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Village Roadshow To Break Up?

Jamberoo Fan

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An interesting article from The Sydney Morning Herald:


A cinematic feud: Are the curtains closing on Village Roadshow?

By Jennifer Duke & Kylar Loussikian

The angry emails began on June 20 when John Kirby fired off a lengthy missive to the Village Roadshow board. The subject line was: “The Diagnosis”.

Kirby had resigned as an executive at Village - the film, entertainment and theme parks business run by his family for decades - five years earlier.

He remained on the board, however, and watched with growing frustration as the company’s share price tumbled from $7.15 five years ago to as little as $1.77 in July.

The 71-year-old had stood back as his younger brother and executive chairman Robert Kirby and chief executive Graham Burke, a family friend, called the shots over that time. But now he’d had enough.

In the email John outlined his frustrations. He accused Village’s management, led by his brother, of issuing overly optimistic financial forecasts, weak corporate governance and poor capital management.

He concluded the business behind Hollywood blockbusters such as Happy Feet, The Matrix and Zoolander was sick, and needed urgent attention.

The email received a cursory reply and was then followed by several others. Sources familiar with the contents estimate they would run to more than 150 pages if printed out.

John’s arguments are contested by other members of the Village board who dismiss him as disgruntled and jealous.

Earlier this week, Burke called him “disgruntled and bitter”. But there is no question about the trajectory of the company that is still worth $554 million, boasts a 70 year heritage and was one of corporate Australia’s great success stories.

Since 2014, Village Roadshow’s market value has tanked from $1.2 billion to as little as $370 million. The market decline was keenly felt by Burke and the Kirby family who own 42 per cent of the company between them.

The rise in video streaming services such as Netflix and Stan slowly hobbled Village’s DVD distribution business.

A string of box office bombs, including the 2015 flop Jupiter Ascending starring Mila Kunis, eroded an investment in Village Roadshow Pictures, the Hollywood film studio the Melbourne company once controlled.

And suddenly too its theme parks were in trouble. In 2017, Village reported a $67 million loss.

The other undeniable fact about John’s emails is that they exposed tensions with his brother that some people believe have existed behind the scenes for years.

The family feud remained a private matter last year but earlier this week John went public with his grievances by confirming he had hired an investment bank in an attempt to break up Village. It is a proposal Robert vehemently opposes.

With both brothers seemingly intractable, the question is who will prevail?

The greatest showman

One of the earliest memories Robert, now 67, has of Roscoe “Roc” Kirby is of him standing over the kitchen table, sketching up dreams for what the company’s next cinema would look like on huge sheets of white paper. Robert says he remembers “clear as crystal” his pioneering father drawing lines representing the parking ramps and planning out the way it would look.

The idea for the new drive-in theatres was based on a photograph Roc had seen in a newspaper while serving in WW2.

Hearing his family were cinema operators, an American soldier showed him an article of the US’ most recent drive-in innovation and the idea returned with him from Papua New Guinea.

At the peak of the drive-in era, Roc’s businesses Kirby Theatres Pty Ltd and Village Drive-In Pty Ltd would have 14 drive-ins, mostly in Victoria, and many other traditional theatres.

The business rapidly became a household name and today Village has 74 cinemas with 704 screens, owns some of the country’s biggest theme parks in Movie World, the Gold Coast’s Wet’N’Wild and SeaWorld and is associated with classic films Gallipoli, Mad Max, Red Dog, Muriel’s Wedding and Breaker Morant.

Roc is described by those who knew him as the “ultimate showman” and an instinctive businessman who knew that fresh ideas, glamorous openings and promotion were the secret sauce for getting Australians out of their home and into his venues. And he would put everything on the line to get the job done.

Known for sayings like “your word is your bond”, “always do what you say you’ll do” and “an ounce of loyalty is worth a ton of know-how”, Roc ignored naysayers who laughed at him because he wanted to put “pictures in a paddock” at a time when indoor cinemas were closing due to the growing popularity of television.

He launched his Croydon drive-in in the 1950s. It was a sensation with innovations such as BBQs, a fish and chip unit and a glass-fronted cafeteria (which now-defunct newspaper The Argus reviewed as “expected to be a huge success with Melbourne people who have taken to espresso coffee in a big way”).

As the 20-acre plots he owned for the drive-ins surged in value after land was rezoned to cater for a growing and sprawling urban population in Melbourne, Roc was able to sell out for a big profit in subsequent decades

He used the money to buy a prime Melbourne CBD location on Bourke Street from Alan Bond who had been using it as a Walton’s department store until 1983. The business spent $30 million redeveloping the site into a five-level cinema, retail and office complex (the head office would later move to South Yarra).

The drive-ins are just one of the achievements the Kirby sons and Burke idolised him for.

“He turned a paddock and a creek into MovieWorld ... he mortgaged his house [to do it],” Burke says.

Village continues to be controlled by the Kirby brothers and Burke who started working for Roc part-time aged 14 at the Ararat cinema in south-west Victoria

By the time he was a young adult, Burke was managing a large part of the business (at 21 he wrote the operations manual) and says he had come to see Roc and his wife Beatrice Kirby as “my Melbourne mum and dad”.

Those who know the family well refer to Burke and Robert as “like twins” who grew up together, visiting St Kilda’s Luna Park, and the empty drive-ins during the day-time, for fun. Burke, 77, has spent his entire career at Village and remains very close to Robert to the point where they call each other “at least four times a day”.

The close friendship between them may explain why John’s resentments are bubbling to the surface. Some observers believe jealousy over his brother’s closeness with his father’s business protege plays a role, as does that pair’s dominance over Village. Sources close to John dispute this.

Roc died in 2008 (Beatrice in 2011) but his strategy of turning a deaf ear to negativity has been a defining part of the Village story. His business style has left an indelible impression on Robert and Burke.

Even today, on the wall of Robert’s office, is a sign that reminds him to have “contagious optimism” - a motto that has been vigorously tested over the last few years.

Echoes of a tragedy

No one saw it coming. On 25 October 2016, a balmy Tuesday on the Gold Coast, Ardent Leisure-owned holiday venue Dreamworld was on the verge of a tragedy that would send shockwaves through the theme park industry.

A malfunction on the wildly popular Thunder River Rapids Ride left four people dead, in a disaster that was traumatic for witnesses, dominated the news cycle for days after and led to a government inquest.

It didn’t just close down Dreamworld for more than a month – and the ride forever – it saw the public lose confidence, at least temporarily, in all theme park operators.

Burke says mums were “spooked about taking their kids to theme parks” afterwards and the tragedy turned a steady stream of local and international tourists to Village’s entertainment venues into a trickle.

“It was the single biggest turnaround in our fortune,” he says.

Unlike the Village of Roc’s era, a large swathe of the company’s income comes from its theme parks rather than cinemas. By 2016, losses from Village’s movie production business had hit $487 million. In the same year, $88 million of earnings came from theme parks, $82 million from cinemas and $24.5 million from film distribution.

After the Dreamworld incident, Village’s earnings (before interest, tax, depreciation and amortisation) from the theme parks division fell from an $86 million average in the five-years prior to $56 million in 2017 and $39 million last year.

“There's no doubt the biggest low the company here has had over its whole period of existence was the Dreamworld tragedy,” former board member David Evans says.

Evans, a prominent Melbourne businessman, was chair of corporate governance until November 2018 and is a friend of Burke’s.

“It didn't have anything to do with Village, however its roll on effect was substantial. That is only just starting to right itself,” he says.

While no one disputes there was an impact from Dreamworld, sources close to John claim Burke and Robert “overstate” the fallout and failed to use the issues facing a competitor to get ahead.

For John, Wet’n’Wild Sydney was the final straw.

The park was sold last year for a loss of $25 million after draining cash despite great hopes when it opened in 2013.

It wasn’t Village’s only problem.

The company blamed broader financial woes on a smorgasbord of uncontrollable factors, including the Dreamworld disaster, “low attendance” to the Commonwealth Games on the Gold Coast and wet weather.

But it was the aqua park’s problems, and a call for the Kirby brothers to inject $7 million each into the company to pay down debt, that was the focused of John’s ire.

Burke, a film lover, is described by supporters as highly knowledgeable about the entertainment business and devoted to Village.

But he is criticised by detractors as being too interested in “Hollywood” despite film production now being on the sidelines.

Under the spotlight

In July 2018, John hired former Rothschild boss David Kingston, an erstwhile investment banker turned property tycoon.

Kingston knew Village and the Kirby brothers well, having previously sat on the board of radio network Austereo when it was controlled by the company.

He had worked on property trusts for management in the past.

Kingston is well-known for his aggressive approach. In 2015 he attempted to evict Justin Hemmes from the Coogee Beach Palace Hotel in 2015 when the Sydney pub baron was two days late paying the rent. Kingston was out of pocket by $85.74.

Kingston and John detailed a litany of issues ranging from the acquisition of businesses with no connection to the core theme park and cinema operations to accusations Burke and Robert were using the company to enrich themselves and their children. Robert’s son Clark works as the theme park division’s chief executive on a salary exceeding $1 million a year.

Since 2015, Village has paid $1.4 million to purchase wine from Robert Kirby’s vineyard Yabby Lake, another $90,000 renting the family artwork, and about $70,000 to buy bikinis from Burke’s daughter Lisa.

All these related-party transactions are legal and disclosed in Village’s annual reports but most listed companies try to avoid them.

Tensions between the board grew and sources close to John Kirby say his constant questioning was the reason the company started tightening spending.

Kingston is among those who does not accept the Dreamworld tragedy as a valid reason for the overall decline in shareholder value and who considers John a “white knight”.

“In the interests of all shareholders to fix the future performance of Village, John is seeking a new independent chairman in line with corporate governance standards [the] injection of new senior management, more non core assets sales and further reduction in excessive expenditure,” he says.

“With cancelled dividend, a $50 million rights issue, very poor share price and fire sale of Sydney Wet’n’Wild, since June 2018 John has done the heavy lifting and has probed extensively and constructively on multiple issues and concerns.”

The extent to which John can marshall a rebellion remains to be seen. The rest of the share register features few institutional investors with the exceptions of American outfits Dimensional Fund Advisors and Mittleman Brothers.

The few market analysts who continue to watch Village are lukewarm about the company’s turnaround. Citi analyst Sam Teeger said in August that Village could struggle to grow earnings.

“This could be challenging given the structural challenges in cinema and plans to reduce capital expenditure … divestment of underperforming divisions such as Roadshow may assist,” Teeger wrote.

Deutsche Bank’s Wassim Kisirwani was similarly unimpressed, and told clients that Village had “a poor record of delivering on expectations”.

The company had “attractive assets and an undemanding valuation”, but investors would “prefer to see some evidence of cost out traction before taking a more positive view”, Kisirwani wrote.

But a note from Baillieu a week ago said the company's share price has "rebounded strongly from the deeply discounted capital raising" in July.

The broker attributed the rally to capital raising to reduce debt, cost initiatives, successful refinancing and an improved trading outlook with a strong domestic box office and recovering theme park ticket sales.

The show must go on

Roc and Beatrice Kirby famously gave very few interviews, though the couple spoke in-depth to former Victorian premier John Cain for his 1998 book On with the Show.

One of Roc’s great thrills was seeing Village blossom, and in 1994 he said that when he first started the business it was a “struggling little outfit [and] my vision had to survive through the ruthless competition in those early days”.

“When this became apparent, I had a clear dedication for Village to achieve a commanding cinema circuit throughout Australia... My vision now is for Village Roadshow to become an overall world entertainment identity,” he said.

Robert shows similar optimism in 2019 after the company’s toughest year on record, saying “there are strong and encouraging indications of a turnaround, especially in our biggest business, our theme parks”.

“And of course the Queensland summer has been blessed with superb weather.”

He refuses to speak publicly about John and the family feud (John also declined to comment) but regardless, February 22 will be a landmark for the company when it publishes half yearly results and faces shareholders.

Either Burke and Robert deliver a strong return to growth - and importantly, start distributing money to shareholders again - or their leadership of Village will look increasingly untenable.

Investment banks are already sceptical, interest from major fund managers is scarce, and the board is riven by a bitter feud.

And what’s at stake? Only the future of the Village name and the legacy of Roc, Burke and the Kirbys.

The article which brought this "feud" to light 5 days ago only refers to the selling of Village Roadshow Pictures, "Village Roadshow's British marketing business, its stake in the American iPic Theatres premium cinema outfit, and its Hollywood holdings" as the closest thing to John Kirby's proposed 'break up' of Village Roadshow which is referred to in the above article. Is that what is meant by "break up"?

Or is it the 1st stage of the "break up"?

Or would the company split in 1 go forming a new theme park-cinema-studios-only company?

Or will nothing happen?

Regardless, the above article is interesting enough because of it's theme park-related content.

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What happened on Green Lantern didn't affect attendance though. I don't buy for a moment the it's all DW thing for the Village Theme Parks decline, particularly WnWS, but it is pretty clear that it had a huge impact. I mean unless you know another reason why their attendance went down the year they added a Hyper?


Also MW isnt in a downturn, the whole of VRTP is. Big difference. They're also coming out of their downturn.

Edited by joz
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How the battle for Village Roadshow could play out

23 Jan 2019 — 11:00 PM

Phase two of the Village Roadshow campaign has begun.

The first phase was a board-level argument, which at times became uncivil, between brothers Robert, 67, and John Kirby, 71, over how to run the business founded by their father Roc in 1954.

The Melbourne-based company's assets include Village cinemas and Warner Bros Movie World, Sea World, and Wet'n'Wild Gold Coast.



John Kirby, left, with younger brother Robert in 1998. Their relationship is now "completely toxic", a source says. Robert Rough

The second phase kicked off last month when press articles began appearing. Chief executive Graham Burke was mocked for flying to Los Angeles to invest in movies. Last weekend there was a detailed report about the rift between Roc Kirby's sons, both directors, over the company's performance.

The articles included interesting information. John Kirby's email complaints to his brother about the company's performance extended to more than 150 pages. A single golf driving range on the Gold Coast cost $35 million. Plans to build seven more are on hold.

Related Quotes

VRLVillage Roadshow

$2.99+0.05 (+1.70%)
Jan 18Jul 18Jan 191.0002.0003.0004.000
Updated: 25 Jan 2019 — 1:56 PM
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Goodbye to Kirby's wine

Phase three, if the second is successful, will be a shareholder revolt to remove Robert Kirby as executive chairman and Burke, his chief executive. New managers would, presumably, pay themselves a lot less, stop buying wine from Robert Kirby's Mornington Peninsula vineyard, Yabby Lake, and sell a London business that helps phone makers and similar companies give away stuff to drive sales.

If investors aren't inspired enough by phase two, lawyers may replace the public relations consultants. Under one scenario being considered, a judge would be asked to break up the private company that controls 34 per cent of Village Roadshow.

Burke and the Kirby brothers own one-third each of the private company. At the moment, John Kirby can't use his shares to vote for a change of strategy or leadership at Village Roadshow, because he is outnumbered by his brother and Burke.

John, who spent most of his life working at Village Roadshow, would like the private company split up after some 30 years.



Robert Kirby, left, and Graham Burke control a private company that holds 34 per cent of Village Roadshow shares.  Robert Rough RNR

A split would likely trigger a big tax bill. Working out how to pay the tax office is likely to be one of the major challenges to resolving the Kirby brothers' financial separation.

A great mediocrity


In a crowded field, Village Roadshow is one of the great mediocrities of the Australian entertainment industry. Every few years a burst of profit growth has been followed by disappointment at over-spending, sending the price bouncing from almost $8 to under $1.

A recent sore point is spending estimated at $135 million on a grand water-slide park in western Sydney that was sold for $37 million six years later. (My kids are fans – but don't go on a hot day.)

Last year, stretched financially, Village Roadshow stopped paying a dividend and asked shareholders for more money to reduce debt.



John Kirby and brother Robert at a shareholder meeting in 2005. Jim Rice

Without a lucrative company job, the dividend cut cost John Kirby his main source of income, a pre-taxed $5 million a year. To avoid his shareholding being diluted by his brother, he had to come up with about $7 million.

With much of his wealth locked in a private company controlled by an alliance of his younger brother and a family-functionary-cum-corporate overlord, John Kirby got some new friends of his own.

He engaged David Kingston, a 62-year-old Sydney ex-banker and private investor experienced in media and leisure companies. They now talk almost daily. There is also a corporate public relations manager, Mark Rudder, who has worked for the Packer family, and a Melbourne mergers and acquisitions partner at law firm Arnold Bloch Leibler, Jeremy Leibler.

'Completely toxic' relationship


Primed with professional advice, John has sparred with his brother and the board about strategy over the past five months. Kingston wrote an analysis of Village Roadshow's problems and how to fix them that was sent to the board in July. A few months later Kingston called the 77-year-old Burke a "dunce" at the company's annual meeting.



Clark Kirby, the son of Village Roadshow chairman Robert Kirby, is being groomed to take over the company.  

The group emails sound legendary, and have caught up Clark Kirby, Robert's son and purported heir. One person familiar with the situation said the siblings' relationship is "completely toxic" and riven by competition and rivalry.

The next key date is February 22, when Village Roadshow's first-half profits are due. Now the focus of media attention, a poor result would be acutely uncomfortable for Burke and Robert Kirby. But December and January's warm weather may have drawn in thousands of extra tourists to its venues.

Either way, John Kirby appears to be preparing for protracted combat. He wants a new chief executive and chairman, which is an unusual request when you're on the board, the chairman is your brother and the CEO has been dubbed your surrogate sibling. Other directors wonder why, if he is going to publicly campaign against their decisions, he remains.

John Kirby is exploring his legal options. One is to ask a court to wind up the private company that holds 34 per cent of Village Roadshow shares for him, his brother and Burke.



Village Roadshow founder Roc Kirby in a 1965 photo. He died in 2008.  Fairfax Photographic

Burke and Robert Kirby control the private company, which means John Kirby's shares won't be voted against the chairman and CEO. Arguing he has been disenfranchised, John could file an "oppression of the minorities" claim under the law which forbids dominant shareholders favouring themselves over other investors.


Another legal argument might be that Robert Kirby has breached his fiduciary duties to maximise the income received by the private company.

Suing a brother

Either argument would constitute a direct assault on the honesty, integrity or competence of one brother by another. It might be met with counter-accusations of breach of confidence and bad faith.

One corporate adviser familiar with the company, who isn't Kingston, suggests John Kirby ask a judge to freeze his brother and Burke's shares and line up a buyer.

Using the oppression of minorities argument, the pair might be blocked from using their 40 per cent holding, which includes shares owned directly, to stop a private equity takeover, the corporate adviser said. Desperate for a share price bump, other investors would likely rush at the offer, he said.

A lawsuit would be an extraordinary step for one wealthy brother to take against another. It would go further than the family fights inside the Murdoch, Fairfax and Packer media dynasties, who mostly knew how to keep embarrassing disputes out of the papers (except when they get into street brawls). It could expose embarrassing information about how the company is run, wreck the reputation of the Kirby family and damage the Village Cinemas brand.

The tax problem

Money, they say, may not salve all wounds. But it sure can help. John Kirby sounds like a seller of Village Roadshow, if a tax-effective solution can be found. His brother is the obvious buyer.


On Wednesday afternoon Village shares were trading at $3, valuing the company at $583 million.

There are various ways to raise the money that could be used to cover the tax bill triggered by a restructure of the family holding. Village Roadshow could sell some assets and pay a one-off dividend (fully franked, of course), or buy John Kirby's shares from the private company.

Roger Colman, a veteran media analyst who has bought, sold and bought the stock for years, estimates Village Roadshow's businesses could be worth as much as $1.3 billion next year.

In theory, selling assets should drive up the price. New managers would probably help too. Private equity could swoop in.

Village Roadshow could even monetise the dispute by financing a courtroom family drama. It could be called: Kirby vs. Kirby.

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  • 4 weeks later...

From The Australian Financial Review (subscriber-only article):


Village Roadshow pressed to outline future direction amid Kirby brothers dispute

By Max Mason

Village Roadshow's board and management face growing pressure from shareholders to offload assets deemed a "distraction" and get better returns from its cinema and Gold Coast theme-parks businesses.

The push comes amid the bitter dispute between the Kirby brothers over the company's poor performance in the past five years – shares have dropped 54 per cent to $3.25 – and lack of clarity on direction.

Sydney-based funds manager Lanyon Asset Management believes shareholder returns will improve under a new, independent chairman, executive changes, a reduction in "obscene" corporate overheads and asset sales it deems a "distraction".

New York-based Mittleman Brothers supports asset sales, to focus on driving better profits at the cinema and theme-park businesses, and cutting corporate overheads, but wants to see who is proposed as chairman and management before supporting such a move.

Mittleman Brothers is Village's third-largest shareholder – after the bloc held jointly by the disputing Kirby brothers and chief executive Graham Burke and Vijay Vijendra Sethu – with a little less than 5 per cent of the company.

However, Mr Sethu, who owns 5.1 per cent, has backed Robert Kirby and Mr Burke to continue as executive chairman and chief executive respectively, but to outline what is core and non-core to the business and proceed in an orderly manner on potential asset sales, arguing there is no rush.

CCZ Equities has outlined a sum of the parks valuation on estimated 2020 earnings of $7.12, while JPMorgan said the business could be worth up to $5 a share on a break-up.

Lanyon managing director David Prescott has called on the three independent board members – Tim Antonie, who is working with Solomon Lew agitating for change at department store Myer, Jennifer Gambrell, and Robert Le Tat – to push for the sale of "distraction" assets, reduce "obscene" corporate overheads and introduce new management.

Assets that could be unloaded were overseas theme parks, stakes in loss-making film-funding arm VREG, and United States premium cinema chain iPic, and the London marketing services business, he said.

"We feel that companies should have a board of effective composition; ideally, we think best practice is an independent chairman – one who facilitates effective contribution and promotes constructive and positive relationship between all of the board members and management and shareholders. That clearly hasn't been the case at Village" Mr Prescott said.

"In our view, Village has been poorly managed and shareholders have suffered from their weak corporate governance framework."

Village's theme parks have struggled since the accident at rival Ardent Leisure's Dreamworld, when four people died after a raft flipped on the Thunder River Rapids ride in 2016. Village will report on Friday and its result is expected to improve thanks to good summer weather on the Gold Coast.

There has been growing tension between Village Roadshow's largest shareholders and board members – John Kirby, his brother Robert Kirby and Graham Burke – over the direction of leadership.

Deputy chairman John Kirby is at loggerheads with Robert Kirby and Mr Burke, seeking to oust them from their long-held roles and sell underperforming assets.

Robert Kirby has been chairman intermittently since 1994 and Mr Burke has been chief executive since 1988. From 2013 to 2018, they held the dual roles of co-chief executive and co-executive chairman. John Kirby stepped down from Village in an executive capacity in 2013 but remained on its board.

Together, the Kirby brothers and Mr Burke control about 42 per cent of Village Roadshow, through a combination of direct shareholdings and their ownership of Village Roadshow Corp, which speaks for 34 per cent of the ASX-listed company. They each own a third of Village Roadshow Corp.

John Kirby cannot use the majority of his shares to vote for change because they are held in the private corporation, and he is outvoted by his brother and Mr Burke. He is exploring his legal options and may end up in court seeking a break-up of the private company.

John Kirby hired investment banker David Kingston last July to pressure his brother and management for change after the share price hit of low of $1.73, the company asked for shareholders to tip into a $50 million capital raising and it suspended dividends in 2016.

However, Mr Sethu said he believed Robert Kirby and Mr Burke had made their decisions with good intentions, and "hindsight is 20:20".

"These guys have more skin in the game than anyone else, they will obviously do what's right for the shareholders. Any mistake in the game, they own it more than us," he said.

"With hindsight it's easy to look at something and say, it's not core. The Sydney water park that they exited last year, that's about as core as it gets."

Last year, Village sold Wet 'n' Wild Sydney for $40 million, taking a heavy loss on its investment as it looked to fix a growing debt problem. It also raised $50 million in capital last July to pay debt and invest in cinemas and Topgolf.

The Australian Financial Review revealed in January Village's board had halted plans to build eight Topgolf venues throughout Australian and the Asia-Pacific until the first Gold Coast centre, opened mid-last year, had proved its earning.

In 2017, the company completed the sale of its half stake in its Singapore cinema business for $165 million to joint-venture partner Orange Sky Golden Harvest Entertainment. It also sold the land its Gold Coast theme parks, Movie World and Wet'n'Wild, stand on for $100 million to super fund LGIAsuper, before signing an initial 30-year lease, with rent starting at $6.2 million annually.

"They have a track record of when they make a bad investment of exiting. There's no rush. The debt problem is completely over. There's no urgency to exit, you figure it out and tell the market and say what's core and non-core," Mr Sethu said.

Mr Sethu said he believed the disputing parties were not far apart, and achieving an acceptable price for non-core assets was down to timing.

Mittleman Brothers' Chris Mittleman said he would need to see who the proposed executive replacements were, but generally supported John Kirby's proposal because there was room to improve profit margins, capital allocation —such as buying back shares when they were cheap, not raising capital — and disclosure, such as per-patron data on movie theatres, information other companies provide.

"We have never operated as a group before with any other investment firm or individual, but I would be willing to talk and consider proposals from anyone inside or outside of Village Roadshow who seemed to have reasonable ideas on how to improve the business and thus its returns for shareholders," Mr Mittleman said.

"If reasonable prices can be obtained, the lower margin businesses like loyalty or marketing services and VREG for example, would be better off sold so capital could be redeployed into higher return assets."

Mr Mittleman said he did not support last year's $50 million capital raising because he believed previous assets sales had been enough to ease Village's debt problems. In 2017-18, Village reduced its net debt $527.1 million to $338.5 million.

He said Village's management should get credit for the returns on a 10-year and 15-year basis, but on a five-year basis they had been poor.

"The owner-operators here deserve some credit for those longer-term results which are very good, and some understanding given the Dreamworld related issues that were a large factor in the under-performance of the past two years. That said, I think EBITDA margin should be much higher for the corporation overall, given what competing businesses generate."

3 key points:

  • According to David Prescott, Managing Director of Sydney-based funds manager Lanyon Asset Management, Village Roadshow's overseas theme park assets are a "distraction", which should be sold to improve shareholder returns.
  • Mittleman Brothers, Village Roadshow's 3rd largest shareholder support assets sales to focus on accelerating better theme park (and cinema) business profits.
  • Chris Mittleman of Mittleman Brothers, Village Roadshow's 3rd largest shareholder, "would be willing to talk and consider proposals from anyone...outside of Village Roadshow who seemed to have reasonable ideas on how to improve the business and thus its returns for shareholders"

Regarding the 2nd dot point, if anyone takes up his offer, remember Village Roadshow is not all about theme parks. I'm sure some of you would have "reasonable ideas on how to improve the business", theme park wise, though.

Edited by Jamberoo Fan
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VILLAGE ROADSHOW LIMITED CHIEF EXECUTIVE OFFICER GRAHAM BURKE AO TO RETIRE AT END OF 2019 22 February 2019: Village Roadshow Limited (ASX: VRL) today announces that Graham Burke AO has decided to retire as Chief Executive Officer at the end of calendar year 2019. The Board has determined it is in the best interests of the Company that Mr Burke remains in his role until the end of 2019 to ensure a smooth succession. Upon the appointment of a new CEO, Mr Burke will remain on the VRL Board as a Non-Executive Director. The Board intends to conduct a wide-ranging, global and domestic executive search, with an external search firm to support this process. Clark Kirby who is Chairman and CEO of VRL’s largest division, Village Roadshow Theme Parks will be an internal candidate for the role. Graham Burke started work for Roc Kirby, Village Roadshow’s founder, at the age of 14 as a ticket collector and floor sweeper at Town Hall Pictures, Ararat in Victoria. At age 23, he became Managing Director of Village Drive-In Limited. In 1988, Village Roadshow listed on the ASX, and Graham was its inaugural CEO. He led the company into its highly successful theme parks investments, and was the driving force behind the establishment of Roadshow, which was key to the production of more Australian films than the rest of the industry combined. More recently, Graham has been at the forefront of the campaign to tackle content piracy both in Australia and globally. Executive Chairman Robert Kirby said, “Graham is a giant of our industry and has been an integral part of Village Roadshow. Together we have seen the evolution of this company into the incredible entertainment business it is today, Graham having been a part of it for 63 years. “We thank him for his enduring commitment and the leadership he has shown. Graham leaves an extraordinary legacy as CEO and we look forward to his continued involvement on the Board. “Graham’s agreement to remain on the Board ensures that his invaluable experience and knowledge will continue to benefit Village Roadshow, and allows him to provide advice and mentorship for the incoming CEO.” Graham Burke said, “It is an honour to lead Village Roadshow. I am exceptionally proud of everything that has been achieved. I am incredibly optimistic about the future of the company and look forward to serving on the Board in support of the new CEO. I want to thank the thousands of my colleagues who come to work each day with passion and dedication to creating great entertainment experiences for our customers. “From humble beginnings as a small cinema circuit, we’ve contributed hundreds of millions of dollars into the local economy, provided employment and careers for thousands of Australians, become a mainstay in Australia’s tourism industry and been involved in the production of some of the most iconic films of all time. Having said all of that, I firmly believe the best is yet to come.” Page 2 GRAHAM BURKE AO BIOGRAPHY Graham Burke is Chief Executive Officer and an Executive Director of Village Roadshow Limited. With a contribution to the Australian entertainment industry spanning more than half a century, Graham has had a profound impact on all aspects of film production, marketing, exhibition and distribution. Graham has devoted his entire career to Village Roadshow Limited, having joined the company at the age of 14 as a ticket collector and floor sweeper at the Town Hall Pictures in Ararat, rural Victoria, owned by the late Roc Kirby. At age 23, Graham became the Managing Director of Village Drive-In Limited. In 1968, Graham and the Kirby family founded Roadshow Film Distributors (Roadshow) which became the most successful film distribution company in Australia. In 1988, Village Roadshow listed on the Australian Stock Exchange, with Graham the inaugural CEO. Graham is considered one of the most strategic and creative forces behind Village Roadshow's development. He has been integral to the success and development of the Theme Parks business (Warner Bros. Movie World, Sea World, Wet’n’Wild) as well as an advocate for ongoing Australian and international film production. Through such initiatives, major international films such as Happy Feet, Mad Max and The Great Gatsby have been produced in Australia. During his tenure as CEO, Graham was the Founding Commissioner of the Australian Film Commission; a Trustee of the Victorian Arts Centre Trust; and a Board Member of the International Cultural Corporation of Australia. Graham continues to Chair Creative Content Australia, a position he has held since 2016. Graham was also key in revolutionising the FM radio industry and was a founder of the Sydney 2Day FM company, serving as Non-Executive Director between 2001-2011. In 2018, Mr Burke was appointed an Officer in the Order of Australia (AO) for services to film production, broadcast media and leisure industries, and to the community.

Edited by BatBoyd83
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