Strategy & Operations » Leadership & Management » Cinema chain Vue’s CFO on art of deal-making

The entertainment sector may come under pressure if the economy is hit by Brexit, but Vue CFO Alison Cornwell is confident of the prospects for the cinema industry.

As finance chief of the vast multiplex chain based in 10 countries, the largest privately owned cinema chain in Europe, she says that the feelgood factor of the cinema can provide a fillip for customers experiencing hard times.

“If you go back to the last economic downturn, and you look at cinema attendance, it actually increased. There is a lot of research that shows that cinema is actually countercyclical- and should there be a bad Brexit outcome, and should the UK economy suffer, it doesn’t mean that our business will suffer, and looking back in history, when there has been a downturn, attendance in cinemas has actually increased,” says Cornwell.

“We mined that data and developed predictive models which maximise EBITDA.  For the upcoming slate of films the tool generates  the optimal film schedule for every screen for every day part, for every location,” she says.

“The AI content scheduling has removed a huge amount of subjectivity from what was done a few years ago and that has significantly improved our EBITDA. It’s a predictive model so periodically the algorithms that drive it are enhanced and updated, but in every sense it has been a game changer,” adds Cornwell.

Having begun her career as a generalist at accountants Coopers & Lybrand in Glasgow she moved to the firm’s London office to work in corporate finance, specialising in corporate recovery and turnaround. Once she started analysing businesses and doing deals there was no going back. she says: “knew I didn’t want to do anything else.”

Cutting deals

Cornwell then spent ten years at Walt Disney TV International as CFO, running finance but also playing a pivotal role in helping construct media deals. “I knew in industry I could really get beneath what makes a business work, what makes its model work, and understand how best to drive value and growth,” she says.

“When I joined there was one Disney channel in the UK and when I left in 2005 we had about 40 unique channels around the world. That was an amazing learning experience, in terms of driving business growth,  identifying the next big territory for us to develop and negotiating deals of all kinds. It was an incredibly diverse role,” adds Cornwell.

Cornwell moved to private equity-owned Sparrowhawk Media, owner of the family-oriented international TV network The Hallmark Channel, after deciding she wanted to “do something more entrepreneurial”. “I knew from my broadcasting experience that there were significant opportunities to significantly enhance and grow its value,” she says.

“The biggest surprise was that in the first week, at the first meeting the discussion with our private equity investors was about the exit,” Cornwell reveals. The business was reinvigorated and expanded to include movie and lifestyle channels but when it was sold to broadcast giant NBC Universal she decided to move on.

Moving to another entertainment industry sector, Cornwell joined international film distribution company Alliance Films, which financed movies including Insidious and The Woman in Black, as CFO for six years.

Working one week in every three in Canada, the group had offices in Canada- Toronto and Montreal, in addition to the UK and Spain, Cornwell helped steer the firm into film financing, “which strategically gave us another source of content to feed the distribution business,” says Cornwell.

“You analyse and benchmark, based on the screenplay, the production budget and the talent associated with the project.  You include as much science around the potential value- low, medium and high case, in making the decision to green light the acquisition, or the production finance,” she reveals.

“You have to be very rigorous and disciplined in constructing the business case for each title.  You have to be a good listener, but you also have to be tactful as well as being confident and forthright in your views as films are a creative product and passions can run high.

“I love sitting behind a computer developing business cases and analysing data, but I also love going out, speaking to film producers and to the marketing people who nurture and develop the release plans for films,” says the self-confessed film buff.

“You have present things that in a way everyone can understand. I have enjoyed developing and adding broader business skills to my core finance background as well as learning about all aspects of my industry,” says Cornwell who counts The Kings Speech, Mars Attacks and French film Tell No-one as her favourite films.

At the movies

Cornwell joined Vue after running the sale process of Alliance to Entertainment One, having met the Vue’s founder Tim Richards at the British Film Institute (BFI) where they were both governors. She is also a non executive director of the Edinburgh International Film Festival and is a Council Member and Oversight Board Chair of ICAS, the Scottish accounting body.

“In 2014 Vue was exploring the acquisition of a circuit of cinemas in Italy, so I joined  as group CFO and undertook the financing  and due diligence and we signed the deal three months later.

“I have always loved working in international businesses. Vue has continued to expand and we are now in 10 countries. As an international group CFO I get heavily involved in M&A and integration of businesses. We have done a huge amount of work in developing the teams, implementing processes and systems and improving management information and KPI reporting,”

Owned by Canadian pension funds, Vue’s model is different to businesses Cornwell has previously been involved in. “We cannot control which films are made, but we can focus on being the most efficient operator that we can be, and we focus on ensuring that our cinemas are highly attractive to our customers with the best seats, screens and sound,”

Turnover of £204.8m in the second quarter of 2019 was 17.1% above  the same period last year while EBITDA of £29.5m was 78.1% higher than Q2 2018. At the time Vue said: “Every major territory has delivered growth in every revenue stream in this quarter, reflecting a strong film slate and the benefits from various strategic growth initiatives. These initiatives include enhancements in Digital and CVM activity, automated scheduling and software improvements, investment in our estate, new site openings, recliner seating roll-outs and large-scale refurbishments.”

On Brexit, Cornwell says: “we’ve undertaken a comprehensive review and our conclusion is that, while we have to keep a very close watching brief, we are probably in a good place compared to other sectors.

“We’ve looked at issues such as the continuity of our food and beverage supplies and our staffing needs at head office and at our sites. Even if there is a bad Brexit outcome, we feel that we have taken action and consulted with key stakeholders to minimise  any negative impact,” she says.

On management style Cornwell comments: “I  hire people who have curiosity, who want to understand the business, who want to understand objectives and what are we trying to achieve. I like working with people who take responsibility and who behave with integrity. I admire the ICAS motto which is Quaere Verum – seek the truth,” she says.

In the meantime, a recent headline says that Vue is up for sale for £2bn. She shrugs off the article saying: “That story reappears every six months.” But if a deal is to done, you can be sure Cornwell will take centre stage.