The deals, officially announced Monday, will more than double the size of Dallas-based Rave to 65 theaters with about 1,000 screens and make it the fifth largest domestic chain with a presence in seven of the top 10 markets. Acquired locations include the Bridge Theater in Los Angeles along with sites in Connecticut, Kentucky, Michigan, Ohio, Pennsylvania and the Washington D.C. area.
Word had emerged earlier this month the transaction was in the works (Daily Variety, Dec. 9). The all-equity deal is funded by an investment consortium led by TowerBrook Capital Partners L.P. with co-investors including Lambert Media and Charles B. Moss, Jr.
For Redstone, the sale will further lower National Amusments’ debt load — which had been at $1.46 billion before the mogul announced in mid-October that he was selling $600 million of Viacom stock and $345 million of CBS shares. At the time, National Amusements disclosed that it also hoped to raise over $300 million from selling some of its theaters.
National Amusements, based in Dedham, Mass., will keep its domestic locations in Boston and New York. The privately held entity also owns locations in the U.K, Russia and Latin America and will have about 1,000 screens following the sales to Rave.
Rave, currently the nation’s largest all-digital chain, will upgrade some of the National Amusements locations within the next year and re-brand all the acquired sites with Rave name. The ten-year-old entity — founded by Thomas J. Stephenson with backing by Boston Ventures — bills itself as a pioneer in the adaption of 3-D and a leader in alternative programming such as live sports, concerts and opera.
The deal marks Rave’s first acquisition and Stephenson told Daily Variety that Rave’s looking to expand further. “We’ve worked on this brand, always stressing that we’re going to make the customer experience as good as we can make it,” he added.
Lambert Media topper Michael Lambert, a former TV exec with HBO and Fox, sees the investment as a vote for the continuing strength of exhibition. Lambert already has investments in Concord Music, film production company Village Roadshow and Roadshow’s fledgling Gold Class Cinemas luxury chain.
Showing a big film release remains a really unique experience,” he told Daily Variety. “Studios do a great job of creating a heightened experience so it’s our obligation to showcase that.”
Lambert asserts that Rave is exploring expanded concession options — such as automated soda dispensers with 100 mixtures — and installing merchandising outlets such as kiosks and boutiques. He added that the arrival of digital technologies creates more options for theater owners such as sporting events in 3D.
There are enormous opportunities that are under-exploited in terms of alternative content,” Lambert said.
Moss, a veteran real estate and entertainment investor and operator, will serve as chairman of Rave and Lambert will be vice chairman. Moss is known for heading New York-based Bow Tie Partners.
The deal structure creates a new entity — Rave Cinemas LLC — to separate the 35 National Amusements locations from the current Rave locations owned by Boston Ventures under the Rave Reviews Cinemas moniker. The new entity’s acquiring the business operations of four theaters from Rave Reviews Cinemas, the corporate infrastructure and the Rave Motion Pictures brand.
Rave Reviews Cinemas, owned by Boston Ventures, will retain 21 of its existing theaters, which will be managed by the new Rave Cinemas under a management services agreement.