Plans construction of 220 screens per year until 2001
NEW YORK — California-based Edwards Theaters Circuit Inc. intends to double in size, with plans to build about 220 screens a year for at least the next three years, to take its circuit to more than 1,200 screens around the country, Edwards CEO James Edwards III said Friday.
In an interview, Edwards said that despite the wave of consolidation sweeping the industry and raising prices for exhibs to historical highs right now, his family had no intention of selling.
“We want to continue to grow. We are not a seller of the company at this time, and we think there are some opportunities out there,” he said.
Given some of the prices paid in recent deals, like Kohlberg Kravis Roberts’ $660 million acquisition of Act III Theaters and the KKR-Hicks, Muse $1.5 billion acquisition of Regal Cinemas, Edwards noted “it might be a mistake not to sell right now … but it’s not the right time.”
“We are a family business and the family is involved in the business. We want to stay,” said Edwards, who is the son of the founder. After taking into account the various exhib mergers announced in recent months, the company is now the ninth-biggest exhibitor in the U.S.
Edwards is not looking to acquire other exhibs, however. “I don’t want old theaters,” Edwards said.
Instead, the exhib is building aggressively, expanding outside its home market of California with complexes with as many as 26 screens.
Edwards has just opened a complex in Boise, Idaho, and the CEO said the exhib will open 13- or 14-plexes in areas like Oklahoma City, Salt Lake City and Houston as well as central California this year.
But Edwards is also looking in Virginia and elsewhere, the company’s VP and general sales manager Don Barton confirmed.
“We are actively seeking sites throughout the whole United States, the East, West, North and South,” Barton said.
These plans will likely pit the exhib against other operators in their own markets, as Edwards conceded it was difficult to find sites further than five miles from existing locations.
“We are not trying to go against anybody. We are trying to find new areas that are non-competitive in film,” he added. He also indicated that the exhib preferred to take the offensive and expand outside its home markets rather than focus on its home markets, which are vulnerable to invasion from outsiders.
The scope of the screen-building is just as open-ended as its geography. Edwards said he wanted to maintain this year’s schedule of 220 new screens for “as long as there are viable opportunities available to us.” He confirmed this would put Edwards at the 1,200- screen range “within three years.”
All up, building 660 new screens in the next three years will cost between $500 million and $665 million, given the industrywide per-screen cost of $750,000 to $1 million, which Barton said was accurate for the exhib.
Edwards declined comment on how the privately-held company would finance the building but said the company may utilize sale-and-leaseback arrangements with real estate investment trusts.
“I think we can achieve our growth plans,” Edwards said.
The company builds its theaters with several different developers, although Edwards said the exhib has a joint venture with a Newport Beach developer to build 300,000-square-foot entertainment centers. One such center will be opened in Houston, housing both a multiplex and 200,000 square feet of restaurants and retailing.
The company has plans for four more in locations yet to be announced, Edwards said.