SINGAPORE: Despite its financial struggles, the owner and operator of Cathay Cineplexes is not giving up on the silver screen.

Days after the company revealed it had fallen behind on its rental payments, Mr Melvin Ang, founder and executive chairman of mm2 Asia, told CNA in an exclusive interview that he remains optimistic about its future.

The mainboard-listed media company said last Monday (Feb 3) it had received letters of demands from the landlords of its Century Square and Causeway Point cinemas for S$2.7 million (US$2 million) owed in rent and other costs.

Both landlords have asked for payment by Feb 10. The company is unable to meet the deadline and is in talks with the landlords on a repayment schedule.

“I am still very passionate, and I want to continue to maintain and grow this business,” Mr Ang said in an interview last Saturday at mm2 Asia’s office in Bukit Merah.

“The question that I ask myself and everybody is: Is cinema (like the) typewriter? The answer is no. But you need to right-size it and produce more content that the audience wants so that they can be motivated to come back to the cinemas.”

STRUGGLES AND A SLOW RECOVERY

The company acquired Cathay Cineplexes’ Singapore operations in 2017 for S$230 million. Having its own theatres would complement its movie production business, and provide a steady revenue stream, mm2 Asia said then.

But the COVID-19 pandemic upended those plans. Cinemas were shuttered for months in early 2020, and later only allowed to reopen with capacity restrictions. Even then, audiences never really returned as they embraced on-demand streaming services from the comfort of their own homes.

The industry's hoped-for resurgence in 2024 was further delayed by Hollywood labour strikes the year before, which disrupted blockbuster releases.

“Whether it's concert, F&B, karaoke, arcade or even outdoor entertainment, everything is back to normal … but the cinema business is the one that never fully recovered from COVID-19,” Mr Ang said.

The cinema business has been a significant financial drag on mm2 Asia since 2020. In the first half of FY2025, it posted a net loss of S$7.6 million for the segment, up from S$4.6 million a year ago, due to lower attendance and fewer blockbuster releases.

Losses have been roughly equal between its Singapore and Malaysia operations, said Mr Ang, who founded the company in 2009.

While Malaysian cinemas benefit from lower rents and successful local films, revenue remains constrained by lower ticket prices and a weak ringgit. The company is also a small player in the Malaysian market, with just 13 cinemas.

Mr Ang said mm2 Asia has tried its best to manage its funds and ensure timely payments since COVID-19 struck.

It had to prioritise some payments to sustain its operations, he said when asked why it did not pay the rental arrears despite reporting S$10.1 million in cash and cash equivalents in the first half of FY2025.

“Pre-COVID, all our suppliers and partners got their money on time … but unfortunately, it has become so tough. We feel sorry to people that we owe money to. We will work harder to solve this problem,” Mr Ang said.

Discussions with landlords have been “positive” and operations at the affected outlets continue as usual, he added.

“We’re still talking about how do we try to settle payments sooner and continue the relationship. It’s not like we are ending the relationship.”

The firm has seen growth in other areas that have helped to make up for the losses in its cinema business. These include content production and distribution, events and concerts, as well as digital entertainment which has seen a surge in opportunities after the pandemic.

"PAINFUL" DECISION TO CLOSE FOUR OUTLETS

Hopes for a rebound hinge on a strong slate of upcoming Hollywood releases, including the final Mission: Impossible instalment and a new Jurassic World movie. Regional content is also gaining traction, with Chinese animated film Ne Zha 2 setting box-office records. 

“That shows that if you have something good and unique, the audience will want to come back,” Mr Ang said.

Beyond content, mm2 Asia has been restructuring its cinema footprint. Over the past two years, it exited four locations, including Orchard Cineleisure, the Cathay Building, Parkway Parade and AMK Hub.

Mr Ang described the decision to close the four outlets as "painful", but necessary to manage risks and sustain operations until the industry rebounds. The company had to be strategic with its locations and the size of each cinema, he said.

But it also opened a new cineplex at Century Square in 2023 and acquired WE Cinemas’ 321 Clementi outlet last October – an "attractive" deal due to its prime location near residential areas and schools, Mr Ang said.

“We see the traffic going up. We think we can do more things there,” he said.

A new outlet at *Scape, adjacent to Orchard Cineleisure, is set to launch in April or May. This “multi-functional entertainment hub” will have not just cinemas but event spaces for live performances and local content showcases.

Plans are also in the works to spruce up existing locations with more entertainment offerings, such as karaoke and gaming arcades. 

“If you can integrate … and allow people to enjoy various options in one location and the options are linked, it will bring more traffic than a huge cinema,” Mr Ang said.

RISING COSTS, TIGHT MARGINS

Addressing concerns from moviegoers about rising ticket prices, he pointed out that operators face mounting costs – primarily rent and manpower. 

About half of the box office revenue goes to the studio, so the margin is tight, he said. “In fact, if you're not selling concessions, you probably can’t make or make very little money.”

To bolster its financial position, mm2 Asia is in talks with various lenders and creditors for short-term working capital and to reschedule debt as it comes due. A partial or full divestment of its cinema business is also on the table, with increasing merger and acquisition activity signalling renewed interest in the sector.

Despite scepticism about mm2 Asia's acquisition of Cathay, Mr Ang remains resolute.

“When we acquired the cinemas, they were profitable,” he said. “If we knew that COVID-19 was coming, then we probably wouldn't have done it … but things happened and we have to work hard to solve the problem.”

While right-sizing and potential industry mergers may be necessary, he is confident in cinema's staying power.

People are not ready to abandon the big screen and the unique experience it offers, Mr Ang said. As the number of cinemas declines, malls with theatres will gain a competitive advantage in future, he added.

More importantly, he will not give up without a fight.

“We've been managing (the situation) for the last few years, and we will continue to,” Mr Ang said. “At this point in time, we still want to push on.”