Anschutz Seeks to Take Theater Company Public

Taking another step in consolidating his position as the nation’s No. 1 movie theater owner, Denver billionaire Philip Anschutz filed Monday for a $345-million initial public stock offering by his Regal Entertainment Group.

The widely anticipated move also signals a possible turnaround in the financially troubled film exhibition business, which has seen eight major chains file for bankruptcy during recent years.

Anschutz created Regal by combining three theater chains he acquired through bankruptcy reorganizations: Regal Cinemas Corp., United Artists Theatre Co. and Edwards Theatres Inc.

Reemerging with a leaner and potentially stronger company, yet boasting the largest number of screens in the country, Anschutz is positioning himself to take advantage of the remaining opportunities for further consolidation, said Matthew Harrigan, an analyst with Janco Partners Inc.

“Theaters may not be a high-growth business,” Harrigan said, “but it is a strong and steady business.”

In 2001, total box-office revenue increased for the 10th consecutive year, rising 10% to $8.4 billion. Attendance grew roughly 5% to 1.5 billion moviegoers.

“Anschutz did a good job of bottom fishing,” said Harrigan, who added that many theater chains expanded “like drunken sailors ... building too many theaters too fast” during the last several years.

Not only were there too many theaters, they were too big, with many sporting a dozen or more screens at a time when Hollywood was churning out fewer blockbuster hits.

The reclusive Anschutz did not return calls, and Regal declined to comment on its filing.

Anschutz built his fortune bartering railroad right of ways, creating a 16,000-mile fiber optic network that is now Qwest Communications. Recently, Anschutz has been building a sports and entertainment empire with stakes in sports arenas including Los Angeles’ Staples Center as well as teams such as the Los Angeles Kings hockey team and the Colorado Rapids and Chicago Fire soccer teams.

Last year, Los Angeles gave Anschutz approval to develop a $1-billion entertainment district on 27 acres downtown. It would include a movie theater complex.

Under bankruptcy protection, Anschutz closed many of the Regal group’s under-performing theaters and extracted the firm from high-cost leases. He found further savings by combining managements of the three chains, centralizing management in Knoxville, Tenn.

Taking advantage of the seasonal peak for moviegoing, Regal’s stock offering is scheduled to hit the market in June, when the next installment of the “Star Wars” series will be playing.

“Regal is moving forward with good theaters,” said Jeff Blake, head of distribution and marketing for Sony Pictures. “They got rid of their bad theater leases, aggressively consolidated their operations and what they presented to us [at ShoWest in Las Vegas last week] is pretty exciting.”

Regal said it operates 17% of all the theater screens in the United States, with 5,885 screens in 561 theaters in 36 states.

Coincidentally, AMC Entertainment Inc., the second-largest theater chain, plans to go to market Wednesday with an offering for 9million common shares. AMC shares, which closed Monday at $11.29, have more than doubled during the last 52 weeks.

According to financial information filed with the Securities and Exchange Commission, the combined financial performance of the three chains constituting the new Regal Entertainment last year had revenue of $2billion and earnings before interest, taxes, depreciation and amortization of $358million.

Regal plans to use $180million of the IPO proceeds to repay Edward’s Cinema debt and an additional $76million to redeem that company’s preferred stock. Most of the remaining funds would be devoted to general corporate expenditures, including acquisitions and working capital.

Regal plans to sell Class A shares, which have one vote each on company issues. Anschutz owns 45.6 million Regal Class B shares, and an affiliate of investment firm Oaktree Capital Management owns 12.3 million Class B shares. Each Class B share has 10 votes each.

Regal will seek to have its shares trade on the New York Stock Exchange under the symbol RGC. Underwriters for the stock sale will include Credit Suisse First Boston and Lehman Bros.