Regal Entertainment Group (REG) hopes to create loyal subjects out of fickle movie-goers. The US's largest theater owner has about 6,700 screens at some 540 theaters in nearly 40 states through its Regal Cinemas, Edwards Theatres, United Artists Theatre Company, and Hoyts Cinema brands. REG also co-owns National CineMedia, a joint venture that sells in-theater ads and operates a video network that distributes digital content to theaters. REG 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 REG and controls 78% of its voting power.
REG's theaters house an average of 12 screens, and more than 80% of its screens are in theaters with stadium seating. The company targets midsized metropolitan markets and suburban growth areas of larger US cities. It makes about 70% of its revenues from ticket sales, and also generates more than a quarter of its revenues from concession sales. Additional revenues come from vendor marketing programs, gift cards, and discount ticket programs. REG's revenues and net income dropped slightly in 2010 compared with 2009, mostly because of an overall decline in movie attendance that year relative to a particularly strong 2009.
A major part of REG'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, and the 3D technology that goes with it. REG is in the process of converting all of its theatres from 35 mm film projection to digital projection. By the end of 2010 the company operated 2,202 screens outfitted with digital projection systems. It also increased its digital 3D screen count to more than 1,700 that year (up from about 420 in 2009). REG plans to complete the digital conversion by early 2013. To further advance its digital strategy, REG in 2010 developed a proprietary format known as "Regal Premium Experience", or RPX. In 2010 it had converted seven of its auditoriums to RPX, which features a 60-foot wide screen and a custom-built sound system, and is converting up to 12 additional auditoriums in 2011.
The company is implementing this digital strategy through partnerships with other technologically advanced businesses. REG formed a joint venture (called Digital Cinema Implementation Partners) with AMC and Cinemark to create a financing model and execute agreements with the major studios for the implementation of digital cinema. In addition, it brings 3D screens to its theaters through an agreement with REAL D, a provider of 3D technology. REG also has partnership with IMAX, and operates some 40 screens in the giant digital format. While IMAX screens are similar to the RPX format, the company is not ending its relationship with IMAX. In fact, REG has plans to expand its IMAX footprint with the installation of more than 75 IMAX digital projection systems by the end of 2012.
Previously, the company operated in the digital realm exclusively through its 25% stake in National CineMedia. REG continues to use 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. In 2007 National CineMedia completed an initial public offering; as a result, that year REG reported a one time divestiture gain in net income.
Company founder Michael Campbell resigned as CEO in 2009 and was replaced by former Regal CFO Amy Miles. Campbell remains chairman.
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