Anschutz assembling broad and varied entertainment empire
Philip Anschutz may not exist.
He certainly hasn’t darkened the doorstep of any newsroom lately, and firsthand accounts of Anschutz sightings in the broader community are — well, there aren’t any.
The press-shy billionaire so shuns the limelight that when he recently convened an annual mustering of his business troops, execs met at his Denver ranch in a location so remote their cell phones wouldn’t work.
“Maybe that’s just the way he likes it,” a staffer shrugs.
Reputedly a 62-year-old native Kansan, this born-again Christian with a Midas touch for biz has recently emerged as the 800-pound gorilla of just about any industry he chooses. After making his mark in fiber optics and elsewhere, Anschutz is assembling a broad and varied entertainment empire.
He’s already established beachheads in film production and concert promotions. And now, with Regal Cinemas’ Sept. 6 endorsement of an Anschutz takeover proposal, the quirky financier soon should control an unprecedented number of U.S. screens — more than 6,000 — or nearly one-fifth of the entire domestic biz.
Industry colleagues might corner Anschutz for his thoughts in assuming the mantle of this sprawling exhib empire at a Colorado Rapids soccer game in Denver. High finance’s No. 1 hermit is rumored to leave his Rocky Mountains lair occasionally to catch play of the team — one of four Major Soccer League franchises he’s snapped up. He may also lurk among the luxury-box shadows at L.A.’s Staples Center, where he’s a majority owner of the arena and its Los Angeles Kings hockey team.
“He comes to a hockey game maybe once a month,” claims one source. “He likes the idea he can stand in line for a hot dog and nobody knows who he is.”
While he’s choking down a tubesteak, Anschutz might confide any thoughts on whether his amassing of such impressive screen numbers will finally produce film-rental concessions from historically stubborn Hollywood distribs.
There’s another intriguing question: At a time when U.S. business is tanking across the board due to economic distress, why has Anschutz so dramatically entered, arguably,the most ailing of the nation’s ailing business segments?
One answer seems to be that sick assets can be bought cheaply — and made healthy.
“If you sit back patiently in the business world and wait for the right opportunity at the right time, you can pick up some nice assets at a nice price,” observes David Davis, senior veep and analyst at investment firm Houlihan, Lokey, Howard & Zukin in Los Angeles. “In exhibition, it’s a perfect time to acquire such assets.”
To date, Anschutz has taken over the Denver-based United Artists Theaters chain and has a deal to acquire a majority stake in Newport Beach, Calif.’s Edwards Theater Circuit. Those chains together boast more than 2,200 screens.
Regal would add another 3,800 or so screens, and the Knoxville, Tenn.-based company could emerge from its proposed prepackaged bankruptcy reorg with so little debt that the struggling circuit could serve, ironically, as a nifty vehicle for further screen acquisitions.
Whether Anschutz and sometimes-deal partner Oaktree Capital can cobble together their disparate exhib operations into a single company is uncertain, due to nettlesome questions over varying corporate structures. But Anschutz still would have effective control over such an array of theaters that handicappers are already working overtime crowning winners and losers at the various companies.
Leaving aside obvious losers like current Regal owners Hicks, Muse, Tate & Furst, and Kohlberg Kravis Roberts — the investment firms are taking a $1 billion bath on their three-year investment — circuit topper Michael Campbell seems a clear short-term winner.
Positioned to see Regal through its planned reorg, Campbell gets a new, deep-pocketed owner and cleaned-up balance sheet in the process. But some industry insiders, citing various business miscues by Regal brass, question whether Campbell ever will be tapped to run Anschutz’s entire exhib empire.
For that job — which exists only in theory for now — many see UA topper Kurt Hall as the more likely go-to guy. UA has completed its bankruptcy reorg, and insiders say Anschutz holds his Mile High neighbor in high regard.
There are also a couple of key Anschutz lieutenants to consider. Michael Bennet, a former Justice Department attorney in the Clinton administration, has been especially hands-on during Anschutz’s exhib-buying spree. Key Anschutz aide Craig Slater is another potential candidate for uber exhib.
Further down the road looms a question of whether Anschutz will see any exhib synergy from his involvement in fiber-optic networking. Such a high-tech infrastructure is key to the successful conversion of a portion of the nation’s movie theaters to digital distribution and projection.
But insiders say Anschutz’s holdings in fiber-optics giant Qwest Communications are best seen as coincidental to his exhib buys — for now.
Pundits similarly pooh-pooh any notion Anschutz will exploit exhib holdings to line up distribution for pics made by Crusader Entertainment and Walden Media. But others note it sure won’t hurt that the same guy who funds those family-friendly film producers also controls thousands of movie screens.
Meanwhile, there’s no guarantee the sick circuits Anschutz is snapping up can be healed simply by mopping up red ink and paying down debt.
Sure, it’s notable he’s bought at the bottom of the market, whereas Hicks Muse and KKR failed by buying at the top. But Regal is famous for owning an enormous number theaters that too often are located in places nobody actually lives. And in addition to concerns over film rentals, some basic other questions persist, including the number of movies an ideal multiplex should offer.
The industry’s current financial woes are largely traceable to too many circuits building too many megaplexes featuring too many screens. With many of these bedraggled behemoths bloating up to 30 screens, exhibs cite a growing “inelasticity” at the biggest megaplexes.
To wit: When an anticipated big release like “Josie and the Pussycats” crashes and burns, there’s no quick fix for exhibs stuck with programming the tanking pic on multiple screens for several weeks.