, and ended up in the Audi garage, in a deep recession.  You'd think they'd be struggling.  But it was a non-stop precession of bankers and finance types trading in porsches, lambos and ferarris for Audi

Downtraders then? Makes sense, probably still need to be seen in a new motor to keep the image up but the monthly nut on a Eurobox is going to be what, half the price of a Porsche?

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Bricks & Mortar
40 minutes ago, Sugarlips said:

Downtraders then? Makes sense, probably still need to be seen in a new motor to keep the image up but the monthly nut on a Eurobox is going to be what, half the price of a Porsche?

Yeah, definitely downtraders.  It wasn't always so pronounced.  Lots of A4's & 5 series going to A3 as well. 
I was just the driver who takes the trade-ins off the forecourt - but one of the sales guys offered that he thought they all had plenty of cash, and it was more an image thing - they didn't feel good about a premium car when the neighbours and perhaps their own employees were losing their jobs. 
I think the cinema has always been entertainment for the masses.   The price is steep right now, because they can get away with it.  In a recession, they'll alter the model to get the bums on seats.

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8 hours ago, Bricks & Mortar said:

In 2009, I needed a part time job.  Applied all over town, and ended up in the Audi garage, in a deep recession.  You'd think they'd be struggling.  But it was a non-stop precession of bankers and finance types trading in porsches, lambos and ferarris for Audi.

I'll guess the cinema is something you can trade your weekly entertainment down to.  I reckon they can do a lot with special offers as well in a recession- just get films with cheaper royalties.

As an industry they have done a fantastic job.Getting the business model down to where its £5 a ticket in a new modern cinema,and £2.50 on a two for one app is incredible value really.They also have a lot of leverage with shopping centres etc as they drive footfall at quiet times.My son and his friends go regular with their girlfriends/boyfriends and tend to get a meal somewhere near.

The problem with Cineworld is the debt.When rates rise they will be very exposed.I guess the question is how fast they can de-leverage.I actually dont blame the management.They are probably doing the right thing in consolidating the industry as much as they can as that will drive their power with the film studios.There is also the risk people keep using the cinema,but in a downturn they might avoid buying as much expensive food/drinks etc.

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9 minutes ago, DurhamBorn said:

As an industry they have done a fantastic job.Getting the business model down to where its £5 a ticket in a new modern cinema,and £2.50 on a two for one app is incredible value really. 

It’s better than that.  They can charge regionally.  The maximum the market will bear, rather than fixed pricing. You’re not getting much change from £15 for a ticket where I am.  Unless you hunt out the discounts.  It’s become almost egalitarian in pricing.  People can afford £15 a ticket here.  


 

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8 minutes ago, feed said:

It’s better than that.  They can charge regionally.  The maximum the market will bear, rather than fixed pricing. You’re not getting much change from £15 for a ticket where I am.  Unless you hunt out the discounts.  It’s become almost egalitarian in pricing.  People can afford £15 a ticket here.  


 

Must admit i love living in the north,it seems everything is cheaper.My local charges £2.20 for a pint of lager.I can get fish and chips at the coast for £3.80 and that includes peas and a cup of tea.There is plenty of money up here,but the mean is lower so to get volume you need to be cheap.

Iv got myself a lovely bargain today on Facebook marketplace.A beautiful set of curtains from a posh house in Gainford.Curtains were £300 a year ago,shes changing her colour scheme,got them for £40.Its amazing what you can get on there if your patient.Just wait for the real quality stuff.

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19 minutes ago, DurhamBorn said:

Must admit i love living in the north,it seems everything is cheaper.My local charges £2.20 for a pint of lager.I can get fish and chips at the coast for £3.80 and that includes peas and a cup of tea.There is plenty of money up here,but the mean is lower so to get volume you need to be cheap.

It’s really hard to comprehend the difference a few hundred miles make.  Here you have to budget a £5 a drink, £80 for a standard meal for 2, but people pay it, there is just so much money floating around.   One of the chain restaurants stopped taking discount vouchers, they are literally can’t handle the extra customers they bring in.  But that’s what being 45mins from Liverpool street gets you..  

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Bricks & Mortar
43 minutes ago, feed said:

It’s better than that.  They can charge regionally.  The maximum the market will bear, rather than fixed pricing. You’re not getting much change from £15 for a ticket where I am.  Unless you hunt out the discounts.  It’s become almost egalitarian in pricing.  People can afford £15 a ticket here.  

This is my experience too.  It coloured my comments that they could easily reduce their rates in a recession.
£3.50/pint in my local.  £7.00 fish & chips in chip shop.  (rural village, East Scotland, 50 miles from Edinburgh - filled with retirees from the cities).

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Democorruptcy
54 minutes ago, DurhamBorn said:

As an industry they have done a fantastic job.Getting the business model down to where its £5 a ticket in a new modern cinema,and £2.50 on a two for one app is incredible value really.They also have a lot of leverage with shopping centres etc as they drive footfall at quiet times.My son and his friends go regular with their girlfriends/boyfriends and tend to get a meal somewhere near.

The problem with Cineworld is the debt.When rates rise they will be very exposed.I guess the question is how fast they can de-leverage.I actually dont blame the management.They are probably doing the right thing in consolidating the industry as much as they can as that will drive their power with the film studios.There is also the risk people keep using the cinema,but in a downturn they might avoid buying as much expensive food/drinks etc.

I've added Cineworld to my watchlist called 'Short'.

Ticket sales are back down to what they were in 1995. Box office has doubled like ticket prices.

https://www.the-numbers.com/market/

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