Regal Entertainment Group hopes to create loyal subjects out of fickle movie-goers. The largest theater owner and exhibitor in the US has some 580 theaters with nearly 7,400 screens in 40-plus states through its Regal Cinemas, Edwards Theatres, United Artists Theatre Company, and Hoyts Cinemas brands. Its theaters house an average of 12.7 screens, and more than 75% 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 Group was formed in 2002.
Tennessee-based Regal Entertainment operates 580 theaters in 42 US states, the District of Columbia, Guam, Saipan, and American Samoa. The chain 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 nearly 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 employs an interactive marketing program for specific films and concession items to increase attendance and consumption. Its Regal Crown Club loyalty program rewards frequent moviegoers with deals of concessions and more. The loyalty program boasts more than nine million active members. In 2012 the chain launched a mobile ticket app for the iPhone and Android smartphones.
Strong attendance and a slate of popular movies (Iron Man 3, The Hunger Games: Catching Fire, Despicable Me 2) had a positive impact on the box office in 2013. Indeed, Regal Entertainment Group's revenue increased 8% in 2013 versus 2012, to $3 billion. Net income grew 9% over the same period, to $157.7 million, on increasing revenue. Admissions (up 7% year over year) represented 68% of total revenue, while concession sales (up 9%) brought in 27%.
Higher attendance and a 1.2% increase in average ticket prices bolstered the take at the door. Indeed, 228.6 million people visited one of the company's theaters in 2013, up from 216.4 million in 2012 and nearly 212 million in 2011. The average ticket price rose to about $9 in 2013 from $8.90 in 2012.
Concession revenue rose on increased attendance levels and movie goers spending more on popcorn and beverages and, to a lesser extent, selective price increases and the continued rollout of Regal's expanded food menu. Movie patrons spent an average of $3.57 on concessions in 2013, an increase of 11 cents versus the prior year.
2013 marked the second consecutive year of rising sales and profits at Regal's movie theaters, following two years of decline. Cash flow from operations has been essentially flat over the past three years.
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. At the end of 2013, the company operated 7,305 screens outfitted with digital projection systems (up from 4,721 in 2010). Other amenities designed to lure moviegoers include stadium seating and the implementation of the 3D technology that goes along with digital cinema. In 2011 the theater chain completed its 3D deployment. 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. Auditoriums with RPX feature 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. In 2013 Regal Entertainment Group acquired the Hollywood Theaters for $191 million in cash. The acquisition added about 43 theaters representing 513 screens to its current portfolio and enhanced its presence in 16 states and 3 US territories.
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.