Hoyts gets groovy with new Oovie

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					24/11/2009                                    Hoyts gets groovy with new Oovie

 Hoyts gets groovy with new Oovie
 PUBLISHED : 13 Oct 2009 11:00:01

 Neil Shoebridge
 Cinema company Hoyts has stepped into the DVD rental market, buying vending machine operator Instant DVD
 and announcing plans to rename it and dramatically expand the number of machines it operates.
 Hoyts executive chairman David Kirk said it paid "a few million dollars" for Instant DVD, which would be
 relaunched as Oovie later this month.

 Its founders, Ian O'Rourke and Andrew Evetts, will stay with the company and receive payments based on
 earnings over the next three years.

 Instant DVD operates 80 vending machines in Sydney and Melbourne. In the next two years Hoyts will fund the
 addition of another 1000 machines, which will be installed in supermarkets, shopping centres and transport hubs.
 "DVD rental machines are a very small distribution channel here," said Mr Kirk, who joined Hoyts in early July,
 seven months after he quit as chief executive of Fairfax Media (the publisher of The Australian Financial Review).

 "But we think it will grow rapidly, driven by two key consumer benefits: convenience and low prices."

 DVD vending machine companies account for 19 per cent of DVD rentals in the United States. Research
 company NPD recently predicted their share would jump to 30 per cent by late 2010 as companies such as
 Redbox, which has a 75 per cent share of the category in the US, added more machines.
 There are only two DVD vending machine companies in Australia: Instant DVD and Redroom, which has about 25
 Instant DVD's machines carry about 300 DVDs, which are rented for $2.99 a day. If the DVD is not returned after
 14 days, the customer's credit card is charged $36.

 Mr Kirk said the move by Hoyts - which private equity firm Pacific Equity Partners bought from James Packer's
 Publishing & Broadcasting Ltd and West Australian Newspapers in December 2007 for $440 million - into the
 DVD rental market did not create any conflicts of interest (Hoyts worked with Minvera Advisory Partners on the

 "The movie release windows aren't affected, that is, movies still go to cinemas first and then into the DVD rental
 and sell-through markets, so there's no impact on our relationship with movie distributors," he said. Instant DVD
 buys its DVDs from a wholesaler.

 The purchase of Instant DVD follows Hoyts' acquisition of Outpost Media, which operates 320 digital television
 screens in 39 shopping centres, in November 2008.
 Four months earlier, Hoyts announced a joint venture with US company Imax Corporation to set up Imax screens
 in four of its cinemas.

 Mr Kirk said the company was looking at other acquisitions but no deals were imminent. He said PEP had no
 immediate plans to float Hoyts.

 "A float is some way off," he said. "The Instant DVD deal confirms that, as we'll invest in that over the next couple
 of years, which will affect our earnings. A float is not a priority at the moment."
 The Australian Financial Review

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