NEW YORK — United Artists Theatre Circuit Inc. is to spend $175 million in the next three years building 450 new screens, it revealed Friday, in an effort by the exhibitor to start defending its core markets.

At the same time, UATC is stepping up its efforts to sell off theaters in “non-strategic domestic markets,” and says it will sell 70 theaters with 280 screens to help pay for the new screen construction costs.

The total cost of the new screens is close to $300 million, estimates UATC chief operating officer Kurt Hall, but a good portion of that will be covered by landlords or in sale-and-leaseback transactions.

Key markets targeted

Most significantly, however, the focus of the screen expansion program shows the strategic change under way at UATC. Unlike the screen building undertaken by UATC under its former CEO Stewart Blair, much of the money in the latest program will go toward renovating existing theaters in UATC’s key markets like New York City, Long Island, Philadelphia and San Francisco.

Since Blair left last December, UATC has abandoned his strategy of expanding overseas and into new domestic markets. Sale of its investment in Hong Kong theaters, other international holdings and non-strategic domestic theaters is expected to fetch at least $80 million, Hall estimates.

In a statement, Hall said that while the development efforts since 1992 had been aggressive and “generally have resulted in very good investment returns, in many instances they did not place enough emphasis on our key markets.”

“This is a strong message to our competitors that we are not going to let them (overbuild us),” Hall said. In recent years UATC has done little to defend its position in markets like New York, while rivals like Sony Theatres and AMC Entertainment have improved their position or begun to encroach.

N.Y. emphasis

That is now changing. UATC will add 124 screens in the New York/Long Island area, of which 68 will be in rebuilt or renovated theaters and another 56 in new theaters including one in the Union Square area of Manhattan.

The Philadelphia area will get two new theaters, and expansion or rebuilding of three others, as will San Francisco. New theaters will be built in Dallas, Denver and towns in Michigan, Maryland, North Carolina and Louisiana.

Most of the building will be done in 1998, tailing off in the first half of 1999. The 450-screen-count expansion includes 71 screens built so far this year, UATC said.

Most of the new theaters being built will have 14 to 16 screens, and the program will increase UATC’s per-theater screen average to about 7.5 from 6.2 now, Hall says.

Playing it safe

UATC continues to be cautious in its approach. Hall said the exhibitor was concentrating on markets that were not already overbuilt. In the Times Square area of Manhattan, for instance, where UATC has a location and where AMC and Sony are both planning megaplexes, UATC doesn’t yet plan to renovate its existing site because it wants to see how the new projects play out.

“Our focus is in areas where we have a strong position, and where there is not a lot of announced construction,” Hall said, noting that densely populated areas like New York and Philadelphia were difficult for outsiders to get into.

While building completely new theaters can produce higher returns, Hall said expanding an existing site that is heavily patronized is a “much lower risk proposition.”

The sale of non-strategic theaters also continues a long-standing program under way. Hall said that since 1992, UATC had sold or closed 195 theaters with 711 screens. He declined to identify the areas UATC is planning to exit.

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