Edwards Could Be Latest Link in Anschutz’s Chain of Theaters

Billionaire investor Philip Anschutz has emerged as a likely bidder for struggling Edwards Theatres Circuit Inc., the state’s largest movie house operator.

The Newport Beach chain, which is in bankruptcy proceedings, is in negotiations to sell at least part of the business. Industry sources said Anschutz, who is moving to gain control of hundreds of cinemas throughout the nation, is one of the most likely bidders.

Anschutz owns a majority stake in United Artists Theatre Co., a nationwide chain that also filed bankruptcy last year, and is attempting to take control of the struggling Regal Cinemas Inc., the largest U.S. exhibitor with 4,361 screens. He also owns the Kings hockey team, most of Staples Center and part of the Lakers basketball team.

“Edwards is a nice regional addition to what appears to be an attempt to build a nationwide chain,” said a Wall Street analyst, who asked not to be identified.

Anschutz made his fortunes in oil and railroads before turning to telecommunications and then entertainment.

In stockpiling movie houses, the Denver businessman could be positioning himself to convert the cinemas to receive movies digitally, a risky but potentially lucrative strategy, analysts say.

Anschutz declined to comment. Edwards offered no specifics but a spokeswoman said the chain has narrowed its negotiations to one potential investor.

“Under the scenario they’re looking at, the Edwards family will remain significant shareholders,” spokeswoman Ann Julsen said Tuesday.

She declined to say whether the family would relinquish controlling interest, or who would manage the cinema chain, which was founded 70 years ago by the late James Edwards Sr.

Since his death in 1997, the company has been headed by son James Edwards III. A number of other family members have also been intimately involved in the company’s operations.

While sources have placed the value of the Edwards chain at between $250 million to $300 million, it is not clear how much an investor would have to pay to gain control of the chain, which owes more than $217 million to its largest creditor, a consortium of lenders headed by Bank of America.

Industry insiders say a number of companies expressed interest in Edwards, including Boston-based National Amusements Inc., which has a controlling stake in Viacom Inc., and Century Theatres in Northern California. The two companies are family-operated chains that have managed to remain profitable in the midst of the industry crisis. Both declined to comment.

Edwards is one of a number of exhibitors that struggled with rising debt and sinking profits after a building binge left them with too many screens. The proliferation of flashy new mega-plexes caused customers to shun the older, dowdier movie houses, which then became a financial drain on Edwards and other major operators.

Edwards, which has 70 theaters with 739 screens, filed for Chapter 11 bankruptcy protection last August. The chain lost $40 million in 1999 after earning $14 million in 1998.

Since its bankruptcy filing, Edwards has severed dozens of leases, making it more attractive to potential buyers. Its showy mega-plexes and stronghold on the Southland also make Edwards an appealing chain.

Industry sources say Anschutz, in moving to snap up movie house chains, appears to be seizing the moment, as he did when he bought, sold and merged railroads earlier.

When he sold Southern Pacific Railroad in 1996 for a $1.4 billion profit, he retained the rights to lay his own fiber-optic cable along the railroad tracks’ rights-of-way.

Through his Denver-based holding company Anschutz Investment Co., Anschutz is the largest shareholder in Qwest Communications International, a telecommunications giant that owns fiber-optic networks.

The billionaire’s Anschutz Entertainment Group is one of the nation’s largest sports entertainment companies. In addition to the Kings, it owns more than half of Staples Center in downtown Los Angeles, 25% of the L.A. Lakers, two minor-league hockey teams, four professional men’s soccer teams, five European hockey teams, the London Arena and Concerts West, a small concert-promotion company.

Edwards has until June to file its reorganization plan with the bankruptcy court. If the company reaches an agreement with a buyer or major investor before then, it would have to be approved by the bankruptcy judge.