Regal Entertainment Group hopes to create loyal subjects out of fickle movie-goers. The largest theater owner and exhibitor in the US has some 520 theaters with more than 6,600 screens in nearly 40 states through its Regal Cinemas, Edwards Theatres, United Artists Theatre Company, and Hoyts Cinemas brands. Its theaters house an average of 12 screens, and more than 80% of its screens are in theaters with stadium seating. It also claims to be one of the most modern theater circuits in the country. Regal Entertainment co-owns National CineMedia, a joint venture that sells in-theater ads and operates a video network that distributes digital content to theaters.
Regal Entertainment operates solely in the US and targets midsized metropolitan markets and suburban growth areas of larger cities. It has a large number of theaters in California, Florida, and New York; those three states together account for more than a third of Regal Entertainment's locations.
Through its approximately 20% stake in National CineMedia, Regal Entertainment uses that service as a lower-cost digital video and communications tool to digitally distribute in-theatre advertising and footage of live events. National CineMedia complements the company's business of renting out theaters for corporate meetings, seminars, and distance learning programs.
As part of its strategy to participate in partnerships, Regal Entertainment jointly owns film distribution company Open Road Films with AMC Entertainment. Established in 2011, Open Road Films distributes and markets smaller budget films, with a goal of eventually distributing eight to 10 films per year as way to drive incremental value for stockholders.
Sales and Marketing
Regal Entertainment makes nearly 70% of its revenues from ticket sales and about a quarter of its revenues from concession sales. Additional revenues come from vendor marketing programs, gift cards, and discount ticket programs.
Regal Entertainment's revenues dropped in 2011 compared with 2010 (from $2.81 billion to $2.68 billion), as did its net income (from $77.6 million to $40.3 million). The decline was mostly because of an overall drop in movie attendance that year, as well as a slight decrease in average ticket price. The industry's box office results were negatively impacted in 2011 by a difficult comparison with 2010, when the record-breaking Avatar was released, as well as big draws such as Toy Story 3, Alice in Wonderland, Iron Man 2, and Inception.
A major part of Regal Entertainment's strategy to get customers out of the living room (where they are more inclined to watch DVDs from fancy home theater systems) and into the movie theater is through digital cinema. Regal Entertainment is in the process of converting all of its theatres from 35 mm film projection to digital projection, and it is financing the move through a joint venture (called Digital Cinema Implementation Partners) with AMC and Cinemark. By the end of 2011 the company operated 4,721 screens outfitted with digital projection systems (up from 2,202 in 2010); it hopes to complete the process by late 2012 or early 2013.
Regal Entertainment has also been busy implementing the 3D technology that goes along with digital cinema. In 2011 it completed its 3D deployment; it now operates nearly 2,800 3D screens (or about 42% of total screens). It brings 3D screens to theaters through an agreement with technology provider REALD.
An additional digital effort includes Regal Entertainment's proprietary format known as "Regal Premium Experience", or RPX. By the end of 2011 it had converted 17 of its auditoriums to RPX, which features a 60-foot wide screen and a custom-built sound system. Regal Entertainment also has partnership with IMAX, and operates some 66 screens in the giant digital format. While IMAX screens are similar to the RPX format, Regal Entertainment is not ending its relationship with IMAX. It plans to grow its total count of RPX and IMAX screens.
Mergers and Acquisitions
Regal Entertainment has long sought and achieved growth through acquisitions. It has acquired and integrated seven theater circuits, consisting of more than 150 theaters amd 1,800 screens, since its 2002 IPO. In late 2012, to further solidify its market leading position in the US, the company acquired Great Escape Theatres for $91 million. The deal included 25 theaters and more than 300 screens in 11 states mainly in the Midwest and Southeast regions.
Regal Entertainment was founded in 2002 when Philip Anschutz bought and combined controlling interests in the bankrupt Regal Cinemas, United Artists, and Edwards Theatres through his firm, The Anschutz Corporation. Anschutz owns about half of Regal Entertainment and controls 78% of its voting power. – less