Regal Entertainment Group to explore possible sale

Regal Cinemas L.A. Live Stadium 14 in Stadium 14 in downtown L.A.
(Genaro Molina / Los Angeles Times)

Regal Entertainment Group, the largest movie theater chain in the U.S., will explore options including a potential sale, the company said on Monday.

The announcement came as the company posted third-quarter earnings that fell sharply from a year ago because of a weak summer box-office season.

Revenue for the quarter that ended Sept. 25 was $693.8 million, down 15% from the same period of time last year. The firm’s earnings fell to 17 cents per share, compared with 48 cents a share a year ago.


The summer box office suffered industry-wide, with movie ticket sales in the U.S. and Canada down 15% from last year.

The company said its board of directors has authorized the exploration of “strategic alternatives to enhance shareholder value,” including a potential sale of the company.

Shares surged 17% in after-hours trading, after closing at $20.51 during the regular session.

“Commitment to delivering shareholder value has been the cornerstone of our strategy for many years and we believe today’s announcement along with the declaration of our sixth special dividend clearly demonstrate that commitment,” said Amy Miles, Regal’s chief executive, in a statement.

In a conference call with analysts, Miles said the company’s “strong performance” and “attractive industry dynamics” made it an “opportune time to conduct a thorough review of our options.”

She declined to say whether the company had received any offers or how long the process might take. “We have not set a timetable for a completion of the review,” Miles said.


The last sale of a major theater chain came in 2012 when China’s Dalian Wanda Group bought AMC, the nation’s second largest, for $2.6 billion.

Based in Knoxville, Tenn., Regal operates 7,347 screens in 573 theatres in 42 states, including LA Live Stadium 14.

The company, which is controlled by Denver billionaire Phil Anschutz, said its board of directors had retained Morgan Stanley & Co. as its financial advistor in the review process.

Founded in 1989, Regal expanded rapidly, merging with the Edwards and United Artists chains before filing for bankruptcy protection from creditors in 2001.

Anschutz reorganized the company in 2002 as Regal continued to grow through acquisitions.

Last year, Regal acquired Hollywood Theaters, a Portland, Ore., chain that operates 43 theaters in 16 states, for $191 million in cash and about $47 million of assumed lease obligations. Most of Hollywood’s cinemas are concentrated in Texas, Missouri, Hawaii and Kansas.

Brian Mulligan, a former vice chairman of media and telecom for Deutsche Bank, said any buyer would most likely be a foreign-owned, such as Cinepolis, the Mexican-based chain that is largest movie operator in Latin America and has recently expanded into Southern California.


“The buyer that makes the most sense to me a is a foreign buyer who wants to use their expetise to expand internationally,” he said. “It’s not an easy sell.”

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